The Basics of Digital Analytics

Nowadays, having an online presence is essential for businesses. To make the most of the opportunities offered by the Internet, it is crucial for entrepreneurs to understand and use digital analytics professionally. It is a tool that empowers companies to measure and optimize their marketing activities and track the effectiveness of business decisions. Through analytics, you can understand users’ behavior, track the paths they take, monitor the performance of both paid and organic marketing channels, and track your PPC and SEO campaigns. All of this helps you gain a better overview of the online marketing landscape and improve your company’s performance.

In this article, you will learn the basics of digital analytics and acquire the knowledge that every entrepreneur should have.

So what exactly is Digital Analytics?

Digital analytics deals with measurable, data-driven activities. Quantitative and qualitative data is collected from various digital platforms, such as websites or mobile apps, followed by their analysis and interpretation. The process and results help in understanding users’ digital behavior, such as what information they search for, how quickly they exit a website, what activities they perform on the site, and so on. This can greatly assist the business owner in improving customer experience, developing their marketing strategy, and optimizing company performance.

Basic Concepts – A Bit of Theory

Before we dive deeper into digital analytics, it is important to familiarize ourselves with a few key concepts.

Conversion

Conversion is one of the most important metrics in digital marketing. It can be useful in many different areas, from managing website settings and calculating other metrics to making serious business decisions.

Conversion is defined as an action taken by a user that is valuable to the business and in alignment with its goals. This includes purchases, quote requests, and so on. It is clear why this metric is so useful, as tracking it allows us to measure which marketing campaigns, keywords, or landing pages lead to the most conversions—information that can later influence important business decisions.

It is important to note that not all conversions are the same. We distinguish between micro- and macroconversions. Microconversions are events that do not immediately result in revenue—meaning they are not purchases and their value is not directly measured in money. However, they are essential because they reflect users’ interest in the company, product, or service. Examples include adding products to the shopping cart, filling out forms, subscribing to newsletters, downloading catalogs, reading blog posts, and so on. Macroconversions, on the other hand, represent the actions that directly fulfill the company’s ultimate goal—such as purchases in an e-commerce store or quote requests in a B2B company.

CVR (Conversion Rate)

CVR stands for Conversion Rate. It shows the percentage of visitors who perform the desired action. For example, how many users buy something on a webshop, or in the case of a B2B company, how many visitors request a quote.

Example: If 1,000 people visit the website and 20 of them make a purchase, then the conversion rate is 2% (the number of buyers divided by the number of all visitors, then multiplied by 100).

While this metric alone isn’t sufficient to evaluate marketing campaigns, it is a great illustrative indicator. A high conversion rate is certainly a positive sign of an effective campaign, advertisement, or website.

CPA (Cost Per Acquisition)

CPA stands for Cost Per Acquisition and is often used as “conversion cost”. It measures the cost associated with acquiring a new customer, lead, or client during a given marketing campaign.

Example: If a campaign costs 1,000 euros and results in 50 new customers over a specific period, then the CPA would be 20 euros (the campaign cost divided by the number of conversions = 1000/50 = 20).

CPA is one of the most important metrics for measuring campaign performance because it quantifies marketing results in monetary terms, making them more tangible. In this case, a low value is ideal, as it indicates that the campaign is effectively targeting potential customers.

ROAS (Return on Ad Spend)

ROAS stands for Return on Ad Spend, a metric that is calculated by dividing total revenue by the total cost of advertising. It is important to note that this is not a general-purpose metric – it applies to a specific timeframe. The data is collected over the lifetime of the marketing campaign, so naturally, the ROAS value relates to this time period.

By itself, ROAS is not sufficient for a comprehensive campaign evaluation, but it does provide quite a clear picture of how profitable an advertising campaign is. The higher the ROAS, the more successful the advertisement.

The chart illustrates the key metrics of a marketing campaign for the given period. It shows that the total cost was 54,400 HUF during the examined period, resulting in 31 conversions. The average cost per conversion (CPA) was 1,760 HUF. The 4.9 indicates the Return on Ad Spend, (ROAS) calculated by dividing the total revenue by the cost of advertising. In this case, a 266,560 HUF revenue was achieved with an investment of 54,400 HUF. (revenue / ad cost = ROAS, here: 266,560/54,400 = 4.9)

Bounce Rate

Bounce rate is another significant metric in digital analytics. It measures how many users leave a website or app after viewing only one page. This means that after opening the site, the user did not click on another tab, add a product to the shopping cart, or open the gallery. Essentially, they did not interact further with the content.

