In this lesson, we'll get into how designing a digital advertising framework will impact your market research. In order to do that we'll first get in to more specifics about how digital advertising works. By the end of this lesson, you should be able to define the purchase funnel and discuss where digital advertising interacts with it. You'll also be able to list various metrics for assessing digital advertising effectiveness. Let's start by looking at this diagram illustrating a consumer's potential path from seeing a digital advertisement to making an actual purchase. There might be a display click that leads to a social interaction in the sense that this ad might be on social media. You might also have paid search advertisement that the individual interacts with. And then you might have organic search and direct advertising also as a point of interaction between the consumer and your firm. Now in term of the purchase itself though, you have a consumer going through various stages of the purchase funnel as seen at the bottom of this graphic. The purchase funnel is a consumer focus marketing model that illustrates the journey a consumer typically takes as they go on to purchase a product. The first stage of the customers journey is that they become aware of the product or service. They then consider the product or service, then they move towards the intent to buy. Then finally they reached the ultimate decision to make the purchase or not. What this graphic shows you here is that there are different types of advertising. And they can interact with the consumer at different stages of this purchase process. You could have display advertising interact with a customer at an awareness stage where the consumer might not even be aware of your product. But they might see a display ad that tells them that your product exist and is potentially useful to them. The consumer could then consider your product along with other options that might exist in the marketplace. And this is where your social media ads might act as a motivator for them to move your product along to the next stage in the purchase front. In the next stages, consumers organic searches on Google and other search engines might reveal their intent to actually make a purchase. And in the final decision step, the consumer might go directly to the website in question to make that purchase. You can see as the consumer moves along this purchase funnel there are multiple points where your advertising can interact with the consumer. So when you are trying to build your market research around this idea, you need to understand at what points your advertising interacts with the customer. Apart from just thinking about the actual advertising and the response to the advertising and the metrics, you also want to think a little bit about how this purchase funnel. And how your advertising impacts the consumer at different points along it. So for those of you who don't already do some sort of digital advertising. I just wanted to show some examples of the different types of digital advertising that could exist. You could have search ads such as shown here that appear within the search engine and are often related to your current or recent searches. You could have some branded keywords that firms buy. You could have some organic links in search results, like shown here. This is all great to have and definitely informative to your target customers. However, you will not know much about how effective these ads are unless you use something like Google AdWords, and Google Analytics which allow you to get some sort of indication on how your advertising did. Some metrics that could be used to assess search ads include how much you decided to spend on the search ad. How many impressions you obtained for that cost. How many clicks you obtained. If you think about a bank or some service that a consumer needs to sign up for, it might be how many applications are completed. What was the click-through rate, and what was the conversion rate. So how many clicks from the impressions and how many applications are completed following the clicks. Summarizing what you need to track in your market research. In general, it would be that you need to track how much you spend. How many impressions you obtained. How many clicks were generated because of these impressions, and what was the end result. To derive those results you can calculate your click-through rate which is nothing but the number of clicks divided by the number of impressions. Additionally, you can calculate your conversion rate, which is how many consumers went all the way to your goal metric, following the click. Apart from search ads, you could also have display ads, and there are all sorts of display ads. For example, you can have text-based display ads, image ads, rich media ads, video ads, interactive ads, and so on. Now with respect to display ads, the types of information that would be useful to track would include media spent, impression, clicks. And again, your goal matrix which could be application completed or sales. And so now similar to what we looked at before you could track your click-through rate and your conversion rate in each case. The reason you might want to track Search Ads and Display Ads separately, even though they're both part of your digital marketing framework is because you can now assess which or what type of advertising gave you the biggest bang for your buck. And that may suggest what you might want to focus on more in the future. So the click-through rate, the conversion rate, the media spend, and impressions, clicks, and goal metric, which in this case was applications completed can be compared across these different digital marketing tools that you have, like search advertising and display advertising. To summarize, some of the important metrics for digital advertising are not only the amount you spend. But also the impressions, that is the number of times the advertisement was shown. Clicks, that is the number of clicks received. CTR or click through rate, which is the clicks divided by the number of impressions. In addition, you could also look at the cost per meal, as well as a conversion rate. Cost per mille is the cost of the advertising for every 1,000 impressions that the ad generated. And the conversion rate is the number of conversions divided by the number of clicks. Together, these metrics should help you assess how well the different search and display, that is common digital media are doing, thereby helping you improve your modeling plan over time. As digital advertising becomes more and more prominent, being able to understand where it makes contact with the consumer. And how to measure those interactions will continue to rise in importance. Including these types of insights, can have a real impact on your market research story.