Unique Visitors, Conversions, Bounce-Rate, Delivered Impressions, Click-Throughs, Hits, Conversions, Branding, Call-to-Action, Time Spent Per Page. These are all great terms, the buzz words for Interactive Media, but try to talk about what makes sense to use as a metric to determine Return On Interactive Investment and everyone has a different opinion as witnessed in "Google Exec: Clicks Don't Equal Success, Bounce-Rate Does"...
"For many media and marketing professionals, "hits" refer to the number of times that consumers visit and/or click on a Web page. For Avinash Kaushik, analytics evangelist at Google, HITS is an acronym, which stands for "How Idiots Track Success."
Why is measuring the success of a Web site by the number of hits it receives idiotic? "Click-stream has become a lot more sophisticated," Kaushik said during a keynote address at a conference hosted by the Magazine Publishers of America trade association on Tuesday. "What you should measure is quality."
One way to measure the quality of a site is a low bounce-rate--or the share of visitors who move onto another site rather than continue onto other pages within the same site. What does a high bounce rate tell you? Visitors are effectively saying, "I came, I puked, I left," said Kaushik."
I don't know that I agree, sure I want to keep someone engaged on the site as long as possible to deliver the maximum impressions for the clients, but sometimes people do what they have to and move on. Working on a Return On Interactive Investment formula, we use Impressions and Click-Throughs to determine success because it relates right back to the Buyers Awareness Cycle. If someone clicks on an ad, they have saw an item of interest and are moving through the stages that we all go through to buy products or services. We use Average Industry Click-Through-Rates to help determine what the client can expect by the number of Minimum Impressions delivered on a weekly investment basis. The formula than determines the Expected Click-Throughs that are generated which is then impacted by the Client's Closing Ratio to determine Expected Sales or Conversions. We factor in the Client's Average Sale along with the Clients Incremental Sales and Customer Lifetime Value to determing the Total Average Sale. Once we have the Total Average Sale figure we can determine with the Expected Sales the Expected Net Sales Return. We apply the Client's Profit Margin to the equation to get the Expected Gross Sales Return. The Expected Gross Sales Return is compared to the Weekly Investment and translated into a percentage to determine the Return on Interactive Investment. Working on this formula with Castanet.net has provided us the industry averages and statistics to make this formula work in the field. We expect to finalize the LPG Return On Interactive Investment soon, we'll keep you posted and make it available for your download so you can see what it does for your clients and any interactive campaign.