Your Audience: Why Rent When You Can Own?

Business.com / Marketing Solutions / Last Modified: February 22, 2017

Here's steps you can take to go from renting your audience to owning it. To get started, take a look at cost per registration and the...

 

In the first installment of this blog series (An Owned Audience), I discussed the powerful financial leverage associated with moving from a rented audience model, which is reliant on repurchasing site traffic and audience engagement, to one founded on building an owned audience. In this context, an owned audience is one where users (visitors to your site) have registered with your site through submission of their email address or, preferably, full contact information (name, email address, phone number, mailing address).

Related: Your Introduction to Owning Your Audience

Measuring Your ROI

This shift does not come without an investment. To own an audience, you must first engage with them. Engagement can be initiated through paid traffic sources such as paid search (SEM), affiliate networks, display ads, social channels, offline campaigns, etc.  Even traffic generated organically involves an investment in SEO personnel and management tools, content creation, etc. To properly gauge the efficacy of your registration initiatives, and to enable optimization efforts, it's critical that you be able to track and calculate the fully loaded cost of a registration (or "CPR")... some refer to this as a CPA (cost per acquisition). They are one in the same.

Of course, there is a price -- or CPR - above which an owed audience does not pencil out. So, how do you measure the return on your registration investment, and determine which channels are cost effective? The first step, which most modestly sophisticated marketers employ, is source-level attribution. This is the ability to (1) track registrations to the specific traffic sources that drove those users to your site, and (2) associate the cost of driving that traffic (all users, not just those who registered) at the source level. These metrics give you the CPR of each individual traffic source, as calculated by dividing the number of registrations from a particular source by the cost of driving all traffic from that source (registrations/traffic cost). For example, if you spend $100 on Google Adwords to drive traffic to your site, and that traffic results in 20 registrations, the CPR on that campaign is $5.  So, how do you know if that was money well invested?

Related: Own your audience with the help of an online marketing agency.

Don't Forget Lifetime Value of a Customer

During the course of a registration, a monetization event may occur: e.g. display ad impressions are consumed, a purchase is made, a lead form is filled out, etc.  A surprising number of marketers stop here, simply measuring the immediate revenue generated from the traffic (also known as in-session revenue) against the CPR of the traffic. Either the registrations resulted in a profit (revenue minus immediate revenue), or they didn't.  This ignores the future monetary value of a registration, and why the concept of Lifetime Value ("LTV") is so important in building a database of registered users. Registration data enables marketers to maintain a constant line of communication with their registered users. Drip email marketing (regularly sending email to your email database) is the most common form of post-registration communication, which allows marketers to generate revenue in the body of an email and drive registrants back to your site, which in turn drives monetization. There are many other forms of post-registration communication, including call center outreach, direct mail, email database rental, etc.  The benefits of ongoing communication go beyond the monetization of existing registrants, to include social sharing and brand building, both of which generate organic site visits.

The Key to LTV

The key to LTV is the ability to tie subsequent events (monetization of the registrant, registrations and monetization that derive from social sharing, etc.), back to the source that drove the original registration. As LTV history builds, marketers have far better visibility into the long-term ROI of their individual marketing campaigns, enabling them to make smart decisions on where to double-down and where to trim the fat. For traffic sources with an LTV that trumps the CPL, additional marketing dollars should be allocated. The opposite is true where the LTV is below the CPL.

Related: Top 4 Tips for Dealing with Marketing Complexity

A common debate among marketers is how long LTV for a particular registrant should be captured and attributed back to the originating source of the registration. 30 days is typically viewed as the bare minimum timeframe, with some marketers tracking LTV back to the original source in perpetuity. A common middle ground is 180 days.

The higher your LTV, the greater you're recurring revenue... greater recurring revenue facilitates more substantial registration budgets, which in turn produce a larger owned audience. This is a circle that every site should strive to perfect.

Stay tuned for the next installment of An Owned Audience.

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