True ROI Measurement in Google Analytics

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With a properly connected Google AdWords account sending data into Google Analytics, establishing ROI for e-commerce websites is a breeze!

Simply navigate to the AdWords clicks report, send a report with the provided ROI number and you are golden, right?

Hold up!

You are having a case of TBAGD (tool blindness and Google dependence), and you are not alone. I had a wicked case of TBAGD once, but now I have kicked the habit and formed a support group. Our first meeting is this Saturday.

Attendees will learn how to calculate the true ROI for their paid media activities, understand important data that needs to be collected outside of Google Analytics, and where to find the goods. The result? Effective end-to-end measurement and a cure for TBAG.

An informal poll shows that 9 out of 10 executives recommend TBAGD support to their analysts and marketing folks, with the 10th simply asking “What is the Internet?”

Jeff Sauer

Published in: Education

True ROI Measurement in Google Analytics

  1. 1. True AdWords ROI Measurement For E-Commerce Websites
  2. 2. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Your Guide 2   Jeff  Sauer   Marketer  and  Entrepreneur   Jeffaly.cs  and  Knowledge  Land   Minneapolis,  MN,  USA   google.com/+JeffSauer   knowledge.land  
  3. 3. Do You Have TBAGD?
  4. 4. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   What is TBAGD? Tool   Blindness  
  5. 5. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   What is TBAGD? Tool   Blindness     Google   Dependency  
  6. 6. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   What is Tool Blindness? Photo  Credit:  mirror.co.uk        
  7. 7. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   What is Google Dependency?
  8. 8. Let’s Talk About ROI
  9. 9. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   ROI Does Not Stand For: •  Regal  or  Idiot   •  Roided  Out  Imbecile   •  Randy  ‘Ol  Ins.gator   •  Rager  on  Ibiza  
  10. 10. Return on Investment
  11. 11. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Return On Investment How  Much   Money  Did   We  Spend?     Investment  
  12. 12. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Return On Investment How  Much   Money  Did   We  Spend?     How  Much   Money  Did   We  Make?   Investment   Return  
  13. 13. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng  
  14. 14. Yet We Send Reports Like This
  15. 15. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   ROI According to Google Analytics
  16. 16. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   And We Think To Ourselves
  17. 17. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   But Executives Think of Us Like This
  18. 18. It’s Not Your Fault
  19. 19. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   It’s Not Your Fault
  20. 20. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   It’s Not Your Fault
  21. 21. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   It’s Not Your Fault
  22. 22. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   You Simply Have a Case of TBAGD Tool   Blindness     Google   Dependency  
  23. 23. Time to Evolve
  24. 24. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Evolution of Man Photo  Credit:  wallpapersus.com          
  25. 25. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Since We’re an Un-Conference
  26. 26. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Let’s Remove the Google Goggles Let’s  Remove  the   Beer  Goggles  
  27. 27. Sidebar: Google Image Search for Ugly to Pretty
  28. 28. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Ugly to Pretty = Goldmine
  29. 29. ROI in Google Analytics
  30. 30. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   This is ROI in a Vacuum
  31. 31. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   ROI by Very Definition, That’s All   By  Defini.on,  This  is   Return  on  Investment    
  32. 32. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Investment and Revenue Are Important Investment              
  33. 33. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   But… We Forgot About Profit We  Forgot   About  Dre   Profit  
  34. 34. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   We’re Still Far From Supermodels
  35. 35. Finding Your True ROI
  36. 36. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   How ROI Should Really Be Calculated Revenue  
  37. 37. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Subtract Our Ad Spend Revenue   Adver.sing   Investment  
  38. 38. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Subtract Cost of Selling Each Product Revenue   Adver.sing   Investment   Product   Cost  
  39. 39. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Subtract Fixed Costs of Business Revenue   Adver.sing   Investment   Product   Cost   Fixed   Costs  
  40. 40. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Now You Have Net Profit Revenue   Adver.sing   Investment   Product   Cost   Fixed   Costs   Net  Profit  
  41. 41. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Here’s an ROI Equation to Use Gain  From   Investment   (Net  Profit)   Cost  of   Investment   Cost  of   Investment   ROI  
  42. 42. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%  
  43. 43. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐  
  44. 44. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $71,788     656%   AKA  ROI  in   AdWords  
  45. 45. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $71,788     656%   Cost  of  Goods  Sold   $62,021     75%  
  46. 46. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $71,788     656%   Cost  of  Goods  Sold   $62,021     75%   Gross  Revenue   $9,767     12%  
  47. 47. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $71,788     656%   Cost  of  Goods  Sold   $62,021     75%   Gross  Revenue   $9,767     12%   Total  Fixed  Costs   $5,000     6%  
  48. 48. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $71,788     656%   Cost  of  Goods  Sold   $62,021     75%   Gross  Revenue   $9,767     12%   Total  Fixed  Costs   $5,000     6%   Net  Profit   $4,767     6%  
  49. 49. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Pulling It All Together Revenue   $82,730     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $71,788     656%   Cost  of  Goods  Sold   $62,021     75%   Gross  Revenue   $9,767     12%   Total  Fixed  Costs   $5,000     6%   Net  Profit   $4,767     6%   True  ROI   44%  
  50. 50. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   We’re Getting Closer
  51. 51. Incorporating Lifetime Value
  52. 52. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Future Purchases = No Ad Spend? Assume  No   Future  Spend  
  53. 53. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Future Purchases = No Ad Spend? Assume  No   Future  Spend   AND   Customer  Has   1.5  Life.me   Purchases  
  54. 54. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   We Find the True ROI of our Efforts Revenue   $124,095     100%   Ad  Spend   $10,942     -­‐   Return  on  Ad  Spend   $113,153     1034%   Cost  of  Goods  Sold   $93,031     75%   Gross  Revenue   $20,122     16%   Total  Fixed  Costs   $5,000     6%   Net  Profit   $15,122     18%   True  ROI   138%  
  55. 55. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   We Have Cured Measure Blindness!
  56. 56. Thank You, Old Chap! Source:  hkps://answers.yahoo.com/ques.on/index?qid=20080201184249AAHqd5l      
  57. 57. Jeff  Sauer  |  @jeffaly.cs  |  #measurecamp|  True  AdWords  ROI  Repor.ng   Jeff  Sauer   Marketer  and  Entrepreneur   Jeffaly.cs  and  Knowledge  Land   Minneapolis,  MN,  USA   google.com/+JeffSauer   knowledge.land   Thank You! 57  

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