Measuring the monetary value of a website
Measuring the financial value of a site is a way to extend traditional web analytics in an entirely new dimension.
While web analytics in the traditional concept focus primarily on traffic measurement and evaluation, the monetary value concept attaches importance to the specific amount of money that the Web brings to its operators. This concept is not a substitute for conventional web analytics, but it's a logical extension. It can be implemented in variously restricted forms directly in the measuring system or in specific reports.
The real impact of the Web on business
When applying this concept, the selected conversion events on the web are measured and compared to a specific monetary amount that has been individually assigned. In its simplest form, it represents a simple multiplication of the number of completions by the conversion event specified constant. In the case of an e-shop, a variable is used instead of the constant, which remains for the product price or its components. The sum of the partial results then represents the real turnover directly generated by the Web in a given time period. The whole procedure can be done directly in Google Analytics, where it is possible to set a monetary equivalent for any individual conversion targets. It is also possible to activate the e-commerce module for e-shops, which tracks sales of individual products and offers aggregated data dashboards. In both cases, turnover generated by the web can be monitored as well as how the individual channels of traffic generators and marketing campaigns contributed to it. If the site covers only a part of the purchasing cycle - and this is a common case that Lundegaard deals with - it is necessary to extend the pattern by further values. In case the site generates Leads while the average value of one Lead is known (conversion), the formula is expanded by the completion probability of the trade. This is still a relatively simple case to work out, as the probability of the commercial channel is a value that can be obtained in the same way as the average Lead value, based on historical data stored in the CRM system of the company.
How to measure the impact of offline conversions?
A harder nut to crack is a situation where the client has a product catalog on his Web site. There are no clearly defined conversions and transactions are made entirely through different channels, such as distributor networks or stores. In such a case, measuring the ROPO effect (I find online, buy off-line) is essential to evaluate the web site's monetary value. First, it is necessary to determine the approximate volume of trade which arises through the site and subsequently convert it to gross visitors (which may be misleading) or conversion actions. These may be, for instance, downloading the product sheet or a visit longer than a certain period of time. The informational value of the data, however, still falls and rises with data quality since any information about any individual interactions are missing and data can not be interpreted at the level of individual items. Despite this, the monetary value of the site in aggregated form is a very useful tool to evaluate marketing activities and the importance of individual traffic channels for the business. Reports containing the monetary value of the website are also interesting material for management, as they allow thinking about the web presentation in a completely different context. Management certainly should be familiar with the specifics of calculating the values to avoid incorrect interpretations.
Need for co-operation of marketing and sales
The leitmotif of the site monetary value concept is what has been earned through the web, however, this approach can be extended to what has been saved thanks to the Web. In case of a large product portfolio, such as when a client has many brochures and technical data sheets for every product available, there can be significant cost saving on the printing and distribution of paper materials. The determination of specific savings based on downloading a single PDF can sometimes appear to be magic, but from our experience we can get these figures in a logical way as well. In any case, identifying the ROPO effect always requires the co-operation of the sales network with the marketing department. There are various different approaches to measurement, bringing more or less accurate results, depending on chosen approach. In some cases, measurement is not even possible and an educated guess must be taken instead.
Evaluating the immediate effects
Once the data on the monetary value of the site are available, they can be connected to the outputs of traditional web analytics to calculate the value of a website visitor. While the monetary value of the site shows the total volume of business generated through the site, the visitor's value represents its equivalent in traffic and allows evaluating the immediate impact of marketing activities. If, for instance, traffic grows significantly during the ongoing PPC campaign while the value of a visitor drops dramatically at the same time, this indicates that campaign targeting has not been set correctly. Traditional Web analytics, such as monitoring fundamental metrics and conversion objectives, may lead to the same conclusion. However, for the concept of the site's monetary value, a single figure needs to be closely monitored. On top of that, this value considers visitor retention, which is an interesting indication itself.
Implementation of the monetary value concept to web analytics allows thinking in business terms about web presentations and seriously comparing it to other marketing channels. The integration of this approach results in improved decision-making, when investment in the site or campaign can be supported by relevant data, or, conversely, a stronger focus on channels with better results. In any case, it is not recommended to work with the monetary value isolated from other indicators. It should be always put into the wider context with all other available information while possible weaknesses of this approach should be taken into account as well.