Monday, June 02, 2008

The Value In Tracking Online Visitor Engagement

Seems as though there's been a lot of talk in the web analytics industry these days about 'visitor engagement'. What is it? What isn't it? How you define it for branding purposes? How do you define it for other purposes? How do you measure it? I'm seeing it being discussed in many blogs and the topic came up many times while I was attending the eMetrics Summit in San Francisco last month.

It's a good topic and it got me thinking about how visitors engage using online advertising efforts (search, display, email, etc). And in thinking about online advertising engagement, I started thinking about the value of the Yahoo! Analytics' Assist report. Here's a simple explanation what what Assists are:

"Assists are campaigns that helped contribute to the conversion of another campaign".

For example, let's say I'm in the mood to buy a laptop. I click on a Sony display (banner) ad and reach the SonyStyle.com site but do not buy. I come back 30 days later and click on a Sony search ad on Yahoo, reach the SonyStle.com site again and this time make a purchase.

If both ads are being tracked using Yahoo!'s 'Full Analytics':

The Sony display ad will get an Assist while the search ad get a Conversion.

Not having the Assist information before, I would have never known how helpful the display ad was in driving conversions, not only for itself, but driving conversions to other forms of online advertising.

By showing Assists, Yahoo is able show a certain level of engagement about the vistor. In the example above, the visitor was engaged with the Sony display ad before engaging with the Sony search ad.

How valuable is this Assist information? EXTREMELY VALUABLE!!

Here's why....

- Let's say that all Sony laptops sell for $1,000.
- Let's say that the advertiser finds that the Sony display ad had 10 Assists associated with it (meaning it contributed to 10 additional purchases on the advertiser's search ads that are also being tracked) over a 30 day test period.
- Let's add in that the display ad only converted twice on itself (meaning a visitor clicked on the display ad and made an immediate purchase on the site) during that same 30 day stretch.
- Finally let's say that the display ad cost the advertiser $5,000 to run and $2000 to run the search ads.

The display ad cost: $5,000
The search ad cost: $2,000
The revenue from 1 conversion: $1,000
The display ad converted twice on itself: 2 x $1000 = $2,000
The display ad also had 10 Assists: 10 x $1,000 = $10,000

Without having Assist information on hand, normally an advertiser would see that the display ad only conveted twice itself and only contributed a total of $2,000. With spend costs of $5,000, the advertiser just lost $3,000. Upset about the poor performance of the display ad the advertiser most likely pulls the ad.

Now imagine that the advertiser has the Assist data in hand. The advertiser knows that all laptop sales are worth $1,000. The advertiser see's that while the display ad didn't perform well by itself, it was very valuable at helping drive sales down the road. In this case, $10,000 worth of sales (10 Asssist conversions). Now the advertiser realizes that rather than making $2,000 in sales, he/she has actually made $12,000 in sales (the 2 display conversions + the 10 Assist conversions). Subtract out the $5K in display ad costs and $2K in search spend costs and the advertiser had made $5,000 in profit ($12K sales - $7K costs) .

Imagine how an advertiser would have felt if they had pulled the display ad only to learn later that it had been valuable in driving an additional $10,000 in sales.

I call this the Steve Nash factor. Steve Nash won two NBA Most Valuable Player awards. He won those awards, not because he was a great scorer (converter) himself, but because he was a great assist man. His job essentially was to get his teamates the ball in the most efficient manner so that THEY could score more points. A coach would never bench (dump) Nash as long as he keeps his assists up and he helps his team score (convert).

The message here is, just because a campaign or keyword doesn't convert well itself, it doesn't mean that it's poor performing. Save yourself the mishap of lowering the bid or getting rid of a valuable campaign or a keyword because it may actually be playing a HUGE role in driving conversions for your other ads. Use a report like Yahoo's Assist report and measure how well your visitors are engaged with other ads before you make your budget decisions.

The last clicked ad, before a conversion, should not get all of the credit!

1 comment:

Pilar said...

Good for people to know.