ROI – Return On Investment, let’s face it, is the cornerstone and key motivation to doing any kind of business effectively.
When creating the internet based aspects of a business, how to approach measurable ROI can befuddle some key decision makers commissioning out the online side of their brand. Usually ‘pre-digital’ aged Managing Directors will know in their hearts and from the beating drums in the business jungle that using online experts is necessary to create the website, social media and to conduct online advertising campaigns in order to stay competitive. How exactly ROI fits into this strategy, however, is not always that clear to many. At worst a half-baked internet strategy becomes akin to throwing darts at targets in the darkness.
A man with a plan
Tom Vaughton (35) now runs a competitive and feisty company specialising in making the most of his cleints’ web-presence. Based in a picturesque Wiltshire town, Bradford on Avon, in the South West of the UK – his SME is successfully taking on larger, popular London agencies with vigour, securing national brands’ contracts.
As a great tale of how someone comes to understand the nature of ROI in online strategy take Tom’s amazing story that occurred one cold winter’s day in the run up to Christmas in 1999. Tom was sitting in his office busily at work, when he happened to look up at the ceiling as something caught his eye. It was at that moment that he realised the entire roof to his barn-office conversion was on fire.
“I could see the embers burning above me,” he recalls.
He rushed out of the office and called the fire brigade – but for the office it was too late, and everything including important files, administration and contractual documents turned to ash as Tom looked on at the wild blaze.
It was while watching the inferno rage that Tom realised how fortunate he had been in backing up the office admin online just two weeks earlier. The business could still carry on without an office. This was in 1999 remember, which put in terms of internet maturity, was still emerging from the Jurassic period. It was also the start of a new era for Tom – who has taken on board the vital nature of having a business functioning fully online. He has since set up his company, Varn Media which focuses on online strategy, web design, SEO and online campaign performance analytics. It is the latter service which holds particular relevance to a company’s online marketing strategy.
Tom’s use of analytical software tracks ‘views’ back to the source. One of his larger clients asked him for this service and to their surprise they found that virtually none of the online interest came through their most expensive marketing outlay – a popular and thought to be ‘must do’ online directory. By shifting their advertising budget from the deadwood they made a saving of £20,000 per annum without diminishing ‘click through’ rate – making the investment for Tom’s service justifiable – basically, ROI in action.
“Too many companies are flying blind when it comes to investing in online marketing. They spread their marketing budget thinly across what they perceive to be obvious advertising channels but the beauty of ‘online’ is that you can pinpoint exactly which links are being used and which adverts are converting into sales. That’s one of the services my company provides,” said Tom. “We can track through phone calls and online actions, the ROI. It’s important to realise what is possible and available – we track sales but we also track where people originate from when they phone the company and also if they download information.”
Barriers to pushing to the front
SEO is also becoming a complicated affair and increasingly expertise is needed to navigate Google’s criteria for pushing your website up the rankings. Tom’s written a blog about it with titles like ‘7 KPIs for Search Engine Optimisation’ and ’15 things Google will penalise you for’. He’s kept a sharp eye on the changing goal posts of SEO.
“The old days of populating text with key words and entering the relevant meta data are no longer enough in isolation to assure your page one ranking. One aspect to be aware of is penalties imposed. For instance, ever been tempted to buy 5,000 links for $30? This will give you a SEO penalty.”
Many companies rely on AdWord campaigns but it is important to know which ones work and why. Tom is adamant you need to monitor performance precisely to understand the worth of each campaign you run in order to give you intelligence into the campaigns’ management moving forward.
“We can show you how to measure your ROI from tracked conversions, from initial click through to making a sale on a Google AdWords campaign. Google Analytics can be useful here. Your ROI is how much profit you have made from your advert compared to how much you have spent on it. Take the revenue that resulted from your ads, subtract the advertising costs, then divide by your advertising costs and multiply by one hundred to get your ROI percentage,” instructsTom.
The underlying message from Tom and service providers like him is don’t let your internet investments get away from you and become feral. Trusting your gut and intuition is great, but nothing beats analytics and performance management to really drive your direction and margins in the right direction.