Search Engine Marketing & Web Analytics
with Engine Ready CEO, Jamie Smith

  Interview Recorded: June 23, 2006 Segment 1; Segment 2; Segment 3

Getting Started with Web Analytic Reports
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After successfully installing web analytics and collecting a data sample, what reports should I focus on? 90% of the time you spend reading reports will be on the same 4-5 reports. (Visitors, Conversion rate, campaign summary, demographics).

Cost per Acquisition: The Driving Metric for Search Engine Marketing
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How to use web analytics to calculate conversion rates, CPA (cost per acquisition) and ROAS (return on advertising spend). If possible always use ROAS to measure results. A brief description of which report in Conversion Analyst which gives you real time CPA and ROAS metrics.

Search Engine Marketing & Web Analytics
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DescriUsing web analytics to improve online marketing campaigns. The key to successful search engine marketing is creative, continuity, conversion and optimization.ption

Summary

Search Engine Marketing & Web Analytics
with Engine Ready CEO, Jamie Smith

On the Friday June 23rd edition of the eMarketing talk show, Cindy and Todd discussed analytics and search engine marketing with Jamie Smith, the Chairman and CEO of an analytics company called Engine Ready.

Jamie has been in the Internet business almost since the beginning. Back in 1995, he was building and selling websites. As a result, he has a lot of experience in Internet marketing. Today, analytics are becoming more and more important in the search marketing world as a growing number of people understand the importance of search marketing in general and what search engine optimization and pay-per-click and sponsored listings etc are. As usual, in this industry everything changes rapidly. When Google offered their free analytics, the analytics industry was shaken up and wondered what the catch was. In this edition, we find out how the Web analytics industry is adapting, the latest services offered and why a number of people still opt for paid analytics versus Goggle’s free analytics reports.

Getting Started with Web Analytic Reports

Why would somebody use paid versus free using Google analytics?

Early 2005, Google bought a local San Diego company called “Urchin” and incorporated analytics into their business model. When they announced that they were going to offer competitive and good analytics reporting for free, the industry was obviously shaken up. There is some good data in the Google analytics reports including the typical visitor path analysis and referring URLs. Apart from this Google also maintains the standalone version that you need to pay for.

How did the analytics companies react to Google’s move?

Coremetrics, Omniture, Web Site Story and the rest stood very strong and said “well, this is just basic analytics and we’re enterprise analytics and this won’t affect our business model”. If you use the free Google analytics and get the reports you are looking for in the free version, Jamie recommends people to try it. “Oftentimes there are a couple of customers who leave us and go and try Google analytics. Then, just because of comfort and the way we report they come back to us.” The great advantage that companies such as Engine Ready offer is that the entire process is managed and Jamie says “we have a relationship with the customer”.

Google is more suitable for an independent person such as a webmaster who doesn’t need tech support and doesn’t need to talk to anybody. Webmasters usually prefer to sit in front of their computer and manage their keyword campaigns. One of the things lacking in the free Google analytics is the cost retrieval and revenue retrieval. So even though they give you your breakdown of your cost in Google, they don’t bring in your cost for pay-per-click from Yahoo and MSN.

In addition to your revenue, one of the big things Engine Ready emphasizes is to make sure you track cost-per-acquisition (CPA) or return-on-advertising-spend (ROAS). If you are not passing in the revenue of each transaction then you are not able to track that within free Google analytics.

However, if you switch over to the e-commerce mode in the free Google Analytics and every time somebody buys something, you provide the information of what they bought, the price, the tax etc, Google analytics will tell you which keywords were effective and how much in sales those keywords brought to you. However, once again it will not bring over the Yahoo or MSN data you need.

As a result, the free analytics tool only helps people to manage their Google accounts and not their entire online marketing campaign. When you are managing multiple engines it becomes frustrating because you end up popping in and out of Google and logging back into MSN and/or Yahoo. In addition, you will need to get all the analytics separately. Engine Ready just focuses on a centralized report which can give you all that data in one interface with the added benefit of management services.

