Measuring ROI of Online Marketing


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This paper discusses the ways to evaluate RoI of current online marketing initiatives. The case study focuses on education but can be extended to other sectors also.

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Measuring ROI of Online Marketing

  1. 1. A LeapEd Knowledge Solutions White Paper 112, First Floor, Mall Road Delhi, 1100 09, INDIA +91 9582777399 | +91 9582598276 Measuring RoI of Education Marketing Initiatives by Universities & Educational Institutes May 2011
  2. 2. Measuring RoI of Education Marketing Initiatives by Universities & Educational InstitutesA White Paper by LeapEd Knowledge Solutions Pvt. Ltd. Contents Introduction Paper discusses the ways to evaluate RoI of current online marketing initiatives.Introduction 3Counseling Process & LeadGeneration 3 Counseling Process & LeadOnline marketing 5 GenerationConcept of ‘verified leads’! 6 Elaboration on stages of lead processing and conversion of a target audience into enrolled student Online Marketing Discusses the typical contractual arrangements with online marketers for educational institutes Concept of Verified Leads Introduction to a new performance oriented contractual arrangement to achieve greater RoI and accountability Benefit 1 Higher RoI, and achievement of desired enrollment rates within budget Benefit 2 Complete accountability of marketing vendor Benefit 3 Lower risk for the educational instituteMay 2011
  3. 3. Measuring RoI of Education Marketing Initiatives by Universities & Educational InstitutesA White Paper by LeapEd Knowledge Solutions Pvt. Ltd.IntroductionIt is that time of the year, when admissions officers across schools are busy chasing studentsto apply for various courses in their institutes. Admissions officers are employing newermethods every day to market their institute‟s offerings to the prospective students. Whetherit‟s the new generation online marketing tools like social media brand channels, internetadvertising, search engine optimization or the traditional print media, the key questionsremain the same:a) Are you reaching the right audience?b) Are you capturing the interest of the student in the form of an online lead?c) Are you capturing a quality lead that is interested in your courses or institute and is willing to listen to your counseling pitch?d) Are you able to separately evaluate the processes of lead generation and student counseling in order to incentivize each process owner correctly?e) And finally and most importantly, what‟s the ROI on your enrollment marketing spending?Counseling process and lead generationIt is utmost important for an enrollment officer to differentiate between lead generationprocess and counseling process. The two processes are quite different both in terms of skillsets required to undertake the two and also in terms of economics. While the former requires Good Good Good Counseling Application LeadMay 2011
  4. 4. Measuring RoI of Education Marketing Initiatives by Universities & Educational InstitutesA White Paper by LeapEd Knowledge Solutions Pvt. Ltd.knowledge of science of online marketing the latter is a largely people driven1 process.A good lead and bad counseling process thereupon or a bad lead and good counseling processwill bear no result in terms of getting applications. Most seriously, since the officer would nothave designed a framework to evaluate the two processes separately, he or she wouldn‟tknow where the problem lies, whom to incentivize and whom to penalize.In an analysis of about 25000 online leads generated for a business school in India, theadmissions officer found the overall application rate to be 0.4% or just 1 in 250 which isdismally low (or a total of 100 applications from 25000 leads). The officer understandablycouldn‟t realize where the problem was: Whether the leads were bad or the counseling wasineffective?After the admissions season was over, the officer did this analysis. He found that close to85% leads (21250) had turned out to be unusable in the first call made to them by thecounseling team.These unusable leads comprised of either leads that were not interested in hearing the pitchof the business school in the very first call or were junk leads consisting of permanently notanswering or switched off numbers, wrong numbers or leads who were not even consideringan MBA in the current year. Out of the remaining 15% usable leads (3750), the counselingteam was able to convert 100 applications or a 2.5% conversion rate. Looking at 2.5% as astandalone conversion figure from usable leads, it didn‟t appear that bad to the admissionofficer. But since from the very beginning he wasn‟t looking at lead quality and counselingquality separately, he calculated just an „overall rate‟ of 1 in 250 which of course left himextremely worried and confused. Essentially he had no one to put the blame on for the lowapplication rate. The counseling team stood by the fact they did a good job given the quality1 Counseling process can also be made process oriented to deliver superior and consistent results by capturing the entireconversations with a lead in a good Academic CRM.
