Optimizing Marketing Towards Revenue

(Counter Tags versus Sales Tags)

Introduction

To be able to tie Marketing expenses to your bottom line accurately you need to have full visibility of the traffic you buy and the results it generates, unfortunately offline tactics do not apply here.

Calculating and optimizing towards marketing revenue in an automated way is only possible for online digital channels.

Defining a Conversion

Fifteen years ago, clicking a banner ad was considered a conversion by some, and semantically, they were not necessarily wrong. You wanted users to come to your site, you wanted to convert the exposure you were buying online into visits. Now conversions take place on your site and are usually purchases or registrations.

But what a conversion is can vary drastically from one business to another, there are as many types of conversions as there are business models, and companies use different terms for the various stages of their onboarding process, assuming they comprise more than one step. (lead, contact, account, acquisition, conversion…)

Why do some Businesses struggle to define Conversion Value?

While marketing technology soon allowed us to track actual conversions very accurately, it was not really telling us what was the impact of those on our bottom line, some of us tried to empirically tie revenue to conversion volume manually while others used CRM technology to automate that process. As great as your CRM tech might be, it is likely that it was not built to keep the campaign ID attached to your original converting ad or tactic all the way to actual marketing revenue. And even when it was giving some sort of general idea as to what tactic or campaign was generating the most money, it did not live in a platform allowing you to automate any sort of optimization tactic.

More so than the conversion itself, it is the product and the way you will convert your customers that will define your ability to keep expense to revenue visibility and optimize it in an automated way.

I was the Director of Search Engine Marketing for a leading financial brokerage company for over 10 years, and although we could empirically get an idea of what our conversions were generating business wise, it was nearly impossible to tie marketing spend to actual marketing revenue. We had to be crafty to find ways to measure trends empirically and we were right more often than not, but there was no way for us to get accurate numbers and even less of a way to automatically optimize towards marketing revenue. You can manually assign values to types of conversions with custom event tags but that solution is limited in many cases.

We faced several issues:

First there was the onboarding process, by the time a client made a deposit on their newly opened account, they were taken to a third party platform on which campaign ID was not being passed on, for security and regulatory reasons. Although the deposit amount was then fed back into our CRM, it was no longer tied to the original ad unit or tactic that generated that conversion, either because it was overwritten by another campaign ID or because it simply got dropped along the way.
Then you have the actual business model, a broker does not generate revenue depending on the amount a client will deposit on their account. It depends on trading volume and also the type of asset they trade. All asset types present different spread or commission models. That information was also being fed back into our CRM, but again visibility was limited, reporting cumbersome, and the ability to automate optimization strategies impossible.
This example is not unique for online businesses and shows that unfortunately, optimizing marketing spend to actual marketing revenue is not always possible depending on your business model type.

The good news however is that some types of businesses can.

Counter Tags versus Sales Tags

For a while all tracking tags or tracking pixels were the counter tag type. Counter tags are a binary signal, telling you when a conversion takes place. It is up to you to consider what a conversion is and where those tags are placed, on form submission buttons, on thank you pages etc. Once it fires it is attached to the marketing campaign ID that generated that click, and you can see on your publisher platform how many conversions were generated for that specific message, keyword or campaign. You can then measure the value of the traffic you bought by volume of conversions it generated. This way of measuring value can be very subjective, and thus not give you the full picture.

Then sales tags (also called transaction tags in other platforms) were invented and they revolutionized the way consumer goods and retail businesses valued their conversions, all of the sudden they could tie marketing spend to actual marketing revenue. No complicated business model, deposit amounts or trading volume, no crippling privacy or regulation concerns to deal with, and even if the actual transaction is taking place on a third party site, the detail of the order and its total are still featured on your hosting domain. The purchase details can be attached right away to the campaign ID of the ad or keyword that generated that converting click.

There was no guessing anymore, you could accurately state that the traffic you were looking at consistently brought users who purchased X items, for a total value of Y US dollars, Euro, etc.

Reporting Capabilities of the Sales tag

Sales tags allow you to keep track of how many items have been purchased and what the overall currency value of that purchase was, it essentially reports on the most important details of your clients orders. With the right backend setup, sales tags can build reports showing revenue, profit margin per product, but also cross sell opportunities and much more.

With all that data available in one platform you can start optimizing every aspect of your marketing efforts, from the bidding to product exclusion.

With that kind of visibility you can really tell how well your marketing dollars are being spent and your decision making process no longer suffers any sort of guess work.

Can your Business optimize towards Revenue?

Most case studies on sales tags take the example of big corporations that churn millions of dollars yearly into marketing spend and optimization to explain the difference between the sales and counter tags and their tracking capabilities, but more so than the size of the business, what you should take in account is your business model type to figure out if this solution is available to you.

Major consumer goods companies like Nestle, L’OREAL or Coca Cola manage hundreds if not thousands of different products, brands or sub brands, automating optimization for that kind of volume is critical. But if you are a small or mid size retailer of any kind and if you are ready to embrace that next level of marketing optimization, there is no reason you should not consider moving towards a marketing platform that will allow you to gain a similar level of insight on your online sales and overall marketing efforts. There are no small gains, who knows what kind of low hanging fruits you could find?

The Huddlefifty team can help you figure out if that solution would be good for your business, and can also help you set it up and/or manage it.

I hope you enjoyed reading this quick paper on revenue optimization.

I encourage you to contact me if you have any questions about anything featured in this article.

Franck Lacroix for Huddlefifty.
Franck@huddlefifty.com