Obviously, in a free version they can’t give you every little detail. As a result, the type of analytics you opt for really depends on how in-depth you want your reporting to be. Search marketing is always changing. MSN pay-per-click program is breaking away from Yahoo and they’ve developed their own now program now. AOL is focusing on pay-per-call. Hence, the analytics companies have to keep updating their software. As Jamie says, “it adds to your frustration but it also adds to opportunity. We need to change every time there is a major change.” This gives the analytics companies the opportunity to create updates and keep in touch with their clients.

Engine Ready is observing the industry’s convergence and consolidation into a sort of unified marketing platform. They are not only seeing it in the Search Engines but also in the analytics business where they are seeing Omniture and Web Site Story invest heavily into the bid management component. This centralizing of the marketing platform seems to be the unified message and Jamie agrees with this model.

Initially, we just needed to manage two main accounts i.e. Yahoo Search Marketing and Google AdWords. Now we need to manage three accounts and possibly four if you are doing any B2B or shopping portal. This has resulted in managing campaigns becoming a full time job. This is good for the industry because it is increasing demand for that type of employment as well.

Currently, Engine Ready is integrating bid management program with Conversion Analyst. According to Jamie, “we are trying to adapt and encourage this transition to a unified marketing platform with a different approach and a unique technology that will improve results for people.”

Users mostly focus on the marketing campaign reports provided by Engine Ready. A webmaster will look at visitor information, what is the screen resolution or the browser being used as well as other data for the Web guy. Other things to look at are search terms, pages that don’t work, exit pages and bounce rates. The Visitor Report shows the webmaster all sorts of information about who the people who visit your site are, where they came from, how they navigated through your site, the time of the day, demographics etc. Then there is your conversion rate. Is your conversion rate 1% or is it 10%? How are you using that as a baseline to measure your different market initiatives to see what is converting better?

Regarding whether or not there a standard or benchmark for conversion rate, Jamie explained that starting from the top level and after taking out the verticals you can break it down into ecommerce and lead generation.

“What we found with our own research in addition to what has been published is that an ecommerce site as a whole should average about 1.25 % conversion rate. This is your base line. A specific niche industry or a very expensive product has a lower conversion rate, but as a whole you can start off and say “here we go. I’m turning my marketing on. Let’s see if we are above or below 1.25%.” For lead generation, the benchmark is about 5-6% because obviously the clients do not need to break out their credit card or enter a secure environment. Since it is just name information or contact information, it tends to be a higher conversion.

Before the Internet, in marketing the average conversion was 1%. In the beginning, the Internet was the “do all be all new age of marketing”. Now, as it evolves and more money is being invested into it and it’s being tracked, it is becoming a serious platform for marketing. As a result, the statistics are starting to fall in line with the traditional marketing ones e.g. a mailer being a 1-3 conversion rate. Finally, we are seeing Web conversion rates starting to fall in to that same line.

Selling your products on the Web can be cheaper if you have a good website developer. In addition, you can track better. In search marketing you are dealing with a reactive type of marketing where the consumers are searching for you and you are not pushing something in their face. You’re saying “here is an opportunity for you to possibly find what you are looking for”. It’s a much more passive way of marketing that produces better results and has a better ROI (Return on Investment).

Many people wonder about how the analytics programs tie into the different channel reports. One analytics program might give different numbers compared to the Google interface and Yahoo interface (e.g. Google statistics and cost and conversion does not match up with my Web analytics). This may be because of the 30 day cookie versus maybe a lifetime cookie, cookies being deleted and the IP addresses being dynamic.

When you click on a listing, it goes to the accounting department of your analytics company. They bill your account and then you are redirected and you finally reach the website. Once you reach there, the tracking stream for the Web analytic begins and the Web analytic technology has started. It takes a fraction of a second to land on the website after you have clicked, and during this tiny amount of time, certain data can be lost which may also cause the discrepancy between the analytics programs report and the Google report.

In addition, you have the channel of entry. The consumer may have clicked on a pay-per-click ad to get to your site the first time, but when they came back to your site they may have come back through an e mail (that they had signed up for on your site). So which one gets the credit, the pay-per-click ad that brought them to the website in the first place or the e mail through which they actually purchased the product in the last place.

