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10 Steps to Measure Digital Marketing Spending & Profitability

If you are working to improve your online presence with Google AdWords, Google display ads, Facebook ads, Instagram ads, and working on improvements to your web site, you probably recognize how many variables affect your success, and you have probably wondered – what is helping us and what is hurting us? Are we spending too much money or not enough money in one channel or another?

This article is intended to help you distill key aspects of your advertising data, site analytics data, and revenue goals into some key performance indicators (KPIs) that will help you to make smart choices regarding your small business digital marketing strategy. At the end of this article you’ll find a helpful spreadsheet available for download that will make an excellent starting point for your very own digital marketing KPI dashboard. Once you get familiar with each measurement topic and the KPIs within, you can start to make progress with your overall digital marketing strategy, and then you can devote a couple hours each month to analyzing your digital marketing strategy’s progress.

For small businesses, I prefer a simple spreadsheet to full reliance on any one of the tools out there, because I think it’s the least expensive and least time-consuming way to get a tailored analysis tool that encapsulates every aspect of digital marketing measurement. If you spend time looking through the tools available, you may find a lot of great gadgets for automation and you may even want to use some for your digital marketing KPI dashboard data collection, but in my experience, taking the time to plug in each number in a spreadsheet helps you to build a vital connection between your data and your decisions.

Download the spreadsheet now:
Sample Digital Marketing KPI Dashboard

For the purposes of this article, we are talking about digital marketing KPIs that make sense for a strategy focused on delivering inbound leads to the business.

Start with the big picture. What are you hoping to accomplish? At what traffic volume, at what conversion rate, and at what close rate?

#1 – Anticipated Revenue

Let’s say that your new site could generate 18 deals a year at an average deal size of $5k. The site could do that if all of the digital marketing KPIs are met. If it’s effective, the site will gross $90k in revenue. After we establish all the KPIs for measuring the effectiveness of our digital marketing strategy, we’ll have the formula necessary to determine how much money must be spent to achieve this anticipated revenue goal.

Something to consider: If your business nets 30% before marketing costs, how much margin are you willing to devote to ensuring that $90k revenue goal is met? What are your other costs involved in new customer acquisition? Does the business growth increase your operational expenses?

Anticipated Revenue is a factor of average deal size and number of deals. Decide on these two numbers based on your existing sales data and plug them into your spreadsheet. As I said, this number will be critical as we determine your digital marketing spending plans.

#2 – Traffic Volume

This is relatively simple, but as we build up to the more complicated KPIs, traffic influences every other number in our calculations. As we look at the big picture, we need to know how much traffic is visiting your web site in total. We will break down the sources of that traffic later on as we work to adjust our spending plan.

You can grab basic traffic data from your WordPress site dashboard within a wordpress.com hosted site, or you can install Google Analytics on your site and gather data there. For the purposes of a KPI dashboard, I would recommend looking at this data on a monthly basis unless you have an extremely high traffic volume and need more granular detail.

#3 – Conversion Rate (Total Number of Inbound Leads from Digital Marketing)

Conversion is everything to a digital marketing strategy, and is the key measure of success for the whole digital marketing strategy. For the purposes of our discussion, conversion will be counted when a web site visitor gives their name and contact info via a form on your web site. This simple act is the bread and butter of a small business digital marketing strategy. There are countless articles and videos discussing measures you might take to increase the conversion rate on your site, vital among those are killer, relevant landing pages. Nonetheless, conversion is a component of several factors including audience relevance, user intent, site load speed, visual appeal, colors, button size and placement, word choice, social proof, and the establishment of expertise.

I would highly recommend utilizing a digital marketing KPI dashboard to centralize data about each of your efforts in improving your conversion rate. The trick here is waiting for traffic to come through before analyzing your efforts. Otherwise, you won’t know if it was the first, second, or third improvement you made that helped improve conversion.

#4 – Close Rate

Take the number of leads received by your website last month and divide that by the number of deals closed to come up with a close rate. If you’re just starting out, take the number of leads you got from other sources over the past few months to get a one month average. You can use this number to adjust how many leads you need to meet your revenue goals. In this section, record deal size and total new revenues.

