I’m not sure if it’s the real estate downturn, but my phone has been blowing up with online advertising vendors lately. I monitor my advertising revenue very closely, so I ask a lot of questions when talking with their salespeople.
Salespeople like to throw around big numbers to entice you to buy, so it’s important to ask for the proper metrics when analyzing different potential advertising sources.
Here’s a breakdown of what you should measure, and what to ask:
1) ROI (Return on Investment) is the bottom line number that you need to use after you have given an advertising source long enough to perform.
ROI is simply how much you’ve earned on an advertising source divided by how much you’ve spent. So, if you’ve earned one $6000 commission from Website A, and spent $2000 advertising there, your ROI is 3:1. You’ve earned $3 for every $1 you spent. Most advertising sources won’t track their customers’ ROI because there are so many “real world” variables that can create different results for different buyers – predominantly how well each customer can convert.
2) Conversion Rate is the number of leads you get per click.
If you have different types of leads (contact requests, registrations, property info requests) then it’s best to track the bottom line conversion rate, and then crunch it down to conversion rate for each lead type. So, if you get 100 visitors in one month from a traffic source, and you get 5 registrations, 2 contact requests, and 3 property info requests, then your conversion rates are as follows: Continue reading this post