Standard search metrics no longer enough for marketers
The good news about internet retailing is the mountain of data available. The bad news about internet retailing is you can easily drown in the data smog and lose sight of the profit drivers of retailing online. As more retail businesses and marketing investments move toward internet retailing, marketers need more sophisticated metrics to provide intelligence on how to invest to improve bottom line results.
Internet retailing is not necessarily “low cost”
In past articles, we have highlighted all of the ways to “invest” in internet marketing. From banner ads to search optimization rankings, you literally pay for each piece of marketing on the internet.
The classic “pay to play” metrics focused on “clicks” are still key traffic drivers, and revenue generators for both e-tailers and search engines. No one debates the need to invest paying for keywords to get traffic to your products and messages. But, the cost per click or click through is rapidly increasing, with keywords on some retailer internet sites exceeding $1 to $2 per click. Click through metrics are necessary, but superficial to the overall objective of selling something online.
The foundation of any retailing is profitable conversion
While traffic to your products and messages are critical, the real key is conversion. The standard conversion metric for internet retailing has been AOV – Average Order Volume. The best internet retailers are focusing on not only the average selling price (mix), but increasing the AOV through attachments and bundles, which grow the overall market basket.
While AOV is still a core metric that focuses on sales conversion, it is primarily volume based. While it is important to know that investing in the right clicks drives sales conversion, what is the marketing ROI for these investments? At the end of the day, marketers need more sophisticated metrics in order to be able to make decisions on how to bid for keywords, online ads and the myriad of other investments.
Marketers lack sophistication in measuring internet results
In today’s competitive market, clicks and click-throughs are superficial metrics. In fact, they are not focused on results at all. They are indices of marketing costs … analogous to ad metrics, coupons and promotion redemption rates. Today’s internet marketers need to focus on a broader array of internet metrics focused on the bottom line.
In a recent survey of more than 500 marketers, Omniture found:
- 43% of e-commerce marketing managers who responded to the survey don`t know how to accurately measure profit per customer or profit per order.
- 67% of respondents say they don`t have enough time to effectively manage search marketing campaigns.
- The majority of search marketing managers use Excel spreadsheets to manually manage keywords, and only 35% use an automated keyword bidding application.
Bottom line - what’s your ROI profitability per internet order?
There is no end to the ways that money can be spent on the internet with retailers. Cost per click through has become a bidding war. And, it is a competitive bidding process that has become real-time.
Just as it is impossible to make investment decisions in print ads without uplift and mROI (marketing return on investment for incremental sales), it is impossible to make internet retail investment decisions without results based, profit focused metrics.
Key questions for your marketers, category and account managers must include both the investments and ROI with internet retailers:
· What is the investment on click-throughs
· What is the click-through conversion rate
· What is the AOV … $ and gross margin
· What is the incremental market basket attach
· What is the profit per order and / or customer
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