1. Web Metrics This module covers the concepts of pageviews, visits, visitors, clickthrough rates, cost per click, cost per order, cost per customer acquired, bounce rate, and abandonment rate. Authors:Paul Farris, Darden Kearby Chen, RKG Marketing Metrics Reference: Chapter 9 © 2014 Paul Farris and Management by the Numbers, Inc.

2. T RAFFIC M ETRICS : V ISITS AND V ISITORS Traffic Metrics: Visits and Visitors Definitions Visitors: The number of unique users of a site. Visits: A visit occurs each time a person accesses a website. MBTN | Management by the Numbers 2 Visitors must be less than or equal to the number of visits. The initial session by a user during a given time period is both a new visit and new visitor. Any future sessions from the same user during the same time period are counted as additional visits but not as additional visitors. Visits Visitors

3. T RAFFIC M ETRICS : P AGEVIEWS Traffic Metrics: Pageviews 3 Definitions Pageviews:The number of times a specific page has been viewed or requested by the server. Unique Pageviews: The number of visits during which a page was viewed one or more times. MBTN | Management by the Numbers Pageviews Visits Visitors Pageviews must be more than or equal to the number of visits, as a visit can consist of one or more pageviews. If a visitor navigates to a different page and then returns to the original page during a given visit, one unique pageview but two total pageviews are recorded for the original page.

4. 4 Definitions Impressions*:Occurs when an organic listing on a search engine results page (SERP) or paid ad appears. Clicks: Occurs when a user navigates by selecting (i.e., clicking) an organic listing or paid ad on a SERP. For a given SERP (with 10+ organic listings and 10+ paid ads), all links will receive an impression but only one might receive a click. MBTN | Management by the Numbers *See the Advertising Metrics module for a more on impressions, which are equivalent to “exposures” or “opportunities-to-see.”. Traffic Metrics: Impressions and Clicks T RAFFIC M ETRICS : I MPRESSIONS AND C LICKS

5. C ONVERSION M ETRICS : C LICKTHROUGH R ATE Conversion Metrics: Clickthrough Rate Definitions Clickthrough Rate (CTR):The percentage of impressions that result in a click Clickthrough Rate (%) = Clickthroughs (#) / Impresssions (#) MBTN | Management by the Numbers 5 Insight The Clickthrough Rate is a key metric in determining the effectiveness of Internet advertising. It is strongly influenced by the position on the page, brand recognition, and compelling ad creatives. Typically, internet ads generate low clickthrough rates. The difference between a good and a poor ad may be a fraction of one percent.

6. C ONVERSION M ETRICS : B OUNCE R ATE Conversion Metrics: Bounce Rate 6 Definitions Bounce Rate: The proportion of visitors that left a site after viewing the first page. Bounce Rate (%) = Visits that access only a single page (#) / Total visits to the web site (#) MBTN | Management by the Numbers Insight Bounce rate reflects the effectiveness of Web sites at drawing the continued attention of its visitors. Typically, bounce rates indicate a company’s effectiveness at generating relevant traffic. Thus, the more relevant the traffic coming to the web site, the lower the bounce rate.

7. C ONVERSION M ETRICS : O RDERS, S ALES AND L EADS Conversion Metrics: Orders, Sales, Leads 7 Definitions: Orders: The number of purchases. Sales: The revenue generated from all orders. Leads: The number of potential customers that are interested in an advertiser’s products or services MBTN | Management by the Numbers Instead of immediate sales, some advertisers focus on generating qualified leads to pursue for long-term commitments (for example, financial products, subscriptions, etc.)

8. C ONVERSION M ETRICS Conversion Metrics 8 Definitions: Conversion Rate (CR):The ratio of the number of orders or leads to the number of clicks. Conversion Rate (%) = Orders or Leads (#) / Clicks (#) MBTN | Management by the Numbers Conversion rate depends heavily on the competitiveness of an advertiser’s product or service offering once a user reaches their site. Note that while clickthrough rate (CTR) is strongly influenced by the position on the page, CR is not.

