Years ago I wrote an article titled, “Conversion Metrics 101″ about how to calculate the top, three performance metrics for pay-per-click marketing. Although many businesses today are moving in the direction of measuring PPC performance, I am still surprised by the number who doesn’t know their cost per lead or sale, conversion rate or value per visitor.
Pay-per-click marketing is a sales process. In a sales process, numbers drive decisions. In a competitive pay-per-click environment, knowing your numbers enables you to make “go” and “no go” decisions quickly and keeps you on track financially.
During initial client engagements, I ask what a favorable cost per lead or sale is in order to build the PPC campaigns around quantitative metrics. Many times, clients have no metrics. Which is O.K. because then the first few months of our engagement are spent gathering data to define those metrics before establishing any engagement success criteria It’s tough to know if a campaign is winning or losing if there isn’t any metrics to compare against, right?
More importantly than just engagement success; how do you know if financially you’re growing and achieving your business objectives if you don’t know how much margin you are achieving per sale with marketing costs factored in? It’s great to assume that you generated $10,000 in sales from pay-per-click marketing but to later figure out that you spent $9,500 in PPC click costs is another story. Unless of course you are working from the angle of a lifetime value per buyer where lifetime revenue is far greater than the first-time acquisition cost. In that case, you’re ahead of the game - congratulations!
If you want to get a handle on your pay-per-click marketing and mange it as a part of your sales process, you need to connect the dots using performance metrics.
Posted on May 15, 2007
