When planning an online campaign, we have a number of providers and a million options to choose from. Selecting the right one for your business without proper due diligence is virtually impossible and may lead to suboptimal results. This is the reason why multiple retargeting strategies and different techniques to expand access to selected users have been developed. Today, it is obvious that using a single retargeter is not always optimal. In fact, running 2 to 3 retargeting campaigns with different providers can bring much better results. I was interested to learn from a VP of Marketing for a Top 250 eTailer that found that utilizing as many as 3 retargeters would drive incremental revenue. Having said that, what is the best way to measure performance campaigns and evaluate the effectiveness of an online store’s marketing efforts?
In most cases, evaluation of effectiveness is a limited process, which only involves checking the number of clicks generated by each studied solution. This in turn compromises the reliability of such information and leads to wrong decisions. A solid knowledge of correctly calculated online marketing indicators is something a specialist should rely on.
- Value and number of conversions
In e-commerce, these two key performance indicators (KPI) largely depend on the online store’s strategy and the type of business they do.
Therefore, for online stores focusing on customer base building, the important thing to measure – apart from value of a conversion – is the number of conversions. Generating large sales volumes might be a good way to benefit from better discount thresholds, modified line of credit for planned purchases, or to engage a possibly largest number of buyers. In other terms, selling small amounts of highly valuable merchandise with a large margin is not as important as a flat cart with a large number of ordered items. In such cases, the indicator of interest when measuring Google Analytics activities, must take into consideration the above numbers, and performance activities should be accounted in CPO (cost per order) model, i.e. paid by a stable fixed fee per order.
On the other hand, for online stores focused on profitability and maximizing margins the most important issue is to increase the value of the cart and to sell more expensive products. In such case, the prevailing model is Fixed CPC, in which the advertiser pays for each click delivered, but what is quite important, it can be differentiated by user segments or product categories. Therefore activities can be optimised to keep the cost below a predefined percentage of a generated profit. Naturally, even at this stage, no-one wants to give up on new consumers. Consequently, in case of retargeting activities for example, a slightly higher acceptable cost for new customers is often set (compared to the normally accepted for existing customers). This stems from the fact that the individuals who do shopping at a given store on average do so more than once, and their actual value is high.
- Conversion cost and user segment
When analyzing data, most marketers still base on channels: they check and report on the number of visits and contacts from a range of sources. Experience shows, however, that practical as it may be, such knowledge is by far insufficient for anyone to assess advertising activities’ results.
The first step towards accurate analysis of multiple marketing activities conducted at the same time is the comparison of costs for each activity. It should be noted that indicators used in different tools, retargeting panels specifically, may be difficult to compare. This is why in order to calculate results for each of these sources, an external analytical tool such as Google Analytics could prove useful.
Another key step is precise analysis of statistics and calculation of the cost of conversion for each user segment. In the e-commerce industry, these are potential new customers with varying levels of engagement, as well as persons who have bought on the studied website. This is a simple way to assess the average cost of conversion generated by the most important users (form advertiser’s the point of view), that is the people who have never bought a product from the website or those who came back to the website to finalize a transaction. When measuring conversion in each segment, one should also remember about ROI (return on investment) and identify the best source of conversion.
You can attempt both to define segments and transfer data to Google Analytics by yourself. But it is helpful to choose a partner who can identify the segments for you and correctly describe them in utm parameters, or even utilize data from the shop to define segments. Unfortunately, to predict the influence of increasing the cost on the share of new customers is a difficult task. It would then be advisable to start with boosting the cost up to the maximum affordable level and after a month or two – with concrete data already at hand – decide to either decrease the cost or maintain it at the same level due to satisfactory results. The advantage of the above method is that it saves a lot of time and quickly returns information on the maximum potential coming with that model. An alternative solution may be gradual increase in cost, but then probably at the testing stage the maximum value will be attained anyway, yet in a much longer period of time.
- ROI and ROAS
As you will probably agree, every marketer wants to boost their return on investment. To attain this end, you could optimize advertising activities in consideration of the ROI indicator.
By knowing the correlation between the profit generated by advertisements and their cost you can easily assess how advertising activities contribute to the growth of a business. In turn, upon checking the ROAS indicator, i.e. return on advertising expense, you may decide what volume is needed to bring profit and which solutions to invest your money and time in.
ROAS is calculated by dividing income by costs. To increase ROI, you might e.g. increase the rates for ads served to an important group of users. When using a number of channels, the cooperation model most desired is the one in which only the actual result is subject to charge, where the channel was the last paid source of traffic. With this approach, you can be sure that the costs are incurred only once and you know how to improve effectiveness if necessary.
- Customer lifetime value (CLV)
Everyone knows that there are collective statistics available concerning how much money on average is spent by e-stores’ customers broken into different industries, and how many times and with what frequency they tend to buy in course of their history. Even more so, every marketer has access to their own e-shop stats and can compute such average value themselves.
The simplest and most widespread method is to calculate the total customer lifetime value. The CLV indicator shows the current value of future cash flows related to the relationship with the buyer, and therefore the assessment of the client’s value over time. When planning an advertising budget, you may wish to keep this CLV number at the back of your head, as it the cost of obtaining a customer should be lower than his/her value.
One of the ways to use this metrics in practice is the diversification of marketing activities. It may for example involve diversification of methods aiming to reach different customers, such as those buying more than the average, or those who shop very rarely. It may turn out that the latter for some reason were not entirely satisfied with their shopping experience or need some further stimuli or means of encouraging a purchase, e.g. promotion, discount coupons, sales banners, which are a must in your communication strategy.
- User, where are you? The multi-device era.
As marketers we will always look around for ways to win a competitive edge. By turning to many varied resources, we gain dozens of advertising options that can change the manner in which the company’s communication is conveyed, consequently leading to better final results.
In consideration of the effects that can be achieved with every advertising technology provider, you should not only focus on the general results, but also analyze data originating from each type of device as well. This is a good way to get your hands on valuable information showing you the best path to catch the user’s interest of PCs, mobiles, or TVs, and to learn how these channels perform and what their individual ROAS is.
As a result of your analysis it may occur that e.g. the share of mobile devices in the studied traffic is very large, but most conversions is made on desktops or tablets. This would mean that what you’re dealing with here is a ROPO (Research Online Purchase Offline) effect or something of similar nature. In today’s world, searching for products, reading opinions, price comparison and purchase planning is often made with the use of the smartphone: on the way to work, on a lunch break, etc. Yet the purchase decision and the transaction itself are affected on a PC. The important factors in here are the fact that desktops offer more comfort in filling in the forms and are considered more trustworthy when it comes to payment methods compared to mobile devices.
Based on the above information, separate advertising activities or cross-device campaigns should be planned to support a number of business goals simultaneously. You could then choose to build traffic on mobile devices employing the Fixed CPC model, and perform optimization follow it with different, preferred methods on PCs. Such form of cooperation, with the use of a retargeter for instance, allows you to create a kind of a purchase funnel, but with a description of engagement based on the platform used.
Summary
Multiple retargeters strategy offer broader reach to your audience and provide flexibility to optimize marketing goals. In order to make the most of a multiple retargeting approach you need to know how to measure performance campaigns and evaluate the effectiveness of an online store’s marketing effort in the best possible way. By adopting a complementary approach to solutions, providers and methods, the outcome may be improved. Measuring them (e.g. cost of conversion per user segment) may be difficult, but also most rewarding as regards accurate account of a campaign’s efficiency and precise definition of a company’s business potential.
Equipped with the knowledge on which channel and technology provider exert direct influence on the final business results, you can plan and run marketing strategies in an optimum way.