Data Driven: Under the Hood
Web analytics are notoriously difficult to reconcile with other reporting sources, as well as to comparative Web analytics. So let's explore why this happens and what can be done about it.
This reconciliation is perhaps the most difficult challenge marketers face in making sense of Web analytics. We will look at three of the most important reporting objectives for Web analytics: merchandise, comparison with industry key performance indicators, and social marketing.
More than anything else, merchandise drives the success of a business. In the case of a service offer, the service becomes the "merchandise" for reporting purposes.
Reconciliation with marketing costs in the print world, before the Internet, always had "real estate" or square inches to serve as a common foundation for analysis. A product or service took up all or part of a printed offer where the cost of that space was clearly visible.
In today's marketing world, that foundation has become a moving target. Web pages are dynamic and only exist for the person looking at them—in a moment in time, in many cases.
Reconciling this moving merchandise target with some kind of financial evaluation of marketing costs is very difficult. Also, a product or service may be sold through other media, further complicating things. Unfortunately, the reporting practices around this calculation vary with each brand and its e-commerce marketing key indicators, so a best practice has not yet evolved.
At the end of the day, determining how marketing costs can be calculated consistently within your brand objectives will arrive at the solution. It can range from an indexing calculation based on impressions, clicks or purchases, to an analysis of the relationship between merchandise and shopping cart behavior. Marketers must all understand a value that is relevant to each of us with consideration of contribution to overhead and profit after cost of goods sold.
Comparing With Industry Benchmarks
It is important to understand where your performance indicators stand relative to others around you. The trade magazines do a terrific job of reporting the basic benchmarks on an annual basis. In doing so, they also provide metrics with excellent segmentation to help account for various targets, as well as the size and type of business.
The challenge is that trying to reconcile your metric with another business turns out very inaccurate if you look too much under the hood. The reason for this is a combination of two things: 1) the lack of detailed industry standards for any consistent rules around Web analytic key performance indicators, and 2) the seemingly infinite number of ways Web pages can be tagged for reporting.
Take a shopping cart funnel for example: How do we each define when that cart officially starts? The page, or URL, where a cart starts can vary greatly between websites. This means that the number of carts started, which is the key element to any cart KPI, varies greatly and can alter the reporting between two shopping cart funnels. This being the case, trying to compare conversions or abandonments between two different starting points makes the reporting value of the exercise directional only.
This objective of "directional value" is the solution to the challenges of comparing your analytic indicators with other businesses. The value is making sure your KPIs are changing the same way and scope as the industry. Most importantly, compare to your own benchmarks on a weekly or monthly basis. If you can improve each period, then only success will come your way.
With the rapid pace of new social media entering the marketplace, this is a third very difficult challenge marketers are facing. How can we reconcile the value of new media when most of us have yet to monetize it and minimal industry practices have evolved for testing?
For example, the fairly recent expansion into action codes such as QR Codes and watermarks is just now becoming available to use for comparison. Key performance indicators around Pinterest and tablets are only now even being tested. Reconciliation of the metrics around these new media and marketing tools with the rest of our tried and true marketing tool chest has to wait until more testing and data is available for more of us.
The solution here is part testing and part leap of faith. The importance of consumers communicating with each other is real and here to stay. Thus, the new social media that represent all of this chatter must be tested aggressively and new reporting views and KPIs established. The leap of faith is about trusting that our human nature of wanting to know what each other thinks and is doing will become the marketing standard of the future.
Finally, I can't resist a quick word about reconciling Web analytic reporting of promotional sources with the P&L statement. Using Web analytics to determine a promotional source that can be credited for generating a sale or lead is a very difficult arena today.
Under that hood, Web analytics excel at providing reference codes without having to ask the customer for information. Reference codes are embedded in so many clicks and cookies that rules must be established to standardize the reporting of all this click behavior and make sense of customer behavior. It is precisely these rules that help reconcile the key performance indicators for Web analytics with the marketing budgets.
The challenges of allocation and attribution are beyond the scope of this article and have been discussed in earlier columns. What is relevant here is that reconciliation of Web analytics with other reporting practices is a process and will always need to be revisited on an ongoing basis.yy
Geoff Wolf is executive vice president of client strategy at the Mission, Kan. direct marketing agency J. Schmid & Associates. Reach him at firstname.lastname@example.org.