Do you give credit to the first initiative or the last initiative?

Engine Ready accredits the last keyword you used. However, within the visitor detail you can go back and look at the history, for example, that they originally came to your site when they typed in “shoes”, then, once there, they typed in “blue shoes”. However, they actually bought when they typed in “blue adidas shoes”.

If they came directly to your website the last time when they made a purchase and if they did not delete their cookies and they are coming from the same IP address or one of the other variables is still in place, the sale will be attributed to the keyword that they initially used to come to the website. Hence, when they come back to the site and purchase, Engine Ready recognizes that they actually found your site through a search engine for this particular keyword and attribute the sale to the right keyword and the right marketing. Apart from this, you can also see how long the whole sale cycle took.

Cost per Acquisition: The Driving Metric for Search Engine Marketing

In the second segment, the topics discussed were Web analytics and costs per acquisition i.e. return on ad spend. Engine Ready was one of the first companies to combine Web analytics and search engine marketing, as opposed to just purely doing Web analytics.

Google AdWords, Yahoo and MSN are in a feature war competing for the advertiser. All these search engines are competing to make their services and tools more user friendly. For example, they have added “day parting” which allows you to turn your bids on and off automatically at different times of the day. This helps if you know at one particular time of the day or night you have the greatest audience and at which time you don’t.

Bid management software allows you to automate your bids, raise and lower them and turn them off or on. Initially, this functionality was a product you had to purchase separately whereas now this functionality is part of your MSN and Google AdWords accounts.

Jamie predicted that in the near future the search engines will add tools that will enable you to automate and shoot for CPA goals as well as change your bids on the fly. In fact, you can already do this in Yahoo Search Optimizer.

Day parting is useful because a lot of companies don’t have their sale staff in on the weekend, so the company can either run the ad in pauses on the weekend or not run it at all. Apart from this, a lot of click fraud tends to happen internationally, so many marketers don’t want to run their ads at night. This also serves as a budgeting tool as you can turn your bids off at night and spend more during the day.

Many people are confused about the difference between ROI (Return on Investment) and ROAS (Return on Ad Spend). The main difference between ROI and ROAS is simply this: ROI is dealing with net and ROAS is actually gross. For example, if I spent $1000 on Yahoo and I got $1000 back in sales my ROAS was 100%. However, I didn’t actually net anything, so my ROI would be 0.

On the other hand, if I spent $1000 in Yahoo and I generate $2000 in sales, my ROAS was 200% and I can plot my ROI minus my hard cost, my salaries and overheads. ROAS is simply how much money I got back from sales compared to how much money I spent advertising, but “it does not factor in true net profits.”

Replying to the question of how to calculate cost per acquisition for lead generation versus ecommerce, Jamie explained that with an ecommerce site you have an average sale price. If the average ticket on your website is $100 and your hard cost is $40, you are netting $60 per sale on average. Hence, you can set your CPA goal at $50 and if you generate sales all day long at $50 per sale, you’ll make $10 a pop plus you’ll acquire a customer.

With lead generation, on the other hand, there is actually a sale cycle, so you have to calculate is how many leads does it take to convert to a sale. As a result, you start to get into CRM management, keeping the leads in a data base and tracking the sales cycle.

After tracking for a while, you start to realize that, for example, you end up closing 10% of your leads or 20% of your leads. Once you identify your conversion rate of leads to sales, you still have to do that same calculation with your average sale price and your average net. However, then you can back out and your CPA goal will have to be much lower obviously because since you are generating leads, you need to close one of the leads to get the actual revenue in the sales. You can use you analytics program to help you out with this.

Jamie went on to explain how you track different types of conversions. Typically, with sophisticated sites you have multiple conversion points e.g. you have a sale (which is the best option), you have a white paper they can download, you have a lead which you get by offering the “request a demo” or “request more info” option, and you have a newsletter that consumers can possibly sign up for.

The next thing you know, you have four to five different actions you are tracking and they all have different values or worth to your company. With Engine Ready’s Conversion Analyst program, you can set up multiple action tracking points and then you can set different values for those actions and track them independently. This offers you a huge advantage because with Yahoo or MSN you can only pick one action tracking point.