With all of these big picture variables established you can find out how much traffic is needed to meet your revenue goals using the simple calculator included on my spreadsheet available for download here.

Sample Digital Marketing KPI Dashboard + Budget Calculator

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Analyze each component of your digital marketing programming from ads to the site’s ability to convert.

#5 – Traffic Sources

For a data hungry nerd like myself, this is one of the most fun things to analyze. At the end of the month, take some time to plug this data into your digital marketing KPI dashboard. How much traffic did you get from Instagram? From ads or a link on your page? How much traffic came from people typing your name into a search on Google? How much traffic came from people typing in your address and visiting the site directly? How much traffic came from your display ads and your search ads? How much came from people typing keywords into a Google search? How many of each source bounced? Take a snap shot on Google Analytics at the end of each month and plug this data into your spreadsheet with other relevant details to build a history of what has worked and what has failed.

Paid Traffic

For each of the advertising sources, we want to look at number of impressions, number of clicks, and cost per click (CPC). High impressions and low clicks may mean you need to rethink your ad’s copy or imagery. Or, it may mean you are targeting the wrong audience.

Organic Traffic

In addition to just tracking how many site visitors came from organic search results, we want to monitor our rankings. We can track how we are climbing the rankings for a handful of critical keywords and compare it with total search volume data for each of those keywords here in our KPI dashboard since our organic rankings will be influenced by the same factors that influence conversion. I guarantee Google rewards a low bounce rate.

Social Traffic

Here, we just want to track how many people came to our site via our social media presences. While you cannot see a lot of information here about impressions vs clicks, you can take a moment to add totals under the headers: posts, likes, comments. If your activity level is quantified, then you can more easily correlate traffic to activity.

#6 – Conversion Attribution

Now you want to know which sources provide better conversion rates right? Yes, that is the golden ticket. Wherever the traffic comes from is the goose that lays the golden egg. Feed that goose more and get more golden eggs, right? Well, truthfully there is a law of diminishing return at play here, but you can do some experimenting to see how to make the most of every profitable avenue. Also, some avenues may not get due credit for conversion. they may play an important role in establishing brand recognition (remarketing ads), serving as a reference check (social media does this well), and establishing credibility (SEO rankings – seriously, do you ever select a company from page 30 of the results?).

There are a lot of ways to connect the dots between traffic sources and conversion rates. You can set up triggers in Google Analytics using Tag Manager. You can pay for software like Hubspot which centralizes lots of marketing data. Or, if you don’t want to invest hours and hours or hundreds of dollars into the more automated options, you can simply ask at the conversion step, “How did you hear about us?” Then offer a simple dropdown allowing them to pick from the sources where you are spending the most resources. Whatever you do, track whatever data you have so you can make the most of the more profitable traffic sources.

#7 – Remarketing Ads

Have you ever felt like a business was stalking you? E-commerce sites like Amazon are masters of remarketing strategy. If you even consider buying those low top gray Converse, you’ll see low top gray Converse ads on every site you visit that supports display ads. You too can leverage this powerful advertising tool. If you have a decent amount of traffic, you can even get extremely granular in targeting people based on what pages they’ve visited on your site. As you gain familiarity with this powerful tool, you should track data about dollars/click, sites where your ads displayed and users also clicked, and various versions of your ads’ popularity as measured by clicks.

Measure how well you are being a good steward of the pipeline. Are you sending enough emails? Is the follow up material increasing engagement?

This is where we analyze efforts in email marketing and lead magnets. It may be difficult to automate the collection of this data, but it’s important to measure every aspect of your digital marketing strategy.  It’s especially important to place an emphasis on what happens to a lead once their data has been collected. The ball is not out of our court just yet. In this phase of the game, digital marketing moves into a supportive role, but we can still measure our success.

#8 -Email Marketing

Fill in data on your dashboard for number of emails sent to leads, number of opens (If you use any number of online email marketing tools, this will be easy…), and number of links clicked. Bonus, what was the most popular link clicked? What are your prospects most interested in? Testimonials? Case studies? White papers? Video content? Take this time to hone in on the most popular content in your arsenal. What can you do to make sure that content is persuasive and compelling?

