Determine your business goals
What is your purpose?
Determining your purpose is something that may take a whole lifetime. Determining your business’s purpose should take significantly less time. A purpose statement helps you keep your focus on the customer and how your product or service is meeting their needs. Everyone in your organization should be able to speak clearly and confidently about the purpose of your business.
The different types of objectives
1.Business objective: A broad, top-level goal for your company. This goal typically focuses on increasing revenue, profit margin, or volume (for example, units sold). Often, larger companies will create a subgoal for each of their lines of business.
2. Marketing objectives: These support the business objective. Some smaller companies may not have the scale to warrant this level of specificity.
3. Media objectives: This refers to the goals for each channel that are necessary for meeting your marketing objectives (for example, the goal of your YouTube campaign).
4. Campaign metrics: These are the individual metrics you use to measure the success of your media objectives.
How to make more money
If you want to increase your profits, there are only two ways to do it: lower your costs or increase your revenue. If you want to increase your revenue, you can either increase your price or increase your volume. What’s volume? Depending on the type of business, volume can mean units sold, capacity, leads, or something else.
Business strategies
Margin, revenue, and volume represent the ways most businesses think about their financials (although reducing cost is also very important). Which one works best for you?
1. Improve margin or profit: This is great for companies looking to reduce costs and increase revenue. There’s usually a trade-off, though. For example, some investments to reduce cost may not pay out for a few years, making the company less money in the short term, even though it’ll be very profitable in the long term. Typically, established companies or those with smaller profit margins, like retail companies, prioritize this.
2. Grow revenue: Companies often grow their revenue by either trying to increase the total number of sales at the same price or increasing the price — that is, revenue could go up, even if total sales don’t.
3. Increase volume: Companies who wish to increase volume will either decrease price to drive more sales or use various tactics to drive more demand. However, this might mean being less profitable in the short term.
Strategic objectives
We’ve been focusing on financial objectives so far, but many companies also use strategic objectives at this top level, which outline how they’ll achieve their financial objectives.
It’s difficult to acquire new customers if consumers aren’t aware of your brand or don’t have a favorable opinion of it. This also makes it challenging to keep existing customers. Therefore, branding is really important for the company's ability to grow sales in the long term. Which brings us to long-term vs. short-term thinking…
Short-term vs. long-term thinking
In order for your business to prosper, you’ll need to be able to make money today, as well as in the future. You need to balance your short-term and long-term goals.
Just remember, every short-term decision needs to work toward achieving a long-term goal as well.
What’s a reasonable growth target?
How should marketers go about setting growth targets? This depends predominantly on your maturity in the market you compete in. If you're a mature company, growth is likely to be modest, as there is increasingly less room for you to grow. This isn’t necessarily bad. Low single-digit growth for a large brand may translate into more dollars than a double-digit growth for a small brand. On the other hand, a less-established company could reasonably aim for more ambitious growth. Just be mindful of diminishing returns, and understand how far you can push your growth ambitions.
When deciding which marketing return on investment (ROI) target to aim for, a higher ROI may not always be the best choice. In order to achieve your growth targets, you may choose to invest profit margin into faster customer growth.
Sometimes the right target is the one that keeps your company in business. That’s OK, too!
Revisiting your business objectives
1. Profit: Marketing requires an investment, and any investment is initially classified as a cost, which reduces profit. However, well-managed marketing drives sales, with results in revenue and profit.
2. Revenue: A company can increase their sales by acquiring new customers or increasing how much existing customers spend.
3. Volume: Companies who wish to increase volume need to either decrease cost to drive more sales or use various tactics to drive more demand.
In all of the above situations, we’re talking about getting customers to buy something. That means you need to place yourself in the consumer’s path to purchase (also referred to as the marketing funnel or customer journey), where you can influence their buying decision.
Long-term thinking alert!
In order to be able to convert prospective buyers into customers in the future, you need to build brand awareness and positive perceptions today. Brand strength is commonly measured by brand “trackers” that survey people who match the profile of a desired customer and ask them a range of questions, such as:
- Are you aware of a particular brand?
- Which brand in the category do you prefer?
- What associations come to mind when you think about a particular brand?
Behold the customer journey
The core function of marketing is to connect the right people to the right product by surfacing the right messages at the right time. This essentially boils down to following a potential customer on their path to purchase and communicating the right ideas based on their interests.