So multiple action tracking is really important because if you just track one action instead of all, what tends to happen is that you see keywords that are not performing and you eliminate them without realizing that these very keywords happen to be driving your newsletter subscription or the contact form. As a result, you end up decreasing leads that could have ultimately turned into sales.

Multiple action tracking works the same as organic in the analytics portion as well. The way to differentiate whether the source of the sale or lead came from a paid advertising, a pay-per-click listing or an organic free listing is usually from the tracking URL. So inside your Google, Yahoo or MSN account you have created a e.g. “source = msn”, “keyword = world talk radio”.

If the source of the sale or lead came from an organic listing, there would be no query or tracking string, so Conversion Analyst would put it into a search phrase in a search engine sale or lead. However, it obviously is not paid as it came from an organic listing. Anyone that comes from a search engine to your site and doesn’t have a tracking string is dumped into the organic campaign for the natural listings.

In order to determine the CPA or ROAS, marketers refer to the “Marketing Campaign Summary” report if they are using Conversion Analyst. If they are using Google, they will refer to the “Action” report and in the case of Core Metrics they will refer to the “Channel Conversion” report.

Conversion Analyst’s “Campaign Summary” report shows you the different campaigns you are running. It shows you your paid search as a whole, not broken into keywords. This leads to the concept of investment or portfolio management, which Conversion Analyst ranks very highly.

Jamie advises “create portfolios with your campaigns. It is a much better way to manage search marketing. It’s just like investing in the stock market and the way you manage that investment portfolio is that the individual keywords act as individual stocks.”

As a whole your entire marketing budget is your investment portfolio. When you see poorly performing stocks or companies, you sell- i.e. sell when the falling and buy when they are going up. The same philosophy goes into keyword buys, where just as you reinvesting money into top performing companies or take money out of investments that are not performing well, you focus more on top performing keywords and get rid of keywords that are not performing.

You can use this information to improve results by creating a strategy in which you observe how Google is performing compared to Yahoo or MSN. Then ask yourself “Should I invest more money in Google, Yahoo or MSN? Is my target market typically using Yahoo, or are the focusing more on Google or MSN? In most cases, it is a combination. However, you’ll see that ceratin search engines perform better for your industry and your website, so allocate more funds to that search engine.

Next, you have the keywords. At the keyword level, all kinds of optimization can be done within the search engine where, for example, you are focusing on the click through rate which actually can affect your cost per click. You can follow this by focusing on your website, which will improve your conversion rate and lower your bounce rate. The optimization at the top level is more general and has broader swings, whereas the detailed info at the keyword level and the website level can have a greater impact on your bottom line.

The latest buzz in the industry is multi-variable testing. You make changes to your website navigation, content and shopping cart process and then measure the affect these changes have. For example, you can actually really improve your conversion rate if you don’t require visitors to your site to sign up to use the shopping cart or require them to put in a lot of information before they can use the shopping cart. It is turning off. Requiring visitors to creating an account can also be turning off.

Conversion Analyst has an edge over other programs because, as Jamie explains, “In tracking the effect making such changes has on your conversion rate etc; we see a lot of vulnerability in traditional Web analytics. We are building a tool to help with this. When a website changes, as small as it may be, it can have a huge impact on the conversion rate. We need to measure that and accurately pin point what change was made that initiated an increase or decrease in conversion.”

Search Engine Marketing & Web Analytics

In the last segment, we learn how you can use Web analytics to help improve sales and any Internet marketing campaigns.

How can you use analytics to measure when you are testing? Do you make one change or you make a pocketful of changes and measure them all? It is better to make one change at a time so you can actually measure it and see if it has made a difference.

Companies such as Optimost that have produced software and site tuners provide a very powerful tool because it makes you realize that one change on a website turns into 5 or 6 changes that actually go on to turn into millions of combinations and variables. Multi-variable testing is, no doubt, complicated and almost impossible without using a tool.

However, carrying out one test at a time is simple. For example you can test the call to action button by naming one landing page “A” and this other landing page (which has a different call to action) “B” and seeing which leads to more sales. Then you can do two more A/B tests on the short form and the long form and then on the color scheme or navigation.

