"There are still a surprising number of companies who haven't installed Web analytics or who don't look at their search metrics in a proactive way," said Jonathan Ashton, director of SEO at interactive agency Agency.com. "It's easy enough to ignore these things if you think your site is doing a good job, but it certainly isn't smart."
Indeed, unless you're looking at metrics, there's no way to know if those who come to your site are sixth graders doing research or people who are truly interested in your products and services.
If you can only track a few metrics, said Andrew Goodman, founder and principal at search marketing agency Page Zero Media, cost-per-sale (CPS) and cost-per-lead (CPL) make the most sense. CPS is extrapolated by dividing the amount you spend on search advertising by the number of sales, while CPL divides the cost of search by the total number of leads.
"A lead can be anyone who requested a white paper or researched a page on the site," he said. "But this definitely isn't the whole picture."
In order to get an accurate assessment of your ROI, you need to know which search terms or phrases are working and which aren't. This means you need to break down your buy—at the very least—into category "buckets" or even better, by individual word.
"Many marketers have a large chunk of their budget going to poorly performing words," said Dana Todd, exec VP at interactive agency SiteLab International.
If you're analyzing categories, start by placing branded words into their own bucket. This takes them out of your overall search performance measurements, a good idea because brand names and words are obviously going to perform best. In fact, some branded words can garner ROI that is 100 or even 1,000 times better than other generic words you buy, said John Rodkin, VP-general manager of digital advertising solutions at Web analytics provider WebTrends. "In many cases, 90% of your return is going to be driven by branded keywords," he said.
One of the biggest mistakes marketers make may be calculating ROI based on the last keyword that lead to a purchase. So, for example, a prospect might be looking for left-handed blue widgets. They do a search on that term, see all the different options available and click around on a few ads and natural results. A few days later, they decide to come back to your site and search for your brand name. When they make a purchase, the search term that gets the credit—and the ROI—is your brand name, when in reality it was the term "left-handed blue widgets" that should get the credit.
"It's such a common attribution problem, but it's one you can definitely solve by tracking every visitor that comes to the site and cross-referencing after the fact," WebTrends' Rodkin said.
And then there are the conversions that you'll likely never track: customers who searched online, did all their research and then called a salesperson to complete their sale. "You really need to be thinking, `How many other sales did I get from the call center, people coming to my store, people coming back to the site much later?' " asked John Ragals, COO at search agency 360i.
While click-throughs are important, there's still value in paid search ads that are viewed but not clicked, which is why Google recently launched a new metric called share of voice and share of search. This metric looks at the total number of people searching for a keyword and compares it to how many times your ad was seen during those searches.
"It's an awareness benchmark," Todd said. "While you'd never want to pay for 100% share of voice, you might want to increase your spend if you see that your share is very low."
Check the competition
That said, your quest shouldn't stop with your own metrics, said Bill Tancer, general manager of global research at Hitwise, an online competitive intelligence service. Instead, you should be scoping out your competition's metrics, too.
"You can pick a term or phrase, and we can tell you which sites received traffic from that term," he said. "You have to assume the marketers around you are intelligent and not try and reinvent search."
You can also look at a list of specific search terms that your competitors are getting traffic on. Once you have both pieces of information, then it's time to look at your ranking and spending. Is your competitor, who is getting more traffic on a term or phrase you're both bidding on, sitting in a search slot that's higher than yours? If so, it might be time to boost spending on that word, Tancer said. Likewise, if that competitor is getting traffic on a word or phrase you aren't buying, you may want to add it to your repertoire.
Of course, there's more than just ROI metrics out there, and tracking them can help boost your sales as well. Clickstream and user pathing—following a visitor throughout their time on your site—can show you how people are using your site and what you might want to change if they are leaving without completing whatever call to action you might have.
"Looking at average number of pages, you can learn a lot because the more pages someone engages in, the better chance there is they will buy—especially if you have a product that requires a lot of research," Todd said.