9. C OST PER C LICK AND C OST P ER M ILLE Efficiency and Productivity Metrics Definition Cost per Click (CPC): The amount paid per click generated on a paid ad Cost per Click ($) = Total Cost ($) / Number of Clicks Generated (#) Cost per Mille (CPM): The average mount an advertiser pays for a thousand ad impressions. Cost per Mille ($) =Total Cost ($) / (Impressions/1000) (#) MBTN | Management by the Numbers 9

10. M AXIMUM C OST P ER C LICK Efficiency and Productivity Metrics This, at least partially, determines the order in which links are shown to searchers. The price charged to the winning bidder will usually be just above the Maximum CPC the second highest bidder was willing to pay. MBTN | Management by the Numbers 10 Definitions Maximum Cost per Click (Max CPC) is established through a biding process, in an auction type format, to search engine marketers. It is the maximum an advertiser is willing to “bid” (i.e., pay) to have their ad served for a given keyword.

11. A D S PEND TO S ALES AND A D S PEND TO M ARGIN Efficiency and Productivity Metrics 11 MBTN | Management by the Numbers Definitions Ad Spend to Sales (A/S): The ratio of the amount of ad costs to the amount of sales; pronounced “A to S.” Ad Spend to Sales (%) = Costs ($) / Sales ($) Ad Spend to Margin (A/M): The ratio of ad costs to the amount of profit margin; pronounced “A to M.” Ad Spend to Margin (%) = Costs ($) / Margin* ($) *See the MBTN Calculating Margins module for more on defining margins.

12. C OST P ER O RDER A ND R ETURN ON A D S PEND Efficiency and Productivity Metrics 12 Definitions Cost per Order/Lead (CPO/CPL): The cost paid per order generated or lead generated by the advertising. Cost per Order/Lead ($) =Total Cost ($) / Orders Placed or Leads (#) Sales Return on Ad Spend (ROAS):The ratio of the amount of sales to the amount of ad costs. Sales Return on Ad Spend (#) =Sales ($) / Costs ($)

13. Q UALITY S CORE Efficiency and Productivity Metrics 13 Definition Quality Score (QS): A search engine’s measurement (from 1-10) of how relevant an advertiser’s ad, keyword, and landing page are to a user seeing a paid search ad. Quality score affects ad positions on the page as well as ad prices and is calculated every time an advertiser’s keyword matches a customer’s search. A high quality score means that the ad, keyword, and landing page seem very relevant to what a customer is searching for and also relevant to one another.

14. A D R ANK Efficiency and Productivity Metrics 14 Definition Ad Rank: A value search engines use to determine a paid ad’s position on the page. Ad Rank (#) = Quality score (#) * Max CPC ($) Ad rank is recalculated each time an ad is eligible to appear so a given ad’s position can fluctuate each time depending on the competition at the moment. The higher the ad rank, the higher the position an ad will serve in relation to other ads. Note that by improving the quality score, an advertiser can achieve a higher ad rank for the same “bid.”

15. O THER I NTERNET M ETRICS Other Internet Metrics Definitions Contribution Margin per order: Contribution margin (%) * Dollar Value of Order Abandonment Rate: The percentage of shopping carts initiated, but not completed. Contribution Margin per order Abandonment rate MBTN | Management by the Numbers 15

16. F URTHER R EFERENCE 16 Further Reference MBTN | Management by the Numbers Marketing Metrics by Farris, Bendle, Pfeifer and Reibstein, 2 nd edition, chapter 9. MBTN Advertising Metrics Module which covers general metrics used in advertising and includes definitions and examples of impressions, gross rating points, CPM, reach, frequency, and share of voice. - And - A special thanks to the Rimm-Kaufman Group, whose assistance was instrumental in updating this module. More about their services can be found at: www.rimmkaufman.com www.rimmkaufman.com