conversion_analyticsToday, almost all companies use web analytics tools to test and optimize the effectiveness of online marketing budgets - especially since it seems to be the only marketing discipline that provides almost total transparency. Marketers simply love the fact that digital marketing can be easily measured, which is most probably the ultimate driving force for the steep growth of the just 15 year old marketing discipline.

Search engine marketing (SEM) benefits most from the fact of being accurately measurable, since it allows marketers to determine which search engine or keywords perform the desired action, to mention one of many possibilities. However, there still are flaws and mistakes in the way campaign optimization is measured today, and the conclusions drawn need to be partly corrected.

Last Click – The incorrect allocation model

Almost all current web analytic tools assign the success of a campaign to the "last click", which means that the conversion is allocated to the most recently delivered advertising material. That’s just an assignment model but does not represent the reality and complexity of the purchase decision process, as an assessment of the effectiveness of online marketing campaigns on this classification has fundamental systemic errors.

The typical booking of a holiday trip on the Internet includes, for example, on average, twelve different searches and around 21 different travel sites are generally checked out. It usually takes about four weeks from the first search query to the final booking. Thus, from the perspective of search engine marketing, such a purchase decision process can be divided into three phases: the informational search, that often starts with general terms such as, for example, beach holiday or similar queries; followed by the transactional search, that is looking specifically for a holiday and leisure hotel; and often only several days later - after consultation with the family and checking of flight schedules  - there is another query, the so-called navigational search.

In the last phase, the purchase decision process is already finalized, and the web site is visited again just to complete the transaction. Still, the current allocation model considers the "last click" or "last ad" and assigns the conversion just to the search with the brand-keyword. This actually means that although we have measured correctly, the result is simply wrong, stating that brand-keywords convert best and the other eleven keywords do not contribute at all to the average purchase decision process.

A better approach: Path-to-conversion

It makes much more sense to detect the path to conversion with consolidated tracking of all online marketing efforts. This way the influence of the different phases on SEM becomes clear, as well as the impact of other online advertising activities such as display or affiliate marketing on the conversion.

Consolidated tracking will measure, document and identify the advertising media

involved in the purchase decision process. An analysis could thus depict, for example: a significant proportion of conversion results from a banner which followed an advertising contact which in turn resulted from various search queries and the brand keyword, ultimately forming the "last ad" in the entire path to conversion.

Just optimizing CPO is not sufficient

We know this from daily practice: We measure "last ad" effects every time we massively optimize a campaign just on the keywords with the least amount of CPO (cost-per-order) - without considering the path-to-conversion. Although this way the best ROAS (Return on Advertising-spending) is obtained, the amount of conversions decreases significantly.

Knowledge of these interactions allows us to launch better and more profitable campaigns, but also makes us realize that we are still at the beginning of a new marketing era. We love to embrace the challenges online marketing is holding for us and enjoyed the ride in the past 15 years. Nowadays, we are more keen than ever to understand the smaller details that often determine success, such as how the different channels influence each other.

This also refers to the interactions between online and offline advertising as well. Offline advertising induces online search queries and the ROPO effect (Research-Online-Purchase-Offline) which should be familiar by now. Not to mention that advertising on TV and other offline media is most effective when it is backed up by excellent search engine marketing.

The still popular concept of "last ad" measurement is actually wrong and needs urgent revision, as it is neither depicting the complete path-to-conversion from online advertising channels, nor the impact of off-line channels such as TV, radio and even print.

It remains important to understand which advertising channels and media influence the purchasing decisions, in which way, and how it all comes together to initiate the actual impulse to buy.

By Daniela La Marca