#9 – Lead Magnets

Lead magnets are another powerful tool in your conversion toolbox. When properly used, a lead magnet is a great PDF, video, or audio recording that people want so badly, they are willing to fork over their name and number in exchange for a small portion of your expertise or a sample of your services provided in the deliverable.

When tracking your success with lead magnets, make sure to note the name of each lead magnet currently on offer, how many downloads it’s seen, and how many views the page has seen. There’s an easy way to track conversion for an individual component of your digital marketing strategy. If the lead magnet has its own URL, simply divide traffic to the page by number of downloads, and you’ll have a granular conversion rate. As you analyze the success of your lead magnets, consider if each one has enough meat and potatoes to entice a hungry site visitor. Does the lead magnet landing page offer a decent preview of what’s on offer in the deliverable?

Finally, analyze your spending vs profitability.

#10 – Cost Per Lead

A component of customer acquisition cost (CAC), this number is relatively simple to find. How much did you spend on the site, the implementation services, the ads, the graphic design, the copywriting, etc? Divide that number by the number of leads received from your web site. As you may want to seek benchmark data on this number, remember we are not talking about the full CAC, we are only talking about the digital marketing component.

Use a formula to tell you the % of that revenue being spent on Cost Per Lead. This is the ultimate way to come up with a custom marketing budget. Are you happy with that number? Can you sustain it? We all know we have to spend money to make money, but at what rate, right? If you look at this number in isolation, you won’t be able to tell what’s working and what’s not, but in light of all the other KPIs, you can really make informed decisions about your digital marketing budget.

Sample Digital Marketing KPI Dashboard with Budget Calculator

 

 

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WordPress.com vs WordPress.org

After a small business owner gets a quote from a professional web design group for $10k+++, the conversation normally goes like this:

“Let’s just use WordPress or Wix or Squarespace or something like that!”

They add, “C’mon, it’ll be easy and cheap.”

And once the project is underway, an overwhelming feeling hits like a ton of bricks. This web site is going to take two hundred hours, a dozen plug ins, and Elon Musk is going to need to finish that artificial intelligence project pronto, so we can mind meld with this technology and get it to do what we want!

These easy, do-it-yourself web site builders can indeed build a decent looking web site quickly, but will it be SEO friendly? Will it load fast enough for your busy customers and prospects? Average load time should be under 2 seconds. Ideally, under 1 second. Did you know these things are measured in milliseconds now? If you’re suddenly curious about your current site, you can get a quick diagnostic about your site’s speed with Google’s Page Speed Insight Tool.

What about integrations with your sales team tools? Do you like the look and feel of every page? More importantly, what do you prospects think of the site? If it’s on Wix – chances are B2B prospects’ IT departments are blocking access since Wix servers are blacklisted by most enterprises. (I’ll do a post on that for you soon.)

If you do a little research on SEO, you’ll end up wanting to use Yoast and you’ll soon realize that WordPress is the modular D-I-Y tool that has room to grow. Squarespace is okay, but it doesn’t have the rave reviews, modularity, or room for growth that a WordPress site has. Plus, the code on a Squarespace site is going to be filled with super proprietary gibberish code that you’ll never get anyone to help you customize. On the other hand, you can call in the cavalry on a WordPress site, and you’ll have hundreds of freelance coders, developers, and experts to help you see your wildest dreams become digital realities.

So then you may have realized there’s two conversations about WordPress out there on the support forums and in the blogosphere. You have the wordpress.com that your niece uses to write her blog about travel, and you have the conversation about WordPress that talks about security, plugins, advanced functionality. You may be scratching your head trying to build at WordPress.com and thinking, “Man, there are all these tutorials about WordPress, but my screen looks nothing like those screenshots. I don’t have those features.”

Eventually, you may find yourself googling, “What is WordPress.org?” (asking for a friend obvi)

After some digging, you’ll gather that WordPress.org is not exactly for amateurs and WordPress.com can be extremely limiting, and you’ll have to chose. Do I want easy and limited? Or, do I want difficult and unlimited?

