Contextual Advertising Under Analysis

Contextual advertising is considered a shortcut to success: pay for traffic and wait for ensured sales. In effect, it's not that simple. Contextual advertising demands expertise; wrong settings will lead you nowhere, and you'll splurge all your budget on Google Ads without receiving a single conversion.

Time to recoup your investments. We'll tell you everything we know about contextual advertising campaigns: prepare for a thorough efficiency analysis.

What Is Efficiency Analysis

There's not much to say. Efficiency analysis helps assess the quality of the campaign so that marketing specialists can understand how it functions.

Why Do We Analyze Efficiency

Here are a few vital grounds why affiliate marketers, marketing specialists, and business owners monitor campaign performance.

1. To make sure whether it is reasonable to invest. Contextual advertising is the most expensive advertising format, so it demands proper assessment before making a decision. In this case, efficiency analysis helps you understand whether the lead you're getting is worth the cost.
2. To identify the interests of the audience. The more you know about what people are looking for, the more and the better you interact, thus building a customer service system offline.
3. To improve customer service. By understanding the audience, business owners can define what they need to change to process requests more productively.
4. To rectify the current campaign. The specialist evaluates which ads attract more potential clients and adjusts their campaign, eventually reducing the cost of the lead and increasing conversion.

The analysis consists of numerous parameters, including data collected from metrics.

Metrics vs. KPI

Online advertising efficiency analysis is based on metrics often confused with KPIs. While the terms share a few common features, there is a difference between the two.

Metrics indicate actual data for the selected period: the number of clicks, impressions, or attracted leads per week/month.

KPIs, aka key performance indicators, only help set goals and analyze the data received from metrics. Using these, you can evaluate the result of your advertising campaign.

To put it simply, metrics convey the actual values of the advertising campaign, while KPIs are your future target, stimulating you to improve.

Before You Start

Greenhorn affiliates and business owners launching an ad campaign for the first time tend to make a lot of mistakes, leading to enormous budget expenses and incorrect efficiency assessment. However, you can avoid blunders if you prepare for the entire undertaking.

Define Your Goals

Have a clear view of what you want to achieve. More often than not, business objectives seem vague: I want to attract several leads. How many? In what period are you planning to get this time? What techniques are you going to use?

In short, trust numbers, not words.

These are the criteria for better assessment.

• Specific numbers. If you want to increase the number of targeted actions, indicate the source from where leads should come, the tools you will use, and the money you are planning to spend.
• Select the measurement unit. This is where you define how to properly evaluate—measure—your achievements: for example, the number of orders placed by leads.
• Set realistic goals. Do not focus on the indicators beyond attainment accessible to large brands with millions of dollars spent.
• Set precise deadlines. For example, clarify that the objective must be achieved in 2-3 months or during a major sale.

The essential thing is that you are supposed to concentrate on the results. Constantly monitor the performance of contextual advertising and increase target indicators. Be strict with yourself, and devote enough time to work.

Analytics Counter

Thanks to modernity, efficiency can be tracked in a couple of clicks: insert the HTML code of the counter into advertising pages. Counters like this can:

• Select a landing page, which will help you turn a lead into a buyer. With this, you can determine whether contextual advertising was efficient;
• Calculate conversion, as the counter tracks user actions on the page and keeps a report;
• Estimate the values of target indicators: you can determine the cost of transition and the quality of advertising (to do this, calculate how many visitors became valid buyers);
• Define the percentage of return on investment (ROI) to understand whether investments in advertising pay back.

Where to find such counters? No need to surf the Internet to find a decent option: Google Analytics is right here, connected to advertising systems, and provides more complete reports.

Efficiency Analysis: Detailed

Throughout the customer's journey through the sales funnel, there are proprietary metrics to track advertising effectiveness.

To evaluate the campaign's effectiveness and efficiency, you should separately gauge each step of the funnel. This method will allow you to manage sales, increase profit from your sales funnel, and reduce lead acquisition costs.

Ad Impression

The essential objective of any ad campaign is user attraction. To attract interested users to goods and services, affiliates should acknowledge key indicators of online advertising performance: CTR and CPC, closely related to other concepts: audience engagement, number of impressions, and unique visitors.

First, analyze the unique visitors who have seen the ad. Here are the parameters you need:

• IP address;
• Browser and device operating system data;
• GEO;
• Cookies.

If the user clears their browsing history and reinstalls the browser, the metrics will take them for a unique visitor, so allow for an inaccuracy.

You can find this data in Google Analytics in the audience overview tab:

Another important metric is the number of impressions. If you know how to use it to your advantage, you will be able to:

• Calculate CTR: find out the click-through rate of your ad;
• Find out the bounce rate;
• Evaluate the campaign's reach if its goal is to increase brand awareness.

The number of impressions is reflected on the main page of metrics. This is one of the vital indicators.

Once you learn the essentials of your campaign, calculate the CTR. Usually, it's an automatic process, but if you feel like supervising the system, use this formula:

You're doing fairly well if your indicators are close to the following:

• search ads: 4-5%;
• media ads: 0.5-1%.

