Google AdsStart from one top number
- Pick one top number for the client, such as net revenue or contribution after ad spend, and write its formula in full. Keep it to one number, since three top numbers make three reports.
Split it into drivers
- Split each number into factors that multiply, or parts that add up. For example: revenue equals sessions times conversion rate times average order value.
- Each branch must add up to its parent. If the children do not explain the parent, a driver is missing.
- Stop splitting when a driver is something the team can act on, such as a traffic source, a product group or a price.
- Put a measurement source against every leaf. Mark a leaf that cannot be measured as not measured, never as zero.
Read the tree each week
- Compare each leaf with the same week last year, or with the average of the last four comparable weeks, not with one odd week.
- Read from the top down: find the branch that moved most, then the leaf inside it.
- Do not explain a change until every leaf has been checked, including the ones that did not move.
Made-up scenario: revenue fell from 30,000 to 29,260 in a week. Sessions fell 5 percent to 19,000, conversion rate rose from 2.0 to 2.2 percent, and average order value fell from 75 to 70. Orders rose 4.5 percent despite fewer sessions, so the revenue drop comes from order value, which fell 6.7 percent.
Keep the tree stable
- Change the tree only with a dated note, so a new definition does not look like a change in performance.
- Keep the same tree for at least a quarter, so the weekly numbers can be compared with each other.
What to write in the client report
- The top number with its formula, the leaves with their sources and periods, and the branch that explains the change.
- The leaves that are not measured, named as such, and what would be needed to measure them.
