Mo Analytics, Mo Problems — other than a terrible use of the great Notorious B.I.G. song, this phrase accurately reflects how marketers feel about their analytics. If marketers aren’t versed in the finer details of the different metrics, they can easily draw the wrong conclusions with their on-page optimization and reporting.
1. Thinking Greater Time On Page Equates To A More Engaged Customer
Average time on a page is a core metric to assess your page performance in many analytics platforms.
However, marketers often incorrectly assume that it’s a good measure for customer engagement because more is always better, right? However, what if the average time on a page is high because the customer can’t find what he or she is looking for?
Marketers need to understand the goal of each individual page. For example, the goal of a sign-up form should be to quickly convert the customer, meaning a lower average time on page is potentially better.
Therefore, a better metric to optimize your page around is bounce rate, which measures the percentage of customers who leave a page if it’s the only page they visit. This metric properly accounts for both intent to view a page and if the page satisfies the viewer’s needs.
2. Thinking Return On Investment (ROI) Is Always The Best Measure Of Marketing Effectiveness
Return on Investment (ROI — calculated as the profitability of a marketing activity divided by its cost) is a popular metric among marketers to calculate marketing performance. However, ROI often does not account for the time it takes to recoup your marketing spend. When time is not accounted for in comparing two projects, it can be misleading.
For example, which is the better investment?
- Choice A: Spending $50 now to create additional blog content that will generate $100 in profitability in one year — 100% ROI
- Choice B: Spending $50 now to secure product placement in a movie that will generate $110 in profitability in three years — 120% ROI
In some situations, Choice A is the prudent choice because profits generated could be further reinvested in other projects, potentially generating more profits than Choice B.
To account for time, pair ROI with Payback Period, defined as the time required to recoup your marketing spend. Using our above example:
- Choice A’s Payback Period is 1 year
- Choice B’s Payback Period is 3 years
Another suggestion is to use Net Present Value (NPV), which calculates marketing performance similar to ROI, but also accounts for the time value of money. That is, the value of $1 today is more than the value of $1 a year from now. NPV accounts for this by discounting future cash flows by an appropriate rate. The discount rate is typically the percentage return you could receive on other marketing investments, also known as the opportunity cost of capital. NPV is calculated as:
- (Initial Investment + (Year 1 Profitability) / (1 + Discount Rate)^1) + (Year 2 Profitability) / (1 + Discount Rate)^2) + (Year 3 Profitability) / (1 + Discount Rate)^3) + …)
Applying a 10% discount rate to our previous example nets:
- Choice A: NPV of $41
- Choice B: NPV of $40
Be careful with your discount rate assumption as it can drastically change the outcome. As a simple rule of thumb, if you’re measuring short-term marketing performance, ROI is better given its simplicity. However, if your marketing activities stretch out over a few years, payback period and NPV are better.
3. Incorrectly Thinking That Word Of Mouth Traffic Or Other Traffic Equals Organic Traffic
Upon reviewing which keywords visitors used to find you organically on search engines, you’ll likely notice many of them are associated with your brand. For example, HubSpot’s detailed Organic Traffic analytics looks like this:
While visitors did find you via an organic search, that’s not necessarily how they first heard about you. These visitors could represent word of mouth traffic — individuals referred from a current customer or follower of your company.
The second potential issue is that your analytics platform displays last-touch attribution, the last medium the visitor used before he or she converted to a lead. Leads typically visit your site multiple times and through different sources before converting. This means that last-touch attribution masks the original and potentially most important source that generated the lead. Analytics platforms such as HubSpot and KissMetrics provide first-touch and last-touch attribution.
Finally, the keyword could represent a visitor who originally found you through social media or a paid advertisement campaign but that insight was lost because the tracking cookie expired or a different computer was used.
This nuance could mean that you’re overstating your return from SEO activities and correspondingly not understating your return from other online marketing activities.
As marketers, it can be easy to think that more analytics are always better. To draw valuable insights from your marketing analytics, pay close attention to what each metric is really telling you and dig deeper into why that metric is important and what might have caused it.
As you make your marketing decisions, think about what your goals are – whether it’s tied to how you want prospects to engage with you, your overall marketing ROI, or traffic to your site. Understanding which metrics can best help you appropriately identify issues and future strategies will prevent you from getting bogged down with marketing data.
Opinions expressed in the article are those of the guest author and not necessarily Marketing Land.