A high bounce rate is a negative feedback that can have several causes. Users are quick to leave a page if they do not find what they are looking for right away or if they do not like the design of the website. Therefore, it is crucial to create a website that is both aesthetically pleasing and user-friendly in function, as this is what will most effectively encourage visitors to interact further and convert.

Attribution Model

An Attribution Model is a framework used in digital marketing that defines how each touchpoint and channel in the marketing and sales process contributes to conversion. Users can encounter your business, product, or brand across various channels, and they typically do not make a purchase or request a quote during their first interaction. Attribution models help map out which channels are driving the most conversions and highlight which areas in your marketing strategy need improvement the most.

There are several types of attribution models. The main difference between them is the weight they give certain interaction points or channels in the user journey leading up to conversion. 

Without aiming for completeness we would like to list a few models used by Google Ads:

• Data-Driven – Recommended
  • Attribution is determined by Google’s machine-learning algorithms based on historical conversion data.
  • It provides a more accurate picture of actual performance but requires sufficient data to use.
  • This model is the default in Google Ads. The other models are no longer available to apply at all, other than the Last Click model.
• Position-Based – Not available
  • The first and last touchpoints receive the most credit, while intermediate points receive less weight.
  • It is ideal for situations where both the first contact and the final decision are important, such as in B2B marketing or e-commerce businesses.
• Linear – Not available
  • Credit is evenly distributed across all touchpoints.
  • It evaluates the entire customer journey in a balanced way.
• Time Decay- Not available
  • Touchpoints receive more credit the closer they are to the conversion in time.
• First Click – Not available
  • All credit is given to the first touchpoint.
• Last Click – Still available but not recommended
  • All credit for the conversion is given to the last click.
  • This used to be the most popular model, but it doesn’t take the rest of the customer journey into account.

A/B Test

An A/B test is a method in digital marketing where two versions of an element of a campaign are compared to determine which performs better – which leads to more conversions.

It can be applied to any element of a campaign for which we can create two versions. A/B testing is commonly used on websites, ads, and even email messages.

Many advertising systems are capable of performing such tests, where they can be run under controlled conditions. For example, in the case of Google Ads, you can set the proportion of visitors that are distributed between the two versions.

In the early stages of a campaign, large A/B tests are often used. This means testing two completely different versions against each other (for example, an ad with different text, headlines, and images). This can be beneficial when there is no data yet on what works best, allowing multiple ideas to be tested. Once there is some data on the direction to take with a specific marketing element, small A/B tests follow. In these tests, only one change is made between the two versions (for example, the ad text and image might stay the same, but one version has a call-to-action in the headline, while the other uses a question).

The results of an A/B test clearly show which version performed better, and over the longer term marketing activity, that version is used. Of course, no ad, website, or app is perfect, so regular A/B testing helps continuously adapt to the needs of the target audience.

The example shows the result of an A/B test. The “B” version, introduced compared to the original “A” version, achieved a 400% increase in conversions and reduced the average cost per conversion (CPA) by 61%. In other words, version “B” was much more efficient, making it worthwhile to switch to it.

Organic

In digital marketing, organic traffic refers to users who arrive at a website or online platform “naturally”, rather than through paid advertisements. This primarily happens through search engines and social media. The main goal of SEO is to increase the organic traffic of a given website, advertisement, or app through keywords and high-quality content.

CTR (Click-Through Rate)

CTR stands for Click-Through Rate. It is widely used in digital marketing as it shows how many users click on a specific ad or link after viewing it. By dividing the number of clicks by the number of views, and then multiplying the result by 100, we get this useful metric in percentage form. A high CTR is a positive sign, as it means the ad is attention-grabbing and interesting. However, if the CTR is low, it is time to make changes to the advertising strategy!

CPC (Cost Per Click)

CPC is a fundamental online advertising metric, short for Cost Per Click. It shows how much the advertiser pays for a click that directs the user to the website or another online platform.