On one hand you get all-in-one hosting, editing, and themes at WordPress.com requiring very little web development knowledge, and on the other, you get full-featured, wide-open possibilities, and 3rd party hosting using WordPress.org that requires a good bit of tech savvy. Either way, the DIY web site route is still paved with good intentions and time consuming roadblocks and detours. That’s why I recommend outsourcing your small business web site projects to an experienced SMB digital marketing specialist – like me!

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Nonetheless here, are some key differences between WordPress.com and WordPress.org:

What I like about WordPress.org

  • the sky is the limit in terms of design, features, and functions
  • plugins are surprisingly easy to install and use
  • granular control of your layout with great plug-ins like Visual Composer that allow for drag and drop design AND custom HTML/CSS
  • easily control the style sheet for your theme
  • easily access files for advanced site development (like working with Google Tag Manager)
  • third party hosting allows for great caching, SSL management, backups, and SFTP (secure file transfer protocol) access – you can guarantee your site will be fast and secure.

What’s tough to sell about WordPress.org

  • a solid understanding of the web development stack is needed to build and maintain the site
  • third party hosting costs about the same as hosting at wordpress.com (so you’re not saving any money)
  • buying and implementing a theme is time consuming – support for themes is usually from overseas, and it takes a while to hear back from them
  • all that granular design control requires a great deal of time to implement and update
  • you’ll need a professional freelance developer handy in case of a mind-numbing css clash, slider issue,  navigation functionality issue (and more…)

What I like about WordPress.com (business package)

  • I think it really does fit a solopreneur’s needs pretty well.
  • You can get a professional looking web site for $350ish/year if you don’t hire anyone to help you.
  • They offer chat support which is my favorite (immediate help, they have your account open instantly, keep my music going, and work on other things while waiting for them to sort me out)
  • It’s really all there – hosting, support, themes, your CMS, and even domain management
  • If you do get ambitious, with the business package, you can upload a custom theme and use plugins – the royal key to customization, but then, you’re really not taking full advantage of the “easier” option here…

What’s tough to sell about WordPress.com (business package)

  • While there is a huge community of wordpress.com users, most of the time, when you Google for help with an issue, you’ll find a wordpress.org solution and end up either confused or frustrated.
  • Without going into the time consuming work of implementing a theme purchased elsewhere and learning about plugins, you’ve got a few dozen template-y looking themes to work with
  • When you get into improving your online presence, you’ll want to improve site speed, cookie people using Google Tag Manager, and set up advanced URL tracking. If you’re worried about advanced speed and security, you’ll want to implement a CDN. And all of that requires access to the site’s underlying database and infrastructure – access you don’t get with wordpress.com.

It mainly comes down to hosting. If you have a site hosted at WordPress.com, it will simplify things. If you want to get picky about design, layout, and functionality, the WordPress platform will not let you down, but you’ll need to host your site with a 3rd party. We’ve had phenomenal success with WP Engine. Their support is first class, and they do everything with WordPress site owners in mind. They have a wealth of support information, and my favorite – Chat Support!

Since you can get complicated and technical no matter where you host your site, the real question becomes – what do you want your site to accomplish? You can read more about that topic from my article: Five Things to Consider Before Building a New Small Business Web Site. In the mean time, here is my final recommendation about wordpress.com vs wordpress.org.

It depends on where you are in your business.

‘Treps Just Starting Out – Limited Time & Capital

While I prefer the functionality of a third party hosted site, I would recommend starting out with the business package of a WordPress.com hosted site. You can still have a custom domain and get rid of that pesky WordPress credit and follow button at the bottom. It will be easy to transfer to third party hosting as your business grows, and in the mean time, you can invest all that time and energy into truly marketing your brand instead of learning how to be a web developer.

Tenured ‘Treps – Limited Time & More Capital

Or, if you’re further along in your business, you may have some extra money to invest, but not so much extra time. I would recommend getting the full-featured benefits of a third party hosted WordPress site with the help of a WordPress implementation specialist – like me! Even if you don’t need a lot of high end features, getting the theme and any relevant plugins to conform to your expectations is still a time consuming job that you can outsource to a freelancer for a fraction of the cost of using an agency.

If you would like some help setting up your new wordpress site on wordpress.com or wordpress.org – I’d love to hear from you!

