Monday, April 27, 2009

Evaluating Advertising Effectiveness: How to Avoid False Positives (and Negatives)

One of the great things about Internet advertising is how fast you can get feedback on the effectiveness of your advertising campaigns, make changes and adapt. I'm a huge advocate of this approach. I believe that locking yourself into 1 or 2 year agreements that cannot be modified (if they need adjustment) or cancelled (if modification cannot make them work) is not in your best interests. It's also not in the best interests of the advertising partner as they need healthy advertisers for their consumers to be served and for their business to be successful long term.

However, in a case of "be careful what you ask for," I've noticed that some lawyers that I've been working with are pulling the cancellation trigger a little too fast, not having put enough thought into whether or not the advertising source can be effective. Or, in some cases, they are not giving a trial period enough time to be yield results.

When I first started buying a lot of internet media, I became addicted to the instant feedback. I would launch a campaign and check the stats (impressions, clicks, leads, etc) every hour at first, and then every day. If something looked good, I would immediately try to do more of it. I'd develop theories for what the successful ingredient was and then integrate that into my other campaigns. And if it didn't look good, I would immediately start tinkering with it, trying to find the answer. After a few months of driving everybody that worked for me crazy, I began to notice a trend: the things that were good didn't stay as good as they looked initially and the things that were bad rarely stayed as bad. In my haste to move faster than the competition, I had forgotten some core virtues of good business: time and patience (and oh yeah, a statistical phenomenon known as regression to the mean).

So, I developed a few rules for evaluating all of the new online campaigns I was launching. These rules apply to all internet advertising, and are especially true for lawyers that are looking to generate new clients online.

Rule #1: Evaluate the source of the traffic

The first thing I've learned is to find the source and replicate the consumer experience. Visit the websites that are generating your leads. Go through the consumer experience. Look at the emails, messages or leads that come from that source. If over 90% of the inquiries are real people, you've got a good source. You cannot stop the spammers and automated submissions from sending in messages, but if the overwhelming majority are real people with real legal issues, then it doesn't matter that the first 10 aren't great cases because the next 10 might be.

Rule #2: Keep statistics in mind

If the conversion rate from lead to case is 15% and the standard deviation is 10%, then there is a 1 in 4 chance that none of your first 10 leads will result in a case (even though you would expect 1.5). There is also a 1 in 8 chance that none of your first 20 leads will result in a case. The numbers work the other way too. You have a 1 in 8 chance that you'll get 5 clients in the next 20 leads. If you are so lucky, don't freak out when the next 20 don't have the same yield. (Remember the regression to the mean rule).

Rule #3: Give conversion enough time to happen

Not every client will make a purchase decision within the first week after intial contact. A high quality divorce lead might take 2-3 months to choose a lawyer as the prospect weighs his or her options. If you pull the plug too fast, you won't give this dynamic time to work. I've spoken to a few attorneys recently who have said, "The leads look good, but I was not able to land any clients." To this I reply, "Yet. Give it some time."

Rule #4: Don't ignore the lifetime value of a satisfied customer

Almost every attorney believes that the best source of clients is through referrals. Makes sense . . . if a client is happy, they may need your services again the future, or may recommend you to a friend. So, even if your profitability from an advertising source is not as high as you would like, you may find that it is much better when you factor in the legal fees generated from repeat business or referrals.

As you are experimenting with using the Internet to generate new business, keep these rules in mind. Testing and tweaking are huge benefits of online marketing. But, in the case of legal advertising, where one client can be the difference between losing money on advertising and getting a 5x return, you are best served to give your advertising campaigns the benefit of the doubt.


  1. Sounds like good advice. Thanks for sharing it.

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