Return on Intelligence
By Jim Gilbert
Dear Dr. pROfIt
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The More Things Change, the More They Stay the Same
The more I study online marketing, the more I'm struck by the parallels to direct mail. Take this example: The other day in a client meeting we were discussing the different clickthrough rates (response rates) to various online marketing activities (lists).
This particular client was generating Web traffic from search engine marketing (i.e., organic search), pay per click (PPC), direct entry from mailings, and previous customers and links. It was realizing that it had potential to expand each of these traffic sources (prospect lists), and each delivered a higher or lower clickthrough and conversion to order rates.
Furthermore, each source produced a different average order value and brought in new customers at a different rate, each with different one-, two- and three-year values. I couldn't help but think that the discussion, which centered around which activities (lists) to invest in (mail deeper) and how to evaluate the incremental spend on each activity (testing plan), related back to the mailing of catalogs.
Ultimately, a spreadsheet was built that looked something like this (click on the image at the bottom of the page). Again, it started to look very much like a detailed circulation plan. Here are the five categories/activities that we decided to track:
- Investments in search engine optimization/search engine marketing result in your site containing more keywords that drive increased search results and higher rankings. This provides lots of opportunity to increase traffic, but also lower conversion to order rates, average order values and lifetime values.
- Investments in PPC provide slightly better economics than organic search and are more controllable.
- E-mail … better still.
- Direct entry - prospect. This is driven by prospect mail.
- Direct entry - customer. And this is driven by customer mail or repeat buying activity — the best traffic you can get!
Given the brevity of this synopsis, I'm sure it'll generate more questions than answers for most. Questions are good. But take with you this final thought: The proven disciplines of planning circ activities/tests, then isolating and measuring the immediate results, remain relevant to your businesses no matter how new the technologies are.
Terence Jukes is president of Ability Commerce, a 140-person firm that designs, builds and runs e-commerce and related marketing programs for catalog companies. He can be reached at TerryJ@AbilityCommerce.com.
