Well, the effectiveness of an online ad can be measured with a few factors:
1) Total views - the total number of times your advertisement was viewed
2) Click through rate - the number of times your ad was click on divided by the number of times your ad was viewed. For example, if your ad was viewed 100 times and your ad was clicked 10 times, it means your click through rate for you ad is 10%.
3) Conversion rate - this is calculated by the total number of visitors who has taken a desired action divided by the total number of visitors in the same period of time.
Total Views
Total views is calculated by measured by the number of times your advertisement was viewed. This figure is usually provided by the site that you're advertising with. This figure is important since it helps you to measure how many times your ad is being viewed by people. But just basing the success of your ad on a high number of views isn't enough. What good is a high number of views if there are very few people clicking on it?Click Through Rate
If having the total number of views on your ad isn't enough to tell you how successful your ad is, then the click through rate will be able to give you a better picture. The click through rate is calculated based on the total number of people who've clicked on your ad divided by the total number of people who has viewed your ad. A higher click through rate means that there is a higher percentage of users who are interested in your ad and what you have to offer.You need to know this rate because it tells you how effective your advertisement is working. And what is the percentage of the people from this website you're advertising on are viewing your ad and are finding it relevant to them.
In the past, banner ads used to have the highest click through rates in the internet. But as time passed and more advertisements flood the internet causing users to become more immune to the ads, high click through rates for banner ads have become a thing of the past. Contextual ads are now showing to have a more effective click through rate as compared to that of banner ads. But they can be a little more tricky to execute since it involves only showing ads that might interest the user depending on what the user is currently viewing.
But at the end of the day, a click through rate will only tell you how many users are clicking on the ad and entering into your website. But if none of them are buying your products, what good would that do? So a conversion rate is the next number you're going to need.
Conversion Rate
The conversion rate measures how many of your visitors have "converted" from being just a visitor to a paid customer. The conversion rate can help you to measure how many of the visitors coming in from a website are interested in what you have to offer and buying your products.Summing Up...
Now the click through rate and the conversion rate are usually the 2 figures that most advertisers are interested in. Typically, total views and click through rates are provided by the website you're advertising on. But the conversion rate can only be tracked by you. You'll need to setup a Google Analytics account for your website to track that. Once that is in place, you can measure how effective your advertising money is being spent and decide which ad channels are worth keeping and which ones are worth reconsidering.
Some After Thoughts
Selecting the correct websites to advertise on (a site that has content that is related to what you're selling, ad spaces with a lot of exposure etc) can make a huge difference in the amount of web traffic to your web store especially on total number of views and click through rates. But there is another factor that has a huge impact on conversion rates for you website.
The pages your visitors land on.
Stay tuned to our next lesson as we discuss on how we can plan a web store that can entice our visitors to stay, browse and even make that purchase.
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