Jake Peterson is the head of customer success at Segment, a customer data hub that lets you integrate analytics, advertising and marketing tools with the flip of a switch.


The e-commerce industry will reach $294 billion in 2014 alone, and accounts for nearly 10 percent of all retail sales according to Forrester research. Clearly, it’s a competitive market, and many online retailers rely on marketing to break out of the pack and get more customers.

Here are a few tips for measuring e-commerce ad campaigns that will help you make the most of that marketing budget.

1. Know what you want your campaign to achieve

To measure the effectiveness of your ad campaign, you first need to decide why you are doing one in the first place. Some e-commerce companies make the mistake of just buying random ads. This is a waste of money.

Before you shell out to ad networks, you should set goals for your campaign. Here are some examples:

  • Increase product sales by 3 percent
  • Gain 2,000 mailing list subscribers
  • Sell 4,300 items from the autumn collection

2. Choose three metrics to evaluate if the campaign was effective

Now you have your goal in mind, you need to be able to measure if you’ve reached it. Figure out what information you need to do this analysis.

For example, if your objective is to drive more sales, you’d want to measure three metrics that contribute to reaching that goal:

  • Average number product views per visitor
  • Percentage of visitors who view products that also purchase them
  • Product revenue

3. Develop a plan for tracking your three key metrics

Most ad campaigns goals revolve around a visitor to clicking through your ad and then do something on your site, like purchasing a product. As a result, you can measure most key metrics overtime with a simple framework that tracks important events in the customer lifecycle:

  • Viewed Homepage
  • Signed up for Newsletter
  • Browsed Collection
  • Viewed Product
  • Favorited Product
  • Added Product to Cart
  • Completed Order

Once you have event tracking setup, it’s easy to calculate your metrics. For example, divide the number of people who “Completed Order” by the number of people who “Viewed Product” to calculate the viewed-to-purchased product conversion rate.

4. Create your media variations

Google, Facebook and LinkedIn, among other popular ad networks, advocate for building multiple ad variations to find the best performing piece of creative. Most of these tools also have the functionality to automatically identify which version is getting the most traction and serve that one more often.

You never know exactly which design will resonate, so try some versions with images, try some without, try different color schemes and calls to action. When designing, make sure you keep in mind your original goal of what you want people to do after they hit your site. Draft your calls to action accordingly.

5. Build unique links to tag each advertisement

UTM links are unique links you can build to tag each ad variation and channel. They enable  you to attribute ad visitors to each network accurately. Google URL builder is the easiest tool for building UTM links, but you can also use something like Terminus if you want want a more advanced tool to keep track of all of your links.

When building unique UTM links, you can set parameters like source (ex: Facebook), medium (ex: banner variation 1), and campaign (ex: autumn collection) to easily track where ad referrals are coming from. The link I just described (that points to a blog post about your autumn collection) might look something like this:

http://yoursite.com/blog-post-fall-collection/?utm_source=facebook&utm_medium=bannerverision1&utm_campaign=autumncollection

Once you set up your links, you can drop them into each ad variation with your ad network admin access.

6. Test tracking for each of your three key metrics

Before hitting the scary “publish” button, make sure to test all of your tracking. Click through each of your UTM campaign links and make sure they direct to the right place.

Go through the life of the customer (signing up, clicking around, viewing products, adding products to carts, checking out), and make sure all this data shows up in your end tools.

Try it for a few different products, and make sure the revenue associated with each product is going through as well.

Everything working? You’re ready for take off.

7. Review results of your campaign

After you set up event tracking and UTM links, you can actually use a few different tools to view the analytics data after your campaign.

KISSmetrics is a great tool for seeing how your key metrics like product purchases and newsletter signups change over time. Google Analytics is helpful for understanding referrals–this is where the UTM links come in. You can see how many people came into your site from each link.

Convertro is a more advanced tool built to analyze ad spend and reallocate your resources to the best performing channels. All of these tools will tell you if you’ve hit your original goals, and if not, how much you missed them by.

You can also view conversions and impressions in your ad tools themselves, but industry folks often worry that ad channels beef up their numbers, so using a third-party analytics tool is recommended.

8. Incorporate learnings into next campaign

Now you know whether you hit your original goals. Way to go! Not so fast. What are you going to do with the results?

Using a tool like Google Analytics you can easily view sites that refer the most people to your website, and sort them by your conversion event. So instead of just seeing that your Facebook ads brought in 890 visitors, you can see that 56 of those people actually completed an order.

Then, you can compare it again your Twitter ads. Maybe Twitter only sent you 300 people, but 70 of them completed an order. That would mean that Twitter is sending you higher quality traffic. Next time, buy more Twitter Ads.

The trick with evaluating your campaigns is to make sure you take what you’ve learned and apply it to your next launch. You’ll spend ad dollars more effectively and be more likely to hit your goals.

Have a question about measuring your ad campaign? Comment below, and I’ll get back to you!

Read next: The danger of vanity metrics: Creating a reality distortion field