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Thinking of Building a New Web Site? Ask Yourself These 5 Questions First.

First of all, you’re awesome for taking the time to improve your digital marketing game. It’s an important – arguably the most critical aspect of marketing for a small business. As you delve into the options available to you, I would highly recommend knowing the answers to each of these five questions before you get too far with design quotes, DIY tools, or hosting options.

1. What is the primary purpose of my web site?

Is it to generate leads for your business? To show off your portfolio of work? To build interest in your brand? To provide compelling content that makes prospects recognize your expertise? Ultimately – the goal has to be lead generation. Getting qualified prospects to get in touch with you about your services will lead to revenue. A good follow up question would be: How much of that revenue do you expect/need to come from the web and how much from other sources like sales, referrals, and trade shows?

2. How much is a new lead worth to my business?

Let’s talk about return on investment for a minute. To embark on a new web site project, we need to get really familiar with our marketing budget (“spending plan” for those of you who hate boundaries.) We need to know exactly how our customer acquisition cost (CAC) is calculated and what is included for the purposes of discussion. How many leads does it take to close a deal and how much can you afford to pay per lead and still make a respectable profit? Say you get three interested buyers’ names and numbers. How many of those leads will take a meeting or a phone call and turn into prospects? Let’s say conservatively 33%.

So then, let’s say you’re a killer closer, because your service is awesome and you know it will help your prospects. Let’s say you close 50% of your prospects on a deal after a couple meetings or phone calls. Then it would take 6 leads to close one deal in a relationship oriented sales process.

You may be saying, “6 leads! Great – now how do I get 6 leads? I want 6 leads every month!” Whoa. Gear down big shifter. How much margin are you willing to devote to getting traffic to your site and making sure that traffic converts at a healthy rate?

If your average deal size is $5k, then divide that by the six leads it took to get that $5k. So, $833/lead. Okay so maybe you only want to spend 5% of the $5k on getting the lead in the first place because you want to retain margin. At 5%, you are allowing yourself to spend $42/lead. Your CAC would include an additional $252 for digital marketing. Maybe that’s a bit steep. Maybe that makes sense for your growth goals. The follow up question is thus: How much is a digital marketing lead ACTUALLY going to cost? Which leads me to my next question –

3. How much should we plan to spend on this new web project?

Since we’ve already got the ball rolling about ROI, I’ll cut right to the chase.

With the help of a freelance WP implementation specialist like myself, you can expect to spend anywhere from $2,500 (very little content development needed) to $12,000 (months of content development needed) to launch a professional, customized, small business WordPress web site. You may need to plan additional expenditures for ongoing content development, SEO consulting, or SEM management depending on how much time you want to devote to the site after it has been launched. Further, if you want a bespoke design, custom plugins, and custom animations, those things require more of a WP developer or full-service agency, and you’ll need anywhere from $20k – $50k.

But you should not build a shop without building roads that lead to it. You should plan to spend money sending additional traffic to your site if you want to recoup your full investment in the project.

Traffic & Conversion – Like Peanut Butter & Jelly

If you’re wanting to spend more to get more, we’ll need to get a sense of some key performance indicators for web sites in your industry: conversion rates, monthly traffic volume, traffic sources, conversion techniques, etc. Essentially, we need to know what it will take to turn web site visitors into revenue. Unless you’ve got a large, established enterprise or if you’re a startup with venture capital levels of cash and advertising your site across every possible channel, you don’t need to spend gobs of money in custom development. If your annual web budget is under $10k, you probably want to focus solely on two things – traffic and conversion.

In addition to the dollars spent on the site itself, the dollars you spend attracting visitors to your site through search engine marketing, display ads, and remarketing should be an equal consideration for your digital marketing budget, because let’s face it, a site without traffic is nothing the same as a site that doesn’t convert is nothing. If either traffic or conversion is lagging, the other will have to work extra hard to pick up the slack.

For example: If you hope your site will bring in $60k in revenue each year with an average deal size of $5k – you’ll need to close a new deal each month. Depending on your niche and your operational growth capacity – you’ll probably want to spend around 4-8% of that revenue on digital marketing. But if you want to grow faster, or if you’re in a niche where conversion requires a lot more investment, that number could be higher.

