Preparing for IPMC and Michael digital Marketing Programs:

How do we measure whether or not we are spending our digital marketing budget
effectively?

How to accurately measure and define Key Performance Indicators (KPI) of our digital
marketing activities so to be able to check its effectiveness and viability?
What is the biggest advantage of digital marketing? Well, it is agreed by all marketing
experts that it is the measuring ability of its effectiveness. Yes, the digital marketing
scene is information-intensive and therefore also has different measurement options, but
what to do with all this data? This can be quite a salad, so the most important thing for
successfully managing the huge data of a digital marketing activity is defining a clear
performance metric for each activity in accordance with business and marketing
objectives.

What are our goals?

A good marketing plan is one that is built to support the business goals we want to
achieve. This could mean either or all the following goals:

 Selling more product units,

 Increasing total customers.
 Increasing revenue from existing customers.
 Any other business needs.

The principle however is setting measurable goals that the digital campaign is designed to
achieve. This will help us planning marketing budget and the digital media mix within
the total budget accordingly.

As a part of our marketing plan and in line with our business goals, we will define KPIs
that are appropriate for our marketing activities that we will review on a weekly,
monthly, quarterly basis, adjust it as needed, making sure we steer the activity in the right
direction so achieving our goals.

About the concept of KPI: We will integrate in the company a KPI system measuring
the performance of each person in achieving tasks. This writeup is focusing on KPI for a
“Digital Marketing Campaign” we will measure how effective is the campaign same as
you measure how effective is a salesman. Every KPI is a metric by definition a Metrics
is a Number or a Ration, for instance, how many leads or clicks (number)? or how many
leads turned to a deal (a ratio)?; however, not every Metric is a KPI, for instance, if our
goal is increasing the average value of each purchase in our website (a KPI) then number
of people clicking in our website is not a KPI. KPI are parameters that we define in
advance as the most crucial and most important metric in measuring the performance of
marketing goals such that the fluctuations in these metrics directly reflect on the
performance and results of our campaign.
Metrics are just numbers and ratios that we can get from the system whether it is Google,
Facebook, Instagram or LinkedIn or other social networks. Such metric has no structured
hierarchy that determines which one is important over the other - we are the ones who
determine it. The amount of campaign exposures, clicks, click-through ratios,
abandonment rate, all are examples of metrics. We are the one to define which metric is
just a statistic and which one is a good KPI for us and our goals.

For example - if we put a new website on the air and I want to direct as much traffic as
possible - my KPI is the amount of inbound traffic. There are however some intermediate
metrics that may help me to understand why more traffic or less of it comes is directed to
website due to my actions (advertisements, search words, names, banners etc..); but when
I want to see if I'm reaching my goal - the key performance metric is the amount of
people who log on to the site.
The important emphasis here is to understand what is the best measure for achieving our
desired results and not be distracted by intermediate metrics that do not necessarily
reflect the end result. Some of the people selling us services will try to distract our mind
by attracting attention to metrics such as clickthrough rates, cost-per-click or volume of
exposure, mainly because it's easier - these are the built-in metrics in the advertising
systems; we can get it at the click of a button…The critical point to understand is that
KPI is not necessarily a structured statistic that exists in the digital advertising systems. It
can be a calculated statistic which is derived from the ratio of other metrics - and unless
we know what is important for us and demand to get it, we will not get it.

Here is an example of how to define accurate key performance metrics for our digital
marketing:

Leads and Conversions metrics: it is easy to understand and can be applied to any
marketing activity. Let's say we are interested in raising # of Leads of people that might
be interested in Michael Method and within the goals and business analysis - we've
decided that it pays us to invest a maximum of $10 for every sale opportunity. The first
KPI we will measure here is "price per lead". Is this a sufficient measure? partially. We
also have to connect it to the “sales team (floor)” and decide how much it is worthwhile
for us to pay for closing a (Conversion). Suppose that it pays us to pay for concluding a
transaction $40, this reflects a closing ratio of 1: 4 (we pay 4 times a lead in order to close
a transaction). A lot of businesses focus on the price they pay per lead and don't mind
their final closing price, which means focusing only on some of the picture, which can
lead them to make the wrong decisions about the effectiveness of their marketing
channels.

Continuing with our campaign, we decided to run programs with both Facebook and
Google Search Network campaigns. After a month, we looked at the results. Let's say that
we spent the exact same budget on both media.

 The Google campaign yielded 10 leads at $100 per lead.

Out of 10 leads, 5 deals were closed, which is exactly $200 for a close.
  The Facebook campaign yielded 20 leads at $ 50 a lead.

Out of 20 leads, 2 deals were closed. Each closing cost us $500.

Of course, when all different spending on media are such as production budgets

(graphics, video, infrastructure , landing page…) it changes even more, but one thing is

already clear - if we were to base our performance analysis on the KPI per lead, we

would have stopped the campaign of Google and divert the budget to Facebook; Not a

rational decision.

It is important to look at the KPI in a broad view some entry might be expensive but

provide a quality exposure that will bring a better quality or a higher revenue.

If for instance we product a nice and expensive Video just before a Media Campaign is

starting, then in calculating our true cost for conversion and closing we have to consider

the investment in this video.

Another practical example:

• My target price per lead is $ 50

• I want to bring a total of 100 leads and allocate $5,000 for that.

• I want to promote a teaser video to improve campaign conversion rates.

If we invested $ 1,000 from the budget in the video, we still have 4,000 to spend on leads
– campaign. The price of our target KPI is calculated all costs, digital campaign +
promotion Video or banners etc…

Two important things happen once we have defined performance metrics

1. We are able at any given moment to understand where we stand in relation to our
goals.
2. Once we define goals and know what are the proper metrics we can set the
appropriate budget to achieve those goals.

Performance metrics vary according to different marketing objectives and it is important

to understand how different marketing activities are measured. Goal setting is the basis
for success in digital marketing. Whether it is for our in-house advertising team or for the
advertising service provider - when the team knows exactly what is required to achieve
the chance that the activity will be goal-oriented and success will be maximized.