Measure Everything: Digital Advertising

Today I’d like to talk about what I see as one of the biggest advantages of digital advertising: it’s efficiency as a form of advertising.

By digital advertising, I mean advertising that is delivered by a computer or other such electronic device, such as Google Adwords or Facebook. By efficiency, I am talking about getting the most increase in revenue for the least cost of advertising.

While digital advertising isn’t for every business, it’s probably the most efficient type of advertising you can buy for businesses selling online. Not because it’s the best way to advertise or has the highest sales conversion rate, but because it’s the most measurable. Here’s why:

When you use digital advertising, you can drive customers directly to a page on your website, which means you can store a cookie on their machine to record that they arrived at your website from a specific advertising campaign. Coupled with the information from the advertising broker (Google, Facebook, etc.) you can work out how much profit your advertising campaign generated per click that you paid for. For example, you pay for 100 clicks (adverts that people click on, priced per click), which generates 5 sales, giving you $100 profit ($20 per sale). You can then work out in a very exact way, the value of an advert. In this example, you know that if you pay less than $1 per advert / click, your advertising is worthwhile. If you pay more, it’s not worthwhile.