How do I know my marketing campaign is working?

The most important thing about any advertising campaign is its report. The phrase sounds somewhat pretentious, but it is no less valid for that. During the course of a marketing action, a perceptive analyst will be able, thanks to a handful of data organized in a report, to determine where it is worth investing more and where efforts should be withdrawn.

In short, the report is an essential tool to lead our advertising campaign to success.

And yet, there isn’t a person in the world who hasn’t been overwhelmed and intimidated the first time they’ve seen one. What do all these numbers mean? What should I do with them? Should I invest more money? How do I know if the ads are working?!

If you are in the instance described in the previous paragraph (or you have not yet faced the unfathomable tables full of metrics and dimensions of an e-commerce marketing report), what you will find below will surely be of great use to you.

3 concepts to measure the performance of a marketing campaign

Before continuing, it is necessary to clarify that the purpose of this article is not to describe step by step how to interpret a report and, in fact, that is something that we could leave for future blog posts. Instead, the idea is to present three basic and essential concepts that, if taken into account, will allow making the right decisions to improve the performance of an e-commerce store.

The concepts, then, are:

1. ROAS
2. UTM
3. A/B testing

These strange little words will make sense of the convoluted tables that we mentioned and will help to answer, with concrete evidence, the questions formulated above.

ROAS

The ultimate goal in any marketing campaign for a store that sells products over the Internet is, without a doubt, to sell. In fact, it’s selling as much as you can with the lowest possible investment. And the ROAS It is the precise metric to be able to achieve such an objective.

What does ROAS mean?

ROAS is an acronym for the English expression Return On Advertising Spend (Return on Advertising Investment) and simply presents the income obtained in relation to the investment in advertising made. The formula to calculate it consists of dividing the income generated by the spending on advertising.

If an advertising campaign cost 500 MXN and had sales of 4,000 MXN, it means that the ROAS was 8 MXN. That is, for every peso invested in advertising, eight pesos in merchandise were sold.

This simple value is the key to setting goals and determining how efficient what is being done to promote a brand’s catalog. Do the ads generate sales? Is it expensive to advertise through this medium? Is this ad better than this one? What article should I publish? All these questions, and many more similar ones, can be answered by applying and measuring ROAS in each respective scenario.

Suppose a store determines its minimum and satisfactory ROAS, a value that allows it to cover its costs of advertising, logistics, wholesale and obtain a fair profit. The owners decide to run a campaign through a number of mediums and measure the return on investment for each of them separately. At the end, they discover that they can classify the media into four groups based on the results of the action:

• Group A: Media that did not generate sales or had ROAS well below target.
• B Group: Means that did not reach the goal, but were quite close to doing so.
• Group C: Media where the objective was achieved and even exceeded by a small margin.
• Group D: Media whose ROAS doubled the proposed objective.

Given these findings, an effective optimization could be (a) cancel the group A ad and distribute that budget between groups C and D, (b) request a cost reduction in group B to achieve the objective by paying less for advertising and, finally, (c) pay more for ads in Group D in exchange for greater presence and better positions since the return is very high and that will attract higher quality customers.

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UTM

From the previous example, the central theme of our second concept also emerges: being able to identify the origin of the traffic that has interacted with the store and that, later, we will analyze to make decisions that improve performance. And it is thanks to the UTM that we will recognize the sources of the visits.

What is a UTM?

UTMs are nothing more than snippets of text that are placed at the end of each ad click URL (ie the page where the user is taken in the browser, after clicking on the promotion). The correct name to refer to these fragments is the term parameters and they allow analysis platforms to identify and classify the traffic that comes from a certain marketing campaign. In this sense, the most common tool is, without a doubt, Google Analytics.

What does UT mean?

In fact, the acronym UTM stands for Urchin Tracking Moduleor Urchin tracking module in Spanish, since it was this company that created them for its web analytics development and, in April 2005, they were bought by Google.

These codes can be placed in mailing campaigns, social networks, native advertisements… any instance that works as a starting point for a person to discover the store. The UTMs allow us to know in depth the behavior of our visitors: what interests them on our site, where they spend more time, and therefore, how to better invest in future campaigns so that, in the future, we obtain better results.

It does not make much sense to explain here how to build the UTM, since there are various tools for it (). Also, most marketing platforms do this as well or automatically insert them because they are an industry standard. Speaking of standards, in general, the following is the information that is usually included in them, to optimize the marketing investment later:

• Campaign name: A unique name to identify our campaign.
• Campaign Medium: The type of ad or its business model is usually identified.
• Campaign source: The channel of a traffic source such as a social network, vendor, or mailing campaign.
• Campaign Terms: Use a parameter to highlight the keywords if it is a campaign of search.
• Campaign contents: This is an identifier to differentiate ads that point to the same URL. For example, if you want to know if people click on a picture of shoes or a picture of bags. This can be optional.

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A/B testing

Finally, we come to the last of the essential concepts to analyze the performance of marketing actions. Through the previous two, we established how to efficiently measure the performance (ROAS) of campaigns and how to identify them (UTM). Now we will discover how to be more and more effective: comparing results.

What is an A/B test?

A/B Test, A/B Test or split-test It consists of planning and launching two versions of the same element (an ad, a sponsored link, a product image) and measuring after an appropriate time which one works better, for example, which one generates a better ROAS. The version with the best performance is the one that will remain active and a new version will be generated from it, to continue optimizing.

Beyond the permanent improvement exercise that it implies, the great advantage of the A/B Test is to put aside changes by instinct and adopt a work dynamic based on concrete results.

To consider:

• Let’s not compare pears with apples: The groups of users on which the test is carried out must be as homogeneous as possible, or the results will not be reliable. So it’s not worth targeting each variant to visitors who come from a different channel or have some other important difference.
• Let us not get carried away by impatience: For the results of an experiment to be statistically relevant, they must be done on as large a group as possible. If your website doesn’t have a lot of traffic, that means you have to leave both variants active for weeks to get really reliable data.
• Let’s not risk: A/B Testing is the perfect place to unleash your creativity and experimentation.

In conclusion

Now that you are clear about how these three concepts work to measure your marketing campaign, it is time for you to create your own.

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