There are certain changes you can make a site that prove to have a greater impact than others e.g. the bottom navigation and copy right symbol don’t make much of a difference, so you focus on the header, the navigation and color schemes. White text on black background and all blue sites tend not to be so popular.

Hence, test your navigation, images, graphics, color scheme and text and test them one at a time. If a test does not yield any results, it shows that you’ve eliminated a variable so you might not have to test this variable next time.

When marketers make changes dynamically, i.e. for example if you have two different ads for the same product running simultaneously in Google AdWords, it is called pre-click optimization in terms of testing different creatives to improve your click through rate.

A/B and multi-variable testing is post click optimization, i.e. website changes. When you have changes going on in your website e.g. if you have a blue version and a red version of your site available on the Internet, you can use unique pages or set certain parameters to mark them as being separate. Then, when you run Conversion Analyst, you can run a conversion summary report by URL and then you can see which Web page is converting better. So in this way you are in effect creating unique URLs for different variables that you are testing. If all this seems intimidating to you, just start small and make simple changes e.g. test a ‘book now’ button versus a ‘check availability’ button. While doing this, use the analytics programs to your advantage.

Please remember that your analytics program doesn’t know when you made a website change, so every time you make a change you must document it. Conversion Analyst has informed clients in the terms and conditions to let the company if they make Web design changes so that Conversion Analyst can time stamp those changes and look at the report before e.g. January 1st and see what the conversion rate was then and compare it to the current conversion rate after the client has launched a new page or made some Web design changes.

Jamie cautions to watch for things that affect your website traffic like the time of the year e.g. is your business not doing well because it is summer or has it skyrocketed because it is the holiday season? So try and make your changes and do A/B testing at a neutral time of the year when your business is not going to be so up and down.

Note that it is not about the change, it is about the data sample. For example, if you made a change and conversion went up but you only had ten clicks on this new site whereas the old site had 3000 clicks and the conversion was lower, you can’t compare these data samples as they are too different. You have to have almost the same amount of clicks or visits to the two version of your website in order to draw conclusions about which page is converting better.

Engine Ready is also launching a unified marketing platform in the form of a desktop application. Jamie described his goal as being a desire to “create a standard and be the macromedia of search engine marketing”. Engine Ready’s new product called Strategy Studio allows you to manage your campaigns the way you want to and it will just help centralize your campaigns and track it for you in a unified area i.e. a desktop application. It will be customizable e.g. you can set certain parameters. You can ask to be informed if your CPA goes down or your click through rate gets affected.

Strategy Studio will come back to you with such information. Strategy Studio will plug in to the free tracking in the Yahoo, MSN and Google analytics or your Google AdWords account. You won’t have to be a Conversion Analyst user to make use of Strategy Studio. This software has been built for marketers to track marketing campaigns, particularly search marketing campaigns and allows you to pull in the cost data from all the search engines, not just one search engine.

Within one campaign summary report of Strategy Studio you can see what you’ve spent today or this month or this year in all the search engines and how much revenue you generated and then you can drill down to the keywords level. The cost retrieval in addition to what you spent versus what you made differentiates us from other Web analytics software available.

Other reports that are important to look at are Navigation, Demographics and the Last Visitor Detail report. The last visitor detail can help you detect click fraud and this can aid you when attempting to get refunds.

You don’t need to assign some sort of tracking codes to each of your links such as navigation buttons so you can see for example, whether people are clicking on your navigation at the top, left or bottom i.e. where you are getting the best value because Conversion Analyst has a “Path Explorer” plug in that you can download into your browser and you can look at your website just as if you were browsing it. It will show you the percentage of people that clicked on the different links. As a result you will be able to see if the top navigation was clicked on and how many times each button was clicked i.e. the comparative percentages. This is achieved by using the standard Conversion Analyst script you have in there. It is an overlay on top of your website that gives you the percentage of times people clicked on a particular button. You can view screen shots of this technology at www.EngineReady.com, in addition to the Beyond Analytics newsletter that has information on search market analysis.