Decoding Advertising Metrics

Naveen Kukreja
Naveen is the CMO of PolicyBazaar.com

Advertising is one of the key facets of a business, particularly for online set-ups. This vertical which is currently valued at Rs. 5000 crore, is made up of various crucial components, the most important being – ‘traffic’ (number of visitors to a particular page or link) For example, a single visit to an average web site might generate 3 Page ‘Views’ and 45 ‘Hits’. These figures effectively translate into the web page’s ‘traffic’. This phenomenon follows the trail of the proverbial chicken and egg story. What comes first on a site? Paid Traffic or Free/Brand Traffic? Now for brands like Amazon, gathering traffic is a cinch, whereas a new name surfacing in the industry would most likely require a major push through pumping of funds in order for traffic to come in.

Another fundamental constituent for advertising is the actual scale your business plans to achieve in the foreseeable future. The segment your business aims to extend its services to, along with the category of products your business intends to cater also play a vital role. The more generic the product, the larger is your scope for being able to advertise for it and eventually acquire traffic.

Marketers need to keep a track of traffic and leads. There are gamuts of metrics available to work with to get these in place.

A start-up also needs to take into consideration the privacy of its advertising content. Safeguarding its interests (by working on a more down the funnel metric – CPL, CPA, etc) where the deliverer of the advertisement would want to work on upfront metrics (CPM, CPC, etc). It is only rational that both ends would want to maximize their returns while safeguarding against the downsides.

Online advertising can be seen with two entirely opposing standpoints; one where you look at it as being exclusively performance based advertising and second where you are willing to pass off some portion of the spend as ‘Brand Spend’. What it essentially does is that it allows the online marketer to reduce perceived performance inefficiencies.

Furthermore attribution is probably the core behind its ROI. If a business fails to measure the ‘halo effect’ of spending its budget on advertising, then the resultant downstream measurement will fail in its accuracy. Understanding what works best as a channel for your advertising is pertinent. Will procuring a big bang banner on Youtube draw traffic simply on the particular day or will it remain consistent over a longer period of time, is the key question that calls for an answer. The perceived life cycle value becomes key when justifying higher upfront acquisition costs.

The online advertising industry operates on various models, including Cost per Opens, Cost per sent, Cost per click, Cost per thousand mille, Cost per view, Cost per lead, and Cost per sale amongst others. The onus lies upon the advertiser to take on the performance risk of the inventory for all mentioned models except Cost per lead and Cost per sale wherein it is the responsibility of the deliverer to optimize and bring out optimum performance.

It is important to note however, that there are certain giants which exist in the industry, like Google for whom your business ought to keep aside a major chunk of its advertiser budget. Such presence is bound to give your business the boost it requires.

As a wrap-up, it is crucial to point out that ‘Viral Advertising’ is a constructive model, but unfortunately not every mode of business can pull it off.  A case in reference is recent case study on ‘Gopro adventure video cameras’ which managed to obtain 400Mn+ views on Youtube, leaving a highly positive impact to the brand, particularly considering the fact that meager amount of funds were used up on the creation of these advertisements.

To conclude, it eventually boils down to ROI measurement, understanding where is it that your audience lies, what is affordable for your business and what does your budget graph look like along with the direction in which your individual brand going to drive. As discussed in the article, metrics operate as pivotal tools of brining in innovation, measurement and evaluation. An ideal action plan draw together all of the mentioned strategies and adapt and evolve as per the varying trends and metrics.