Most of your ads are not profitable.

Over the last few years, Digtective has tracked over a million conversions using our server-side, cookieless tool. Our clients range across several industries but concentrate on financial services and real estate. To celebrate hitting the magic million number, we’ve deep-dived into the data to see what we – and therefore you – can learn from it.

Most of our clients operate businesses with longer and more complex sales cycles than your typical online store, such as loan intermediation, real estate agencies, or consultancy businesses. This means that tracking conversion is more complicated than just seeing who clicked on an advert. After the customer has submitted an application form for a loan, for example, the application has to be forwarded to the appropriate bank, the bank has to consider the application, and only if the loan is approved and the customer accepts the terms, does the intermediary get paid. While this can be a matter of minutes, it can also be a matter of months. Digtective’s tracking of these offline conversions is essential to direct your advertising spend to the right ads.

Most of your conversions don’t make you any money.

You already know that no one clicks on most of your ads – click-through rates are usually low for most channels. Once they’ve clicked on your ad and come to your goal page, though, how many actually turn into revenue? Our numbers indicate that this varies between and within customer segments, but the average is 6.4%. The range is from 2,7% to 11,3%.

*  Note that some clients have proprietary channels ranking in the top 10, which are therefore hidden in the table.

The segments with the highest ratio of conversion to income are those where the end customer’s sense of urgency is highest: one client is a chain of dentists, others are banks and loan brokers specializing in refinancing distressed borrowers. Searching for a dentist or an expensive last-resort-mortgage is clearly not something people do casually … the loan brokers with low conversion rates are those who are active in crowded markets such as credit cards and consumer loans. The variation within each category is also interesting, implying that the quality of your adverts, the target market you are addressing, or other factors are impacting it.

Another interesting finding is that, for most of our clients, the best source of leads is in fact direct. Table 2 (above) shows, for a selection of clients (all from the financial services sector), which lead sources have the highest net income per conversion (i.e. income from the transaction minus the cost of the advert or lead). No average has been calculated (since the clients all have different numbers of total lead sources) direct is clearly the top source. Table 3 shows this quite clearly when looking at the aggregate numbers across the whole sample of clients. This is true even for those whose brand names are not well known in their market, indicating that doing a good job on SEO is a very worthwhile effort.

From our perspective it is also interesting to see how much the ROI on advertising spend differs between clients. As for most SaaS companies, we know that there is great variability in how active our clients are in using our software. Unlike most SaaS companies, we can compare the frequency of logging in with the effectiveness of our product! Of the four clients whose data we have used for the two above tables, two are active users of the service, checking their ads daily and cutting those which are not profitable. The other two have been more passive, allowing us to track their conversions without actively going in to focus their spending on effective ads. This is clearly visible in what return they are getting on their advertising spend:

The numbers you see in your analytics aren’t the full picture

The growth of ad-blockers and “do not track” means that Google Ads is missing more and more of your traffic and conversions. In addition, the use of cookies is becoming more and more difficult. Because our tool counts form submissions server-side, we can track those customers whose browsers do not allow cookies (while still being GDPR and privacy-compliant by avoiding the association of the conversion to any personal data about the customer). Over time, we have seen a significant gap between form submissions as counted by Google Ads, versus the full picture which our tool gives:

This indicates that Google Ads misses a huge number of conversions. This is of course an issue for those wanting accurate data to guide their advertising, but is an even bigger problem for those trying to create machine learning algorithms to automate this process.

What’s even worse is that many clients set up their Google Ads to track many different actions as a conversion – which is fine if you want to measure the performance of your webpages, but not if you’re looking to maximise your revenue. Defining “Youtube channel subscription” as a conversion will help you grow your YouTube channel, but will give you a very noisy dataset. As Cassie Kozyrkov says, the essence of ML and AI is “Optimize [this goal] on [this dataset]” – if your dataset is missing 30% of the full picture, or if the goal is unclear, you’re likely to end up with a bad algorithm. This has been adjusted for in the above table for Client C, which has a very broad definition of conversions in their Google set-up.

How we are developing our tool in response

The core of Digtective’s offering has been the Digger tool to track ad spend and profitability, reducing cost per lead and allowing you to focus your spending on the ads which perform best. However, as the death of the cookie and the growth of no-track has progressed, we have seen that we can provide an important service also to clients who just want to have accurate data in their analytics solution. We have therefore developed a service which feeds our conversion tracking back into Google Ads, allowing you to see the full quality of Digtective data in the interface you are already using. This also allows better training of any algorithms you may have for optimizing your ad spending.

To enable the widest possible adoption of this, we provided this in a “Digger Lite” subscription, where a monthly fee of EUR 50, rather than the full Digger subscription fee from EUR 1000. We are confident that seeing the true numbers will also increase interest in the full service, allowing more customers to reduce their marketing spend.

Big thanks to Jakob Bronebakk, CFA for his analysis. Jakob is an independent strategy consultant with a focus on using technology and data science to improve financial services.

Jakob was a cofounder of MyBank ASA, and served as its CFO and then CEO. He has held CFO positions in other financial services companies, prior to which he worked as a derivatives specialist at investment banks in London. His preferred habitat is steep, mountainous terrain, but can also be found in front of large spreadsheets or building machine learning models. 

Learn more and reach out to Jakob on LinkedIn.

The ability to see the revenue impact on our marketing activities and advertising spend, is necessary for any company, but it can be a challenge for those of us who have a “sales cycle” where the sales process happens offline between a prospect and our sales team. Why is connecting revenue with advertising spend important?

