Web Statistics

Chances are, you have probably came across countless internet marketers cursing and swearing on forums stating that using Pay Per Click (PPC) advertising campaigns to drive traffic is like throwing money into a endless pit.   In fact, nothing could be further away from the truth.  PPC advertising is indeed a double-edged sword,  it works only for those who know how to use it properly & effectively.  It is a skill that needs to be mastered in order to achieve the desired Returns On Investment (ROI) without breaking the bank.

Firstly, we need to set a goal for the ad campaign.  Typical goals of a campaign may include getting that all important sales purchase, requesting subscription to mailing lists, etc.   As an online business owner, you must be clear about the goals you want your campaign to achieve, otherwise you are just shooting from the hip, wasting both time and money.

Secondly, you need to meticulously craft out an attention grabbing, head turning ad sales copy filled with carefully chosen keywords.  In my opinion, this is one of the most difficult and time consuming step.  Fancy squeezing so much detail into a 25 or 35 characters ad space, definitely not an easy task to accomplish.  And in order to write compelling ads that your targeted audience are actively searching for, effective keyword research tools are indispensable for this purpose.

Thirdly, you got to measure and track your ad campaign results.  Unfortunately, this is something most inexperienced advertisers failed to focus their efforts on.  As we are all aware, the effectiveness of any ad campaign is determined by the end result it achieves.  That is why tracking and measuring all your ad campaigns are critical in ensuring the success of your online business.

By tracking and measuring the collected statistics, then can we know how well the campaign is performing and be able to take the necessary actions based on that.  In the realm of quality control, there is a common saying, “If it cannot be measured, it cannot be achieved”.  That is why it is so important as an online business owner to measure the results of all our ad campaigns, otherwise we are just wasting money, period.

Although there are many paid software programs available on the internet that allows us to track the all the necessary web statistics.  Luckily for us, the best tracking and analytical tool on the internet is free, you can download and setup Google Analytics in a jiffy.

Some of the important terminology for tracking and measuring online conversions include the following :

* Return On Investment (ROI)
- It measures the overall returns based on the advertising budget ( ie.  “The Bottom-Line” on how successful the ad campaign was).

* Gross Revenue (GR)
- It refers to the income that a business receives from the sale of its goods and services.

* Total Expenses (TE)
- It measures the total costs associated with managing and running the business or in this case, the ad campaign.

* Net Profits (NP)
- It is calculated by subtracting Total Expenses from Gross Revenue ( ie. GR minus TE ).

* Net Profits Per Sale (NPPS)
- It refers to the ratio of Net Profits to the Total Number Of Sales Made ( ie. NP divided by the No. of sales ).

* Cost Per Click (CPC)
- It refers to the amount of money an advertiser pays for a single click on its ad that sends one visitor to its website.

* Clickthrough Rate (CTR)
- It measures the success of the ad campaign. It is obtained by dividing the number of users who clicked on the ad by the number of times the ad was shown ( ie. if an ad was shown 100 times & only one visitor clicked on it, then the CTR would be 1 percent ).

* Conversion Rate (CR)
- It refers to the ratio of unique visitors who convert from causal viewing into buying customers who made a sales purchase (ie. Unique Visits divided by the No. of sales ).

With these metrics in hand, we can then calculate the most important metric when determining the budget of your ad campaign, namely :

* Maximum Average Bid (MAB) For Your Ad Campaign.
- It refers to the ratio of net profit per sale to the conversion rate (ie. NPPS divided by CR ).
- This is the maximum amount you can afford to pay for each click and not incur a loss.

A word of caution though, it would be somewhat myopic to just focus at some of these numbers and miss the overall big picture.  For example, a high clickthrough rate may seem great but if there are no sales made, you will be just spending money paying for clicks.

Nowadays, in order to get high rankings, many online businesses have to content with excessive bidding for popular keywords, all online business owners got to utilize tight budget control by constantly measuring and tracking their web statistics.

All in all, a properly articulated goal, followed by a well crafted ad campaign and periodic tracking and measurement of the resulting web statistics would complete the pay per click optimization for a typical online ad campaign.

And with an average online conversion rate of only 2%, that is why these statistics are critical to enable us to track and tweak our ad campaigns to get maximum results.