Digital Analytics – the Basis of Online Marketing Activities

In this section, we will describe what, how, and why we measure. The data available in the digital world is abundant and diverse, and to fully utilize it, it is essential to analyze it accurately and strategically. Fortunately, there are countless tools at our disposal that help us gain deeper insights into users’ digital behavior. We can find out how visitors interact with the website or app, map out the paths they follow, identify key touchpoints, and much more.

The proper application of digital analytics is crucial for optimizing content, improving user experience, and increasing conversions, making it an incredibly useful tool for marketers and decision-makers.

How do we measure? – Tools of Digital Analytics

Google Analytics 

Google Analytics 4 is the latest version of Google’s analytics tool, which is excellent for tracking website performance. It is the most popular and widely used analytics program in Hungary, and this is no coincidence; it has a user-friendly design and can easily be integrated with other tools. It works with event-based measurement, meaning it collects data on all types of events, such as clicks, scrolling, subscriptions, page loads, etc. This makes it possible to easily track the entire purchasing process. It provides detailed information about visitors’ digital behavior, demographics, and generates various reports on website performance, making the results transparent. Another advantage is that it is free to use.

Adobe Analytics

Adobe Analytics is part of Adobe’s digital marketing software, and as such, it offers full integration with other Adobe products, such as Adobe Marketing Cloud and Adobe Social. Adobe Analytics has the advantage of providing access to complex analytical tools and a wide range of customization options to meet the unique needs of users. It is primarily recommended for larger companies, as it is a paid platform and works with methods that require greater expertise from the user.

Microsoft Clarity

Microsoft Clarity is another excellent analytics and visualization platform that focuses on user experience and behavior. Since using it is easy and free, it is widely employed by smaller businesses, freelancers, web developers, and marketing professionals. Being part of the Microsoft family, it can be easily integrated with other Microsoft products, such as Power BI. A unique feature is Session Replay, which allows users to replay the interactions of visitors on the website, enabling you to see when they clicked on something, which subpages they visited when they left the site, and more. Since Session Replay is not available in all analytics tools, it makes Clarity quite unique. However, since it does not offer particularly complex tools, it is often used in conjunction with Google Analytics 4.

Kissmetrics

Kissmetrics is an analytics tool that follows a customer-centric approach that can help optimize customer acquisition and retention. It tracks users throughout the entire sales process and analyzes the customer lifecycle, repeat buyers, and the reasons for abandoned shopping carts. Some of its features are more complex, so it is advisable to have an experienced marketer or analyst use it. However, the platform offers excellent tutorials for learning the basic features. Since it is a paid software, it is recommended for those who really want to dive deep into analyzing users’ digital behavior, such as e-commerce businesses, marketing agencies, startups, and growing companies.

Every digital analytics platform has different characteristics, features, and advantages. In Hungary, Google Analytics 4 is primarily used, but the more experienced users extend it with Microsoft Clarity.

What do we measure? – Tools of Digital Analytics

In digital analytics, we use a wide variety of indicators and analyze a lot of data. This helps us better understand users’ digital behavior, website or app performance, and the consequences of business decisions.

Without aiming for completeness, we present a few key data points measured in digital analytics:

• Website Traffic and Visitors: Here, we measure how many users visit the site, which subpages they open, how long they stay, why they leave, and so on. This data helps us map out the interests of visitors and can also assist in optimizing the website.

• Conversions: When measuring conversions, we track events where users perform actions that are beneficial to the company. These actions could include purchases, requests for quotes, contact inquiries, and more. The number of conversions is one of the most important indicators in digital marketing and forms the foundation for optimizing websites and campaigns.

• Demographic and Geographic Data: A thorough analysis of this data helps in reaching the target audience more effectively. Information such as users’ location, age, gender, marital status, interests, and habits are all valuable data in this process.

• A/B Test Results: These tests help determine which version of a particular campaign element performs better, contributing to the optimization process.

• E-commerce Data: For e-commerce websites, revenue is not the only important metric. Measuring the number of products sold, the average order value, the number of discounted purchases, repeat purchases of products, and many other useful metrics assist in boosting sales and optimizing the product portfolio.

• User Journey: The paths taken by visitors on the website help map out how users navigate the site. One of the most important points here is exit behavior — when users drop out of the conversion process. If we can identify where these issues occur, we can fix them, thus improving performance.

• Social Media Followers: When using social media channels, it’s important to measure the number of followers, shares, comments, and interactions. These metrics highlight the effectiveness of our social media strategy.