- Make sure people see that your business, product, or service exists.
- Lead people to think about or show interest in your brand.
- Get people to do something, like make a purchase.
- Make people care enough to purchase more or advocate for your business.
One objective at a time
It's a best practice to choose one objective for each stage of the customer journey. Each stage aims for a specific expected outcome. Also, choosing a single objective provides clarity in determining whether a campaign succeeded or failed. If there are two objectives and one of them showed a strong result and the other one did not, there may be confusion in judging the overall performance of your advertising.
Below is a list of metrics you might use to create your marketing objectives:
What if an objective is not measurable?
Occasionally, an ideal objective is not measurable. This could be because of limitations of the quantity of data available, tracking, or analytics tools. In such cases, the recommended action is to look within available metrics and identify the metric that is most closely linked to your desired objective or has a proven impact on your objective.
Then, you should use this metric as a “proxy” (also known as a proxy KPI) while looking for ways to achieve proper campaign measurement. For example, if it isn't possible to measure a campaign's impact on brand consideration, you might choose as your proxy the increase in searches for the brand name.
What are channels?
Channels are the different ways you can get your marketing message into the world. Some are offline (or traditional) channels, while others are online (or digital), which typically means that the internet is involved. You’ll also hear these referred to as media channels, since they are often categorized by their respective media. Here’s a list of some popular channels:
1. Offline (traditional)
- Television: Can be regional or national
- Radio: Includes podcasts as well
- Outdoor advertising: Like on the side of a bus or a billboard
- Print media: Newspapers, magazines, etc.
2. Online (digital)
- Search engines: Like Google!
- Display: Ads you see on websites and in apps
- Video: Ads like you see on YouTube
- Social media: Like reddit.com
- Email: For example, a newsletter
Creating objective-driven KPIs to measure performance
So, with all of the things you can measure, how do you go about deciding what your objectives should be? The chart below demonstrates a little more clearly how to distinguish between your objectives and your metrics.
Attribution models
When an advertising platform such as Google Ads knows what actions you care about, something magical happens. It automatically starts to recognize the most effective touchpoints that lead to a conversion. There are two ways this can happen: with rules-based attribution and with data-driven attribution.
1. Rules-based attribution: Rules-based models apply static logic to assign a value to each touchpoint in a conversion path. These values are based on the relative importance of that step of the process. For example, a rules-based model may assign some value to the first interaction that introduces a customer to a brand, but assign a higher value to the final interaction that leads to the purchase.
- Last interaction: The last touchpoint receives 100% of the credit for the conversion.
- First click: The first touchpoint receives 100% of the credit for the conversion.
- Position-based: 40% credit is assigned to both the first and last interaction, and the remaining 20% credit is distributed evenly to the middle interactions.
- Time-decay: A multi-touch model that gives more credit to the touchpoints closest to the conversion.
- Linear: Credit is distributed evenly to every single touch in the buyer journey.
- Digital-driven attribution: Machine learning determines the best way to distribute credit for your conversions.
2. Data-driven attribution: Data-driven attribution (DDA) is the most advanced model in Google's attribution products. A data-driven model algorithmically evaluates individual customer paths. Credit is then dynamically attributed to each touchpoint according to its impact on the conversion. An advantage of this model is that attribution logic includes converting and non-converting paths, whereas rules-based models only take converting paths into account.
Valuing media channels beyond attribution
1. Media channels and sales channels
In order to prove that your media is driving your sales, you need to design an appropriate "measurement approach." There are several measurement tools a marketer can use for this. To do it properly, you should take into consideration both your media channels and your sales channels. Let’s take a moment to clarify those terms.
a) Examples of media channels: A media channel is a specific medium that's used to reach an intended audience.
Media channels can be traditional, such as:
- Newspapers
- Radio stations
- Television stations
- Outdoor advertising
Or they can be online:
- Search engines
- Display (ads on websites)
- Video
- Social media
- Email (for example, newsletters)
b) Examples of sales channels: A sales channel is a way of bringing products or services to market so that they can be purchased by consumers.
Examples include:
- Traditional sales (brick-and-mortar stores or retail)
- Online sales (also called eCommerce or eTail)
- Both online and traditional (sometimes called multichannel)
2. Marketing Mix Model
It’s a bit of a buzzword these days, but a marketing mix model (MMM) is not right for every business. It’s particularly useful for companies that invest a significant amount of their marketing budget in offline media channels, or companies that sell predominantly through offline sales channels (brick-and-mortar stores).
