In my experience, too many businesses try to take shortcuts when it comes to tracking the return on investment (ROI) of their online advertising campaigns.
By shortcuts I mean trying to equate website traffic or ad positioning or number of ad impressions to campaign success.
Website traffic does not equal sales and revenue. You must track actual sales if you want to measure your return on investment with any ad campaign.
Shortcuts will surely save you time, but in the long run they will waste thousands to tens of thousands of dollars of your ad budget so it’s just not worth the risk to save a few hours.
And this is not just an exaggeration to prove a point…
Example of How Tracking Increased Profit by 50%
In 2011, I personally reviewed several ad campaigns one of our clients thought were running smoothly. And, as a whole, their campaigns were profitable. But once we added some basic tracking we revealed that one campaign was actually LOSING $1,655 per month.
That’s $19,866 per year down the drain just because there was previously no way to measure the ROI. Once we installed tracking, this business was able to instantly cut the losses and reinvest the saved money into more profitable campaigns.
So rather than blindly lose $1,655 per month in one campaign — and generate an overall profit of $8,000/mo — this company reallocated their ad budget, and now generates a monthly profit of about $12,000.
That is a 50% increase in profit, virtually overnight, thanks to tracking. Once they had tracking in place, all they had to do was cut the losing ad campaign and reinvest more money in the profitable campaigns.
Pretty impressive stats from something so simple as tracking, right?
Well, many business owners don’t think tracking is simple. They think it’s difficult and complicated, so they don’t set up proper tracking… and they miss out on big profits.
So in this post, I want to demystify tracking for you… and provide you with a quick overview of our approach to tracking, which I call 360 Degree Tracking.
What is 360 Degree Tracking?
Below is a diagram to illustrate 360 Degree Tracking for an online Search advertising campaign. This example is for a campaign where the transaction occurs online (i.e. eCommerce, online reservations/appointments, etc.) but the concepts can be applied for offline sales as well (i.e. phone calls and in-person sales).
Everything starts with the prospect searching in Google (#1) and in this example, the search is for a “New York City Dentist.”
The prospect then clicks on your ad (#2) and eventually visits your landing page (#3). The landing page is the webpage the prospect “lands” on after clicking on your ad.
In our example, the prospect then completes a web form to make an appointment. Next, she immediately visits the “thank you” page (#4) that confirms the appointment was set. This “thank you” page has tracking code that sends all of the advertising information to your tracking program.
(See How to Track Online Advertising ROI for Offline Sales for more info about tracking sales that do NOT occur online)
The tracking program (#5) receives the information, which includes the exact keyword the prospect originally typed into Google in step #1.
I realize I went through those points pretty quickly…
The main point I want to stress is that 360 Degree Tracking closes the loop from keyword to ad to sale, so you get all the information you need to calculate your ROI for each keyword in your ad campaign.
How To Use Tracking To Increase Your Profits
By installing this kind of closed-loop tracking for my client, we were able to increase profits by 50%, almost overnight.
There are 3 steps to use 360 Degree Tracking to improve your online advertising campaigns:
- Document the sales process from ad to landing page to actual sale
- Set up online and offline tracking to calculate prospects, sales, and earnings per click, or EPC, which is the revenue per click on your ad. Your EPC tells you how much you can spend per click, which is a critical metric if you want to optimize your ad campaign.
- Monitor your EPC and either increase bids if the keyword is profitable or decrease bids if the keyword is unprofitable.
That’s it. Once you have the tracking in place, then managing your campaign becomes much easier.
Tracking is just 1 step to building a profitable ad campaign, but it’s a critically important step. All of the advertising tips and tricks in the world will not help you if you fail to track your key metrics.
Want All of My Best Google AdWords Tips?
If you found this article helpful, you may be interested in our upcoming Google AdWords course, AdWords Success Formula.
In the course, I provide step-by-step video training for all 10 steps to create a profitable Google AdWords campaign. I’ll show you exactly how to set up tracking based on your specific type of business, and give you recommendations on various tracking tools.
If you’d like to be the first to know when it’s available, sign up for our priority notification list.
In the meantime, for more advice on how to profitably advertise in Google AdWords, check out our free report:
“10 Steps to Dominate Google AdWords” <— click here