Ecommerce Marketing Analytics-Online/Offline & ROI

By-Gaurav Goel

What is marketing analytics & ROI• Marketing Analytics: Process of measuring and analyzing the

performance of marketing campaignsBenefits:Proves financial effectivenessConnect market to salesGives consumer insights to website.

Steps to develop a marketing plan:1. Define KPIs.2. Collect data of all channels after running campaigns.3. Generate reports, try to do automation of reports4. Analyze the reports to generate insights5. Take actions for future acc to the generated insights

ROI• ROI is incremental increase in profits obtained due to that

marketing campaign• ROI= Incremental Revenue*Margin(in %) - Marketing spend

Marketing Spend

Smart way to calculate ROI: Use the concept of “CLV”CLV-Customer lifetime value: It is the present value of net profit

attributed to a customer during his entire lifetime association with us as a customer.

CLV depends on avg revenue, profit%, discount rate and churn rate. Discount rate is generally not taken into count.

CLV of a customer= Average Monthly Order* Profit(%) Avg Monthly Churn rate

Marketing Methods• Online Marketing: Search engine optimisation Search engine marketing – Sponsored results through adwords(paid results), paid links Display Marketing ads- Text ads, Images on google, Banners, pop-ups Affiliate marketing- a form of display mktng through affiliate partners Facebook ads marketing and retargeting Social media marketing through other channels Email marketing Mobile marketing SMS etc. Mobile app download mktng- spend to make user download the mobile app Loyalty Marketing-CRM

• Offline Marketing: TV advt Radio advt Print media(newspaper, magazines) Hoardings, banners at specific places Sponsoring special events, organising on-site events

Online Search marketing• Google search

• Online marketing ROI- Easy to determine• Method: Through web analytic tools find the source from which customer

came to website for purchase>Calculate incremental revenue generated from every source>Subtract marketing spends>Get ROI by using formula and CLV concept.

Online marketing spend break up( 1crore in 1 month in total)• Assume marketing budget is 1 crore for online for 1 month. Lets do split across channels in this way:

Methods:

• Search, display and google are major dominant advt platforms in existence for a long time.• Search mktng: Captures the attention of user when they are actually in the process of looking for

something. Google is more intent driven and adwords has longer lifetime.

Channel Spend(in %)Spend( in amt) Ideology

Search Engine Marketing 35 35 lac Search keyword based targeting..dominant form past

SEO 3 3 lac Optimization of content, organic search

Display & affiliate 15 15 lac Displays text/image ads on google or through affiliates

Facebook Marketing 15 15 lac Audience based targeting, rising these days

Other social media 5 5 lac Will grow in future

Email mktng 8 8 lac Good conversions, content mktng trand increasing

SMS mktng 3 3 lac Pushes users to buy

Mobile app download 10 10 lacs M-Commerce increasing rapidly

In house website campaigns(Loyalty) 6 6 lac

Total 100 1 crore

Online marketing methods• Facebook Ads: Good for creating awareness and brand building. It is very helpful- to target

specific users(acc to age, likes etc) Are not about immediate conversions, but long-term conversions. Fb ads are useful because -pictures/link, friends liked pages will make more

impact. Young generation is attracted towards discounts and new design products. SEO: Depends on search engine crawlers, their algorithm keeps on changing, we

have to change our content acc. Aim is to get high ranking placements in common search.

• Display: Visual effect, ad impressions are placed. On clicking, they take to website.• Affiliate: Brings traffic to our website through them.• Other social media: Twitter, blogs etc are gaining popularity in India• Email Marketing: Used for abandoned carts retargeting, email subscriptions,

special offers delivering.• Mobile App Download: M-commerce is future. • Loyalty Programme: Motive is to increase the conversions, revenues and attract

customers.

ROI Calculation Method

• Determining search/social media ROI:1. Set conversion goals: making purchase, signing up etc.2. Track conversions: Leads, conversions, conv rate3. Assign monetary value to each conversion(using CLV concept)4. Measure total benefits for each campaign(using CLV) 5. Determine total costs incurred on marketing6. Calculate ROI as= (Profit-cost)/Cost

• Cost incurred may be calculated through two ways:1. Cost Per click2. Cost per mile(1000 impressions)

Search Marketing ROI calculation- using CPC• We are spending 35 lacs on search marketing in 1 month.