3. Customer lifetime value
The challenge with most ROI calculations is that they look at the value of channels in the short-term: a typical timeframe for ROI calculation is anywhere from several weeks to one year. Short-term view of ROI can be misleading.
4. Cross channel attribution
Cross channel attribution includes all marketing touch points that result in a conversion action. These conversions could include, but are not limited to website visits, views, newsletters and purchases. Cross channel attribution is an advanced approach to customer measurement and is meant to give a full picture of the customer path to purchase.
5. Store Visits
Store Visits is a Google product. If visits to your physical locations are important to your business — as they are for hotels, auto dealerships, restaurants, and retail stores — you can use conversion tracking to help you see how your ad clicks and viewable impressions influence store visits. You can also use Store Visits to understand your return on investment (ROI) and make more informed decisions about ad creatives, spend, bid strategies, and the other elements of your campaigns.
6. Store Sales Direct
Store Sales Direct is a Google product that analyzes information about the share of store visitors who make a purchase. It also analyzes their average purchase value. With this information, it becomes possible to estimate an offline sales ROI. Coupling this with online performance results in an omnichannel ROI, and optimizing media marketing in response to this omnichannel ROI can fundamentally change media strategy and performance.
7. Brand Lift
Brand Lift is a Google product that can measure the direct impact your YouTube ads are having on perceptions and behaviors throughout the consumer journey. Within a matter of days, Brand Lift gives you continuous insight into how your ads are impacting the metrics that matter, including lifts in brand awareness, ad recall, consideration, favorability, purchase intent, and brand interest, as measured by organic search activity. You can easily optimize your campaigns mid-flight based on these near real-time results, broken out by demographics, frequency, and more.
Two types of optimization
1. Media mix optimization: This practice involves shifting media investment across media channels — moving budgets from lower-performing channels to higher-performing channels in order to improve the overall media performance.
2. Channel optimization: This is changing how ads are delivered within a specific channel for maximum impact on business outcomes. There are three main types of channel optimization:
- Bidding: Acquire more customers by adjusting bids based on a rich set of auction-time signals.
- Creative: Customize your assets to serve the right message to the right user at the right moment.
- Targeting: Reach those most interested in your business with dynamic audience targeting.
New to Google Ads conversion tracking?
Step 1. Set up a conversion action in Google Ads to measure what you consider to be valuable customer actions.
Step 2. Google Ads will give you a snippet of code, which is called a conversion tracking tag.
Step 3. Add that conversion tracking tag to your website or app.
Step 4. When a customer performs a conversion action(s), the tag will send data back to Google Ads.
How is conversion measurement different in Analytics?
So far, we’ve only talked about conversion measurement using Google Ads, but you can also use Analytics for this purpose.
If you’re using Analytics now, your website is already automatically tagged, and you can measure customer actions straight away. All you have to do is tell Analytics what actions you'd like to capture.
There are two options for tracking in Analytics: Goals and eCommerce transactions.
1. Measuring goals
With Goals, you can capture customer actions that are valuable for your business. Setup is easy as we offer templates that outline the most common goals/events to track, such as when someone places an order or contacts your business. Goals can be set up directly in Analytics.
You can also create custom goals using:
- Destination: a specific page that has been visited.
- Duration: how long someone was on your website, such as more than five minutes
- Pages: how many pages a specific person visited on your site, such as three or more
- Event: a specific action that someone took while on your site, such as playing a video.
2. Measuring eCommerce transactions
Sometimes you might want to ask deeper questions about your sales, which can’t be answered with Goals. This is where the eCommerce transactions tracking solution comes in.
The insights you'll gain using the default eCommerce reports include answers to questions such as:
- Which of your products sell well and which are the most impacted by your marketing efforts?
- How many products are you selling in each transaction and for how much?
- How many times is a customer coming to your site before they finally make a purchase?
- What is the full value of the transaction once you include the tax and shipping cost?
Measuring in Analytics vs. Google Ads
If you have conversions set up in both Analytics and Google Ads, will the numbers be the same on both platforms?
The answer is no. Analytics provides a cross-channel view of the customer journey. There are some differences in how each platform calculates the data.
- Attribution differences
- Date of transaction
- Reporting freshness
- Conversion count differences