CTR is important for several reasons:

• It shows how effective your ads are. If your CTR is low, the information displayed to users does not meet the needs of the target audience or is exhibited for irrelevant queries.
• Conversion depends on the click-through rate. The higher the CTR, the higher the return you can expect from your advertising campaign.

• CTR affects ad rankings. The higher the CTR, the higher the ad will be. This results in lower costs for traffic acquisition. If it reminds you of an auction, yes, you're absolutely correct, the principle is the same.

The cost of clicks is determined individually for the advertiser during the auction. CPC shows the average cost per click, allowing you to calculate how much it costs to attract one lead.

Redirection

So, the user clicked on the ad and got redirected to the site. Your objective changes correspondingly: now you want to retain this user and turn him into a lead.

The user’s actions on the landing page are also monitored by the metrics.

The primary indicators are: audience engagement, bounce rate, viewing time, and page depth.

Here are the facts you should know about behavioral metrics.

• Attendance/traffic. This feature implies the number of visitors coming from different sources, divided by the number of unique users and their visits.
• Bounce rate. This criterion indicates the number of users who left the page almost immediately or viewed only one page. Indirectly, this metric hints at the inconvenience of the site’s usability and the inconsistency of the information displayed.
• Viewing time and page depth. These metrics show the behavior of users on the page and how quickly they reach the goal. In single-page resources, this indicator can be neglected.

If the indicators of behavioral characteristics are unsatisfactory, define the reasons in the usability and ads. The bounce rate is of the utmost importance as it affects the quality index of sites.

Conversion

Conversion is the result of the targeted action performed by the user on the site: they viewed a specific page, submitted a request, left their contacts, or placed an order.

Such action confirms their interest in purchasing and leads them along the sales funnel. To track conversions, you use objectives in your metrics reports. They have to be configured according to the sales funnel you created.

It's important to get as many visitors as possible to the next stage of the sales funnel, that's why we use specific metrics to evaluate the campaign. First, calculate the conversion rate (CR), which shows how many users completed the target action.

To calculate it, use the formula:

The rate from 1 to 2% is considered normal. If your CR is lower, consider double-checking the site, as there may be problems: for example, the product lacks information to impel the user to make a purchasing decision.

It's a good idea to assess CPA (to see how much you spent on one user who completed the target action.) This indicator is important if, according to the terms of the affiliate program, you are paid only for a completed order. This indicator is calculated by the following formula:

Another metric you should focus on is CPL (cost per lead). Affiliates resort to it when they need to analyze the efficiency in cases where the target action is obtaining a user’s phone number or e-mail. To calculate this indicator, divide advertising costs by the number of leads.

This metric is also worth using if you have a multi-stage sales funnel or a long transaction cycle. In this case, you first need to get the client’s contact in order to gradually sell him the product or service.

However, if you're trying to make the client place an order, check out the CPO metric (cost per order.) Calculate the price for bringing the deal to completion. The costs include the salary of the call center manager and other expenses.

This indicator is calculated by the following formula:

If your final goal was an order on the site, CPA and CPO mean the same thing.

To analyze advertising efficiency, count CPA and CPO for each traffic source and separately launched campaigns. These indicators are enough to evaluate your work.

Confirm Your Hypotheses

Knowing how to evaluate the effectiveness of contextual advertising, you can test your assumptions related to the behavior of the target audience and its reaction to creatives or individual ads.

To do this, you need to work according to the following scheme:

• Formulate an assumption:
• Create several advertisements with different texts, creative formats, and pictures;
• Show them to the target audience in the selected region or particular time of day; conduct research.

This will allow you to identify a target audience that will be more responsive to the creatives you make. You can also identify the most catchy ads and texts. After such an analysis, you can increase the budget and change the target audience settings.

Increase Your Efficiency

Evaluate the efficiency of contextual advertising to run a successful campaign. To do this, apply the data from the metrics in practice.

Account Analysis

Many marketers and business owners only create one ad per campaign to divide their target audience into groups and create 3 to 4 creatives for each.

Try different settings and teasers to see what works best. Conduct an analysis of advertising after a test run and leave only the ads with better performance.

Keywords

It may not be obvious, but one of the causes of low efficiency is incorrectly selected keywords. Work with them according to the following plan:

• Assemble a semantic core;
• Sort phrases into groups;
• Create your own ad for each one.

Keyword groups can be identified by the subsequent characteristics:

• GEO;
• target audience;
• product;
• presumable placement platform.

The efficiency of the ad will be higher if you show people what they are looking for. The ad must meet the user's needs. A higher CTR can be achieved by limiting the number of keywords in one ad group to target it to a narrow target audience.

Device Analysis

Find out which devices receive more clicks and how efficient they are. If users often click on ads from smartphones, but do not complete the target action, it is worth reducing bids for these devices.

Demographic Analysis

To understand your target audience, determine what users bring conversions. Reduce the rates for other groups of the target audience so as not to slip into the red. By the way, age and gender data will help you create a better portrait of the audience.

Time Analysis

If you drive traffic to several offers, exclude impressions during hours when the ads do not bring conversions. This will allow you to optimize advertising costs and reduce the cost of attracting a client.

Ad Types

If you look at the results of the analysis and realize that you're surprisingly slipping into the red, try new formats. For example, text and graphic creatives no longer work, so switch to the banner options.