• ROI= 240%• This is how ROI is calculated. So it depends on bid, conversion

rate, churn rate, avg order value, profit %.

Search ROI- CPC Method

Spend on mktng 35 lacsAvg Cost per click (bid) 35 rsNo of clicks=35 lacs/30 1 lacConversion Rate of search mktng..assume 2.00%No of conversions into buyers= 1.4 lac*2.5/100 2000Avg order value 1800Avg Profit % 10%Monthly churn rate 3%Avg CLV= 2000*10/4 6000Net incremental Profit= Avg CLV*no of conversions=6000*2000 1.2 crore ROI= (1.2 croe-35lac)/35 lac*100 240%

Display Marketing ROI calculation-CPMMarketing spend on display(text/image ads)= 15 lacs

• ROI= 204%• Better the click through rate, less we have to spend

Display mktng ROI- Cost per impression Spend on mktng 15 lacsAvg Cost per mile(1000 imp) 75Total No of impressions displayed=1000*15 lacs/75 2 croreClick through rate..assume 0.20%No of visitors on website 40000Conversion rate 1.90%No of conversions/purchasers 760Avg order value 1800Avg Profit % 10%Monthly churn rate 3%Avg CLV= 1800*10/3 6000Net incremental Profit=6000*760 45.60 lacsROI= (45.6-15)*100/15 204%

Facebook Ads Marketing

• FB Ads: News feed, right hand column ads- page post text/photo/video/link…event, offer, friends like share, sponsored stories.

• Facebook creates loyalty and brand while Google drives users to more immediate transaction. Fb also helps in gaining marketing trends, retargeting the users with certain behavior.

• Fb ads may not directly result in conversions since they come from clicks by people who just saw our advertisement and not by people who were actually looking for the product at that time(as in case of google search of a product).

• Facebook Ads displays good click through rates and performance when the ad just go live. But, the performance decreases with time as the as becomes old. As this happens, the cost per click increases since the CTR is reduced.

• We need to update the ads frequently to maintain momentum and keep the clicks high and hence costs low.

• But fb branding will help in conversions in long term.• Fb ads spending are increasing these days as fb is becoming a source of

knowing other people choice and what is in trend in market.

Fb ads-ROI Calculation example• Marketing spend on fb ads= 15 lacs.• CPM is less in facebook as it has lower CTR and CR output.

• NOTE: This is a rough estimation, as I am not sure of exact values of all these parameters. Fb ads ROI will be good in long term as we know customer behavior, we will do targeted ads.

• Other social media campaigns ROI can be calculated in the same way.

Facebook- Cost per impression ROISpend 15 lacsAvg Cost per mile(1000 imp) 30No of impressions placed=15 lac*1000/20 7.5 croreClick through rate..assume 0.08%No of visitors on website 60000Converison rate 1%No of customers 600Avg order value 2500Avg Profit % 12%Monthly churn rate 4%Avg CLV= 110*10/5 7500Net incremental Profit=7500*600 45 lacsROI= (45-15)*100/15 200%

Email MarketingEmail Marketing involves advertising and promotional efforts via

e-mail messages to existing and prospective new customers.We can send email for:• Daily/weekly mail to subscribers(about new products etc)• Retargeting Email for abandoned carts.• Email for products that user looked on website but bounced.• Transactional emails- details about transaction performed.• Email marketing ROI is very good and trend is increasing.Email Marketing ROI depends on:1. Open Rate- % of people that opens mail out of total mails.2. Click Rate- % of people going to link from opened email out of total opened

mails.3. Conversion Rate- % of people converted after opening email.4. Average value of a conversion and cost of sending emails.

• Email marketing ROIs are similar to search marketing.

Loyalty Marketing• Loyalty marketing is to focus towards growing and retaining existing customers

by giving incentives.• Majority of sales is driven by a few section of customers, we need to give

additional benefit to them.• Spend on giving special incentives/promotions/offers to customers and it is done

in-house majorly.

• Incentives may be in the form of:1. Special Discounts2. Fast delivery/ less/zero delivery charges3. Gift on Birthdays, movies tickets etc.4. Gold/silver member acc to purchase values.• Purpose of loyalty marketing is to:1. Shift: Acquire new customers2. Lift- Increase the avg order values of existing customers3. Retention- Increase the retention rate or decrease churn rate4. Profit Increase- Push to buy higher margin products.

