When it comes to the micro economics of the cost of marketing and advertising, we tend to come up with empty hands when we fail to dig in the right places. Understanding the value of each visitor can help you make the most of your marketing dollar – and decrease what you actually pay for website traffic.
Starting with Metrics
The first place to start in this adventure is to have solid analytics. What you need to have, as a minimum, is at least 10 confirmed purchases from your website. For some B2B organizations, it might take a month or more to put your hands around that much data, but it’s well worth it.
Once we have that data we can be as broad or as narrow in our calculations as we prefer. To start simply, though, let’s take our total traffic over the value of the 10 customers.
| Total Vistors | Total Customers | Revenue | revenue Per Vistor |
| 22,240 | 12 | 32,000 | $0.69 |
So as a basic measure, this gives you some idea of how valuable traffic can be to your website. From this, we can say that a visitor to our site is roughly worth .70 cents to us. Consequently, we’d only pay something under that to acquire a visitor. This can inform you on your overall cost of many of your acquisition platforms and campaigns.
We can elaborate even more by narrowing down different stages or channels of acquisition. So for example, if I took that traffic and broke it out by the channel, we’d see different data.
| Channel | Total Visitors | Total Customers | Revenue | revenue Per Vistor |
| Search | 11,885 | 8 | 20,000 | $1.68 |
| Referral | l5,850 | 1 | 13,000 | $0.51 |
| Paid | 4,505 | 3 | 9,000 | $2.00 |
By breaking things out this way, we can see how valuable visitors from individual channels are. In this example, paid traffic is actually producing a heavy return, while the referral traffic is not producing as much return. So we’d continue to pay more for paid traffic because, accordingly, the value of that traffic is higher. Investing in referral sources, respectively, should be close to the overall return from that channel.
What Time Range Should We Use?
It does not matter the time range you use – you just want to be clear on how you measure, and on how your measurement impacts your calculations. If you’re using a marketing automation tool to measure traffic and the revenue created from it, then you’ll be able to pull this data easily.
Should You Pay For Website Traffic?
The answer lies in the conversion. If you can calculate your cost to sale from the website conversion, you can now understand if you should buy traffic – and what you can pay to make it work for your company. If you run the calculation and find that your return is not great enough to buy the traffic you need, your first objective would be conversion optimization, as opposed to increasing traffic. This means increasing your visitor to buyer conversion so that the value of each visitor goes up.
