The nice thing about online ads is that you can measure their effectiveness, right?

In fact, understanding how consumers respond to an online ad is a lot harder than simply tallying up the number of people who click on it. As with print ads, just because customers view an online ad doesn't mean they bought anything. Or perhaps they liked what they saw but waited a few days to make a purchase.

So, how you do know if your ads are working? And more important, how do you make them more effective?

Many small businesses use software that tracks how many clicks lead to immediate sales. "For smaller advertisers, a system that only calculates traffic is an easy and inexpensive way to calculate effectiveness," said Eric Eller, director of product marketing at Advertising.com, an online advertising outfit.

In order to accurately calculate "ad-conversion" rates (ad-speak for landing customers), retailers are increasingly relying on companies that use "cookie"-based marketing programs to track the routes consumers take to an eventual purchase.

Get the full story at Forbes