For slow, steady growth, with reasonable digital marketing KPIs such as traffic volume and conversion rates (1-2%*), 4-8% of revenue spent on digital marketing can get results.

*Disclaimer: Good conversion rates don’t happen by accident. Be prepared to invest a lot of attention to detail where conversion is concerned. Even a modest conversion rate won’t happen naturally. It will either take a lot of your time or a lot of expertise to move up even half a percent, but in the end, you can spend less money on traffic.   

Conversion is a short-term pain, long term gain.

With a $60k new revenue goal – plan to spend between $2400 and $4800 a year on digital marketing. That doesn’t leave a lot of room for a new website, but consider this: a site should last you at least two years – maybe four.

So, multiply your annual total digital marketing budget by three (years) and then work with that number to carve out a reasonable web site budget after you’ve assessed your site’s traffic needs and costs. For more detailed information on your small business digital marketing budget – read “Small Business Digital Marketing Budget Strategy.”

4. What features do I want my site to have?

Consider your marketing funnel.

At the top of the funnel – you have people in the vicinity of your brand who don’t need your services right now, but may keep you in mind if they like what they see in passing. Next, you’ve got people who need your services, but they are early in their research stage. They are likely to come take a closer look if you’ve got great client testimonials or you are able to bait them with remarketing and reel them in with relevant landing pages. If you’re able to set the hook, they will move down the funnel and consider connecting with you. This is a time when they may flip through your portfolio or read your blog articles to get a better feel for your expertise before ultimately filling out your contact form.

Top Half of the Funnel Features – Speed, Agility, and Style

At the top half of the funnel, you want to cast a wide net with display ads, pay per click, and organic search results. At this stage of the game, you want your site to load fast, to have flexible landing pages, and you’ll want the ability to cookie your end users so you can use remarketing. When viewing a demo or looking for inspiration – really give some consideration to client testimonials. Are they long or short? Do they have a star rating? Do you want a picture to display or no?

Bottom Half of the Funnel Features – Conversion Seeking Blogs, Portfolios, and Strong Calls to Action

At the bottom half of the funnel, you’re reeling them in with your portfolio, your blog, and your pithy headlines. Most obviously, but often overlooked, you must have a call to action button or section that is readily accessible. If you’re doing a WordPress implementation, you should look for a theme that can accommodate the type of portfolio that suits your needs. Do you want to share a story about your projects in the portfolio or let the images speak for themselves? It could be possible that you don’t need a project portfolio at all depending on what service you provide. Likely, in that scenario, you would need an expertise-revealing blog. Content is king, and if you are good in front of a camera – by all means, offer video content on your blog!

5. What do I want my web site to say about my brand?

They say entrepreneurs and their brand are one and the same. The person is the brand until the company outgrows its founder. So, really, since we’re talking about small business web sites here, what do you want your site to say about YOU?

  • Are you a bright and cheery court reporter?

Consider a lot of white negative space and serif font or maybe even a trendy handlettered font giving the feel of a pleasant personality.

  • A soulful and moody photographer?

Consider dark colors, sans serif fonts, and an edgy design.

  • Are you an experienced and highly regarded chiropractor?

How about a bright site with space for striking headlines and client testimonials?

  • Maybe a thoughtful and creative interior designer?

Consider full screen photography with understated, serif fonts to convey details about your process and philosophy.

Find a couple of words – maybe three or four, but don’t go crazy. You have to find a narrow focus to really work towards achieving brand synergy. Self-promotion can be one of the hardest parts about branding, so ask a friend or two to help you come up with the right perspective on yourself and your brand.

Then as you get into themes and designs – first make sure you’re not laying waste to existing branding collateral you have like swag, brochures, and business cards by going in a completely new direction. (If you need help unifying your branding across marketing channels – read this article “Trying to Make Your Brand More Cohesive? Try These 4 Tips.”) Otherwise, this is the fun part about a new web site – with your brand descriptive words firmly in mind, it will make culling through the theme options much more fast and effective.

I hope these questions have given you lots of food for thought, and I hope if you have any questions about your own digital marketing strategy, you’ll get in touch with me right away!

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