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Online Marketing and Advertising Metrics

Wednesday, December 01, 2010

Online marketing and advertising is a strategy every business owner should be using to improve the bottom line and generate more business. Below are three key metrics to use for gauging your online marketing and advertising efforts and effect.

Cost Per Lead (CPL) is the cost of bringing a lead to your business. Leads can come from a variety of generation methods, including: opting-in to your email list on your website, calling your office, filling out your online form, purchasing a product, et cetera. Generating these leads cost you something. For example, the cost of maintaining your website, the cost of getting your phone number in front of the customer, the cost of your online marketing and so on. Measuring your cost per lead is very important.

Cost Per Lead = Cost from Marketing Effort ÷ Number of Qualified Leads Generated

Cost Per Acquisition (CPA) expresses the cost of actually acquiring a new customer. It's important to measure your CPA because spending dollars on online advertising and marketing that isn't converting leads into new customers for your business is a waste of time, money and effort.

Cost Per Acquisition = Revenue from your Marketing Effort ÷ Cost from Marketing Effort

Return On Investment (ROI) is the rate at which you recover your investment on online advertising. You ROI determines whether your local online advertising is working (or not). If you spend $500 a month with online advertising, you want--at least--$500 coming back to your business. Otherwise, again, you're wasting time, money and effort.

Return on Investment = Revenue from Marketing Effort - Cost from Marketing Effort ÷ Cost from Marketing Effort

With any online marketing and advertising strategy, analyzing these three metrics is integral to your online marketing success. ROI is the most important metric... are you getting your money back? CPL and CPA are also very important. Also, it's important to note, often times acquiring a new customer (CPA) takes a long amount of time (some of Bullsprig's clients have lead times greater than one year!). You may have to wait a while before you can determine your CPA. But keep doing it.

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