Figuring out this precious ratio of Return-On-Investment (ROI) is precisely the question that has the entire internet community in a fix today. The ROI formulas take into account factors to estimate the relative value of different segments of customers and the costs of various forms of marketing. Their basis is data gathered from various sources, including the online marketing. But often these are complicated and have to be tailor-made for each organization.

There are two basic approaches to measure the effectiveness of a website. The first is the one which can measure the viewership and the second is the one which can measure the performance of the site in terms of generating revenues. One leads to another and they both have to work together to create a winning combination.

Traditional net tools used to measure viewership include - hits - number of times each item is clicked or hit on the webpage including images, Page Views - measures the volume of traffic to the site, i.e. number of pages viewed on the site, Visits - that is the number of times each unique, i.e. individual visitor visits the site, and Registered users - who have registered themselves, giving some personal information and details.

The above tools help measure the traffic to the site. The data on viewership has to then be further analyzed to figure out the Attitudinal data - measures the mind (what people think and how they feel) and the behavioral data -measures the computer mouse (where people click, what navigation path they make on a web site, what they have been exposed to). By combining attitudinal and behavioral data, one can understand what people do online as well as why they do it. These two types of data complement each other and provide companies a method to evaluate their online marketing.

Then come the tools which help measure the effectiveness of the advertising placed on the website. Here , "click-through" has been the primary measure of website effectiveness. "Click through" means tallying the total number of clicks or hits per page (also referred to as traffic) or visits to the Website. Most banners receive 0.5% to 2% click throughs or visitors to a website. This means that for 1,000 impressions, you will receive 5 to 20 visitors, for a cost of $10.00 to $2.50 per visitor if you have put up the banner for $50. This tool of measurement is similar to the print media’s tool of cost per thousand (CPM) as a formula for cost breakdown or the broadcast media’s cost per ratings point (CPRP).

A more focused tool is the cost per lead, which is the cost of the advertising divided by the number of leads or queries generated. A more refined version of the same is the Costs per Visitor/Action which is estimated by taking into account all advertising and marketing expenses for the year divided by the number actions taken by the visitors. This is also called the conversion rate. It measures the number of visitors who come to a particular site within a particular period divided into the number of visitors who take action there--for example, make a purchase or register. As the conversion rate goes up, revenue rises while marketing costs as a percentage of sales fall.

So driving conversion rates should be a logical step to the ultimate goal of driving the cost of sale, i.e.- the total cost of advertising divided by the number of sales generated from the advertising.

In order to drive conversion rates, the website should take into account that it has a friendly user interface i.e. easy-to-use site, does not need a rocket scientist to figure out how to order or register etc. It should be high on performance in terms of time and accuracy. It should have convenient features for enabling the transaction to go through like a one-click service, where a user just presses one button to order. It should have effective advertising i.e. ads that placed after properly identifying and researching the customers will inspire purchases. And finally sites which integrate the above content, research and technical parameters successfully will boast of word of mouth advertising which will enhance conversion rates.

But as is with all tools of marketing, the bid to conversion rates should be done after taking into account an effective and well researched method of monitoring or measuring conversion rates. For example conversion rates maybe seasonal, i.e. conversion during festivals or holidays is higher etc. Also new customers tend to be low, while returning customers show a higher conversion rate. And lastly cost cutting is not a way of driving conversion.

In a world where viewers are now being paid to watch ads on the net, it is important that tools of net effectiveness are used so as to fine tune the content and services offered so that the targeted "eyeballs" become "buyballs".

Aru Srivastava