  5. 5. Measuring RoI of Education Marketing Initiatives by Universities & Educational InstitutesA White Paper by LeapEd Knowledge Solutions Pvt. Ltd.of leads and online marketing vendor was obviously getting paid a fixed fees and paymentsper clicks. Quality of leads was not objectively captured in his contract.Online marketingOnline marketing is acquiring increasing importance owing to advantages like low or nofixed cost (vis-à-vis print) and ability to target at right audience. However a non-optimized orill-conceived arrangement with your online marketing vendor can lead to drain on yourmarketing budget without any significantly useful results.The rule of the marketing game remains quite the same here as it always has been. Ifadmission officer is able to reach the correct target audience who is looking for his kind of acourse and institute, then most of his or her job is done to get an application. In marketingparlance, this is called a “warm or hot lead”. While what an officer needs is a warm/hot lead,his or her arrangement with online marketing vendor does not reflect that. The vendor isgenerally paid “a per month” fixed fees for online ad design and administration in addition topayments made to ad networks (on per click or impression basis). However, such anarrangement does not incentivize the vendor to work hard towards optimizing the campaignand generate right kind of leads, which is the main objective of all marketing.In the figure below, this is explained quite clearly. The reducing size of blocks indicates thatleads get filtered out at each step and only a select few are counseled by counseling team in1 2 3 5 6 4 Impressi Clicks Leads Verification Counseling Application ons CPVL vendor is Typical arrangements are paid here paid here
  6. 6. Measuring RoI of Education Marketing Initiatives by Universities & Educational InstitutesA White Paper by LeapEd Knowledge Solutions Pvt. Ltd.true sense and converted to applications. In most contracts, the officer pays vendor at thelevel 1 or 2. At level 1 or 2 not only the officer is not sure whether he will get usable leadsbut also that since volume of leads generated is high, she has to employ a large counselingteam to verify whether lead generated is usable or not. Typically in such contracts, the costsinvolved in getting applications are:Ad Administration Fees (fixed) + Pay per Click + Counseling Costs = Total CostsAssuming an administration fees of Rs. 5 Lac and that every click costs Rs. 20 and 10 clicksgenerate a lead (this means for 25000 leads, 250,000 clicks were paid for), and thatcounseling cost is Rs. 50 per lead, the total cost incurred by the officer for generating andcounseling 25000 leads would be: Total cost (in Rs.) = 5 Lac + 250,000 x 20 + 25000 x 50 = Rs. 67. 5 Lac.Move over clicks, come in ‘verified lead’!The admissions officer wished he had better quality leads to handle so that his conversionrate could be better. He also realized that with fewer but superior quality leads (just 15% ofthe total leads!), he could have a smaller, more manageable and most importantly highlymotivated counseling team who would counsel quality leads (and achieve higher conversionrate) and not just do the job of verifying whether the lead‟s number is correct, whether thelead is answering the call or whether he or she is even interested in doing an MBA. He wasreally keen to know if he could do an arrangement with a marketing vendor under whichhe would only pay per verified lead and no fixed or per click cost?. Such a verified leadwould have been pre-qualified for correctness of contact number, would be a person who
  7. 7. Measuring RoI of Education Marketing Initiatives by Universities & Educational InstitutesA White Paper by LeapEd Knowledge Solutions Pvt. Ltd.would already know something about his institute and its pitch and would be interested inbeing “counseled” by the school‟s admissions counseling staff. The officer further went backto his numbers and found that even if he pays Rs. 1000 as cost per verified lead or CPVL(and no fixed or per click cost), he would reach a much higher ROI for the same numberof applications. He did this simple calculation to reach at a conclusion: Zero (ad administration cost) + Zero (per click cost) + 3750 Verified Leads * Rs. 1000 CPVL + 3750 * Rs. 50 counseling cost = Rs. 39.375 Lac or 40% lower than earlierCalculating „X‟ from this equation was of course a child‟s play for him! If your story is somewhat similar and if you are wondering where can you find such a vendor?? Just call us over for coffee, and we would be glad to educate you and your team about the domain and online marketing, and introduce you to this exciting new world of „Verified Leads‟!!LeapEd Knowledge Solutions Pvt. Ltd.: LeapEd is a company formed with the idea to support education institutions, trainingcompanies in their various enrollment processes and to connect with students through its various marketing channels. LeapEd hasworked with a bouquet of premium clients like Thapar University, NIIT University, School of Inspired Leadership (SOIL), TheEnergy & Resources Institute, Ashok INLEAD-Gurgaon, University of Petroleum & Energy Studies (UPES), ICICI Direct(Education Division), and a few premium universities of UK & Ireland. Contact us: | +91 9582 598 276