Not all leads end up as “sales” and not all leads are good leads.

We spend resources, time and money on lead generation, so knowing which part of the activities, campaigns, and ads, that delivers the growth in revenue and profit, is crucial, and will directly impact our profitable growth and speed of growth.

The conversion from lead to revenue will vary significantly from business to business, but let’s say it’s 10%. What if you knew which of the specific marketing activities that lead to your sales, and not just leads?

Knowing that would enable you to better answer the question of which part of your marketing budget actually contributes to growth, and it would help provide the path to scaling your business.

What our cookieless conversion tracking does for your revenue growth.

Digtective is cookieless which means that your tracking is no longer blocked by cookie consent banners, iOS 14.5 blocking cookies base tracking etc. It helps you associate a lead to any single advert or marketing activity.

The increasing measures for protecting data privacy, means that the current web analytics solutions are not able to provide us with data they are no longer receiving from the visitors device, as it’s blocked by iOS 14.5, cookie consent banners, privacy enhancing web browsers etc.

This means that the majority of our analytics data can not show us which ads deliver revenue and which are losing money … we have lost substantial control on our growth.

Track your revenue and profitability, not just leads

Tracking leads against your marketing activities and media spend is common, but if only e.g. 10% of leads generate a sale, it’s important to know which part is working.

Connecting your revenue data with your marketing data, via integration to your CRM system, helps you see, not just how many leads, but how much revenue your marketing activities and advertising generate.

This helps you to better control your marketing efficiency and deliver more revenue for your marketing budget.

Reduce your advertising cost and increase your revenue growth

Knowing which part of your marketing activities that deliver revenue and which does not, is a major step forward compared to measuring only against leads and it helps you

• Reduce the wasted advertising cost of what doesn’t work
• Reallocate the wasted advertising cost to those activities that deliver revenue
• Save double digits in advertising spend, and increase your revenue growth.

See which ads drive your revenue and which lose money

Getting a comprehensive performance overview of your marketing efficiency is easy when you have connected your revenue with your advertising

See which ads lose money

With cookieless conversion tracking that tracks both your leads and revenue you will be able to see which ads contribute to the growth of your business, and get a view of where to focus your marketing efforts most effectively.

Move your wasted ad spend to profitable ads

Knowing which of your marketing costs and resources, that doesn’t deliver leads or revenue, you can confidently reallocate to the activities that generate growth.

All your digital marketing data in one place for easy reporting

With all your digital marketing data in one place it is easy to set up your automated reporting in Excel, Google Data Studio, or import it to your reporting visualization tool, and once place to pull data to your ad hoc reporting. No more manual data collection and “glueing” together data from different sources.

Get in touch

Whether you are a SaaS or Financial loan broker / lender, wanting to implement reliable cookieless conversion tracking, to gain critical insight to your path for profitable growth, we would be happy to help you out.

To get more details about our cookieless conversion tracking, visit our Cookieless conversion tracking for SaaS, Lenders & Loan Brokers, or get in touch here.

Is there a mismatch between the conversions you are tracking and the actual revenue you are targeting?

Measuring CAC when you don’t really have a customer yet?

For many businesses, their digital marketing conversions are only leads or potential clients with wide variations in actual revenue. Let us look at a few examples.

• If you are an optician, your conversions from digital marketing are largely bookings, typically a eyesight test. However, the revenue from the test can range from nothing (no-show) to repeat orders of expensive prescription glasses and more.
• Similarly, if you are a financial services provider, your conversion from digital marketing is typically an application form for a loan. The actual revenues and results however depend on later events such as approval, interest rates and performance of the customer.
• A SaaS business or anyone selling subscription services measures conversions as new subscribers. How long do they however stay, typically after an introductory discount period?

Tracking and measurement of campaigns and ads typically only provides the cost (CAC) for potential revenues. Most businesses simply accept this as a fact of life and carry on their digital marketing activities with a view to minimize the cost of a booking, application or new subscription. The actual revenue generation is left as a different business altogether.

The devil is in the details

If you simply measure and optimize the cost for potential revenues, you run the risk of attracting the wrong kind of customer. Let us say that you have two campaigns with widely different conversion costs. Without additional information, you would discontinue the high-cost campaign. However, the expensive campaign could provide potential customers that spend more, stay longer and perform better. Correspondingly, the low-cost campaign can provide potential customers that you really don’t want, like bargain hunters, no-shows and loan defaulters.

Trying to bridge the gap

There are different ways to partially mitigate the information gap. As you probably have guessed, excel sheets and hard work are key elements. The challenge with these alternatives is that they require a lot of time and effort and hence do not allow for adjustments before the campaign has ended and the money has been spent.

Google provides some ideas on how to track offline conversions. The idea of posting data back to Google however raises the issue of GDPR compliance. Additionally, as Google is phasing out third-party cookies, perhaps the effort will no longer be worthwhile.

Measure what matters real-time with Digtective

The marketing software Digtective provides a real-time overview of the performance of your digital marketing activities. Measuring customer acquisition costs directly against customer lifetime value is now possible, and you can optimize your marketing spend towards profits instead of an uncertain proxy (leads). Digtective also bridges the gap for offline conversions by connecting with your CRM so you can compare your digital marketing spend real-time against any relevant metric or combinations of metrics.

Relax, Digtective does not exchange personal data and is GDPR compliant. No third-party cookies, no javascript, no fingerprinting.