Measuring ROI: AdWords and PPC in eCommerce
If you’re the marketing manager of an ecommerce site, chances are you’ve spent some of your marketing budget on PPC (Pay Per Click). You’ve probably also had to prove to your boss how effective those PPC campaigns have been in generating more revenue for your brand.
We all know that measuring and proving the success of a particular marketing channel can be quite tricky so we had a quick chat with Emma Chun, Director of Client Success at SearchStar, who gave us some insights on measuring ROI in the world of ecommerce.
Hi Emma! Let’s start with a fairly easy question…How would you define ROI?
It really depends on what people are measuring and what conversion they’re after. Typically, when working with ecommerce clients, we’d look at the amount of revenue generated from the advertising campaigns that we run and use that in the calculation against the cost of advertising to come up with the ROI. However, if you’re using a last-click attribution model (which is the default way of attributing conversions in AdWords) you’re not giving credit to any other campaign or device other than the one that generated the last click before the conversion.
So, measuring success in PPC campaigns is clearly more complex than it would seem. Is it not just a case of looking at ‘cost per conversion’?
Our advice to ecommerce clients is that you should be optimising for ROI and not cost per conversion. Even if the campaigns are meeting your current ROI target there is generally always scope to improve that by segmenting the data further and optimising every aspect of the campaigns and/or landing pages.
A client may measure success as meeting their ROI target whereas we, as an agency, would define our success as improving ROI through continuous optimisation such as ad text testing, bid management, landing page testing etc.
For anyone out there who is considering starting a PPC campaign and is unsure of which platform to spend their budget on, do you see any variance on the ROI between different platforms such as Facebook, Google AdWords or Bing?
Yes! Typically, the competition is much lower on Bing. We do hear some clients say “but no-one searches on Bing” but actually Bing has over 20% market share in the UK - that’s a lot of missed opportunity.
Of course there are fewer advertisers on Bing than Google and therefore the competition is lower and the clicks are usually cheaper. So, if all else is equal, your cost per conversion will be lower. There’s also no reason to think that your average order value would be any different so actually ROI on Bing can be stronger than on Google.
Competition on Google is much higher, the clicks are more expensive and therefore your ROI is lower. But obviously the number of people using Google is much higher so the overall revenue you could be generating from your campaigns is much, much greater than Bing. With Google vs. Bing it’s often a playoff between volume and ROI but you should almost certainly be running campaigns on both.
ROI from social or display platforms is typically lower because of the nature of the platform; you’re pushing your message out to an audience as opposed to them actively searching for it. Platforms such as Facebook and Doubleclick are used to drive upper funnel activity - for example, brand awareness or consideration - and are therefore measured on softer metrics like time on site, bounce rate, pages per visit as well as direct “conversions”. It is still possible to drive a positive ROI from social platforms like Facebook (and we have case studies for clients where we have done this) but you shouldn’t expect as good an ROI as from your search campaigns.
Finally, do you have any tips for marketers trying to prove their ROI from PPC to their boss?
Don’t forget: the path to purchase isn’t linear. It’s multi-channel and multi-screen and I heard a Google stat recently that said around 90% of users switch between screens to complete a task. Even though a customer may “convert” through an AdWords campaign on desktop, they may have first heard of you via an ad on Facebook on their Mobile or a display banner on their work computer. We recommend looking at multi-channel attribution and different attribution models to ensure you are giving each channel, device, campaign etc the correct credit for their role in driving conversions.
It's also important to remember that the success of your online advertising doesn’t just hinge on having optimised campaigns and there are several other things to consider when looking to improve your conversion rate and ROI. For example, once a visitor lands on your site, is there a clear call to action? What’s your checkout experience? How much and how fast is your shipping? Is a competitor selling this product cheaper than you?
If you want to venture further down the ROI rabbit hole and get some practical tips and advice on measuring the success of your marketing activity, you can download the handy guide below!