Measuring and analyzing the data makes the results clear and tangible, which helps decision-makers and marketers make informed, data-driven choices. This way, they can optimize business outcomes without relying on guesswork.

Google Analytics 4

The chart shows an analysis made in Google Analytics 4. It shows that during the examined period, 283 visitors attended the site, of which 281 were new users. Compared to the previous period, the number of visitors increased by 12.3%, with 18 conversions completed in this period. The box on the right also shows that there were no visitors to the site in the last 30 minutes.

Google Analytics is clearly the most popular analytics tool in Hungary, used by almost all companies. The introduction of Google Analytics 4 (GA4) is one of the most significant innovations in web analytics today, with innovative approaches in several areas.

The previous version of GA4 was Universal Analytics (UA), from which every user was required to switch to GA4 by January 2024 the latest. The advantages offered by the new version far outweigh the performance of UA, making the switch well worth it. These advantages include event-based tracking, more accurate analysis of user journeys, and consideration of multiple device usage.

Some additional features described in a little more detail are:

Audience Tracking

GA4 has been updated with new audience tracking features. With the “Audiences” function, you can create custom audience groups and get to know your visitors through demographic data, digital behavior and interests. This helps optimize user experience and develop targeted marketing strategies.

Predictive Analytics

The new version introduces predictive analytics, which greatly contributes to enabling marketers to respond to market changes in a timely manner. This feature can predict certain events, such as expected conversions or churn rates.

Integration

One of the advantages of Google Analytics 4 is its ease of integration with other Google services, such as Google Ads. This, along with enhanced customization options, enables comprehensive tracking and analysis of campaigns, helping marketers throughout the optimization process.

Dashboards

Dashboards are visualization tools that collect and display the most important metrics and data of a marketing campaign on a single interface. This way, we can see information from multiple data sources in one place, eliminating the need to manually gather results from web analytics, campaign performance, social media marketing, and email marketing systems. The goal of a dashboard is to make performance transparent and quick to assess, allowing marketing activities to be tracked, which helps with decision-making processes and optimization.

The main advantage of dashboards is that they save time for marketers, analysts, and decision-makers. However, it is important to highlight other benefits as well: they streamline communication, offer extensive customization options to meet individual user needs, and last but not least, work with real-time data, providing up-to-date information at all times.

Numerous software and analytics platforms offer dashboard features, such as Looker Studio (formerly Google Data Studio), Klipfolio, Domo, and even Power BI.

The image shows a Looker Studio report for a Google Ads account, comparing data from the previous month with that of the month before. Here, you can see the main metrics and the percentage change compared to the previous month, with green indicating a positive change and red indicating a negative one. This dashboard shows data from a successful month. The two graphs at the bottom of the image compare the distribution of impressions and conversions with those of the previous month.

Why Do We Measure? – Using the Data

Better Decision-Making

Analyzing data allows marketers and business owners to gain deeper insights into users’ digital behavior and interactions with websites and online platforms. These analyses are incredibly helpful for decision-makers in developing and shaping strategies and optimizing campaigns.

Targeted Marketing and SEO Application

Analytics helps us better understand the target audience through demographic data, habits, and behavioral patterns. This is crucial for developing a marketing campaign with precise targeting, as it enables us to effectively reach our audience and offer them the most personalized content. Another important tool in this process is SEO (Search Engine Optimization), which focuses on increasing organic traffic to websites and apps within search engines. The foundation of SEO is the quality of the content and the keywords used, and this is where the story comes full circle: to use the right keywords, we must first understand the target audience we are trying to reach with our online content. As we can see, in online marketing, all roads lead to digital analytics.

Performance Analysis

Analytics presents online performance in a clear and understandable format through the most important KPIs (Key Performance Indicators). This is crucial for optimizing websites and apps, and is extremely useful in tracking the performance of campaigns.

Strategic Planning

Predictive or forecasting analytics can predict future trends and events, allowing us to proactively respond to changes.

Summary

Digital analytics is essential in today’s business world, since it is based on online platforms. With the right analytical expertise and activity, you can gain a competitive advantage that is difficult to catch up with.

If you haven’t been using digital analytics until now, this is your sign to start! With the user-friendly software options, you can start tracking your app’s or website’s performance without external help. You can learn from your data, and use it to fine-tune your strategy.

And if you need professional assistance, feel free to reach out to us!