ROI of targetted discounts• Targetted Discounts(TD)- Special promotional discount codes e.g. FREEDOM15, DIWALI20• It is very easy to calculate their ROI.• Using google analytics/omniture we can find the traffic and

hence revenue coming using these TDs.• Hence can find ROI as we already know our marketing cost.

Special URLs• www.amazon.com/diwali-saleAll the sales through this link will be given special discount. We can count ROI easily( using google analytics calculate revenues coming through this link).

Mobile App Download Marketing• As m-commerce is the future and spend towards marketing of mobile app

download has to be increased• Mobile app- shop anytime, it also promotes “Showrooming” or ROPO

effect.• Once a customer downloads the mobile app, there is high probability he

will purchase anytime from us.• Also, customer will browse the app in free time, hence we can know

behavior and do targeting.• 70% android users spend 90 minutes daily in mobile apps.• Mobile app marketing ways- Inapp and push messaging. We can give special

offers for doing trxns through mobile.• To promote mobile app downloads- marketing will have to be done digitally

and offline. So cost is involved. • Also, cost is involved in and giving special offers on first time purchase.• But it will definitely give returns in long term.• Mobile App ROI= Avg revenue per user(in CLV)- spending

Spending

Offline Marketing• Doing 1 crore spend in 1 month in this way:

• Benefits:Market Creation: Reach out to large audience, create awareness in 35+age

group and people in tier2,3 cities where they have good PPP but don’t have awareness.

Builds brand & customer trust- Brand will gain traction and give benefit in long term. TV advt creates a perception among people as a “Big company” as it comes on TV. Build brand credibility through special appeal(examples)”

- Amazon 1.5 million products ad- To showcase their huge product catalogue means everything will be available.

- Snapdeal ‘savings appke haath mein’/”isse sasta kahi nahi”- Promotes moblie app and tone is –check price before buying from anywhere. Its just in your hands.

Offline Marketing

Channel Spend(in %) Spend( in amt) IdeologyTV advt 60 60 lac Costly but helps in long term,create impact in 35+, tier 2,3Print advt (newspaper, magazines) 15 15 lac Build brand and in far-flung areas too,bring new cutomerHoardings, Banners at key points 20 20 lac View has a long term impactEvents organising, sponsoring events 10 10 lac Attract quick attention and spread awarenessRadio advt 5 5 lac Total 100 1 crore

Offline Marketing ROI• No direct way like online marketing to calculate ROI.• We track the sales over and above the base sales that we got after

launching offline marketing campaigns.• Track the change in following metrics: Number of new people visiting the website by typing in url or coming through

SEO. Increase in number of first time buyers. Increase in market share & SEO traffic. Marketplace- Increase in number of new seller requests from regions where

offline was launched. Getting traffic/orders from a wide variety of people from new addresses. Do brand awareness survey before and after the offline campaign. Also, increased response from facebook page, increased product search, increase

in CTR of online ads and increase in conversions.

• If we are launching campaign for a special category products through print/radio- track the increase in revenue for that specific category.

TV Viewership Method of ROI• TV viewership method may be used, but it is not much reliable as

there is dependency on viewership.TV Ads viewership method ROI calculation

Total budget for 30 days 60 lakhsspend per day=60 lakhs/30 2 lakhsAvg rate for a ad slot on a TV channel 1 lakhNo of channels we can take 2

Take 1 channel each in News, entertainment(star plus/colors/sony) Target a wide variety of people

Avg viewership on each channel each day 30 lakhs

Total viewers of all channels in 30 days=30 lakh*2*30 18 crores% of uniques visitors to website after watching TVC in 30 days 0.20%

No of extra people visiting in 30 dayss=18 crore*0.20 3.6 lakhsConversion rate 3.00%No of conversions in 30 days 10800CLV of 1 buyer 2500

Total incrmental profit of campaign= 10800*2500 2.7 croresROI=(2.7 crore-60 lakhs)*100/60 350%

Special events/Onsite promotions

• We should spend some budget on doing on-site promotions- setting kiosks at crowded malls, markets etc. so as to demonstrate the ease and benefit of online shopping and to create brand traction.

• Special campaign in tier 3 cities/towns along with expansion- so as to make people aware of online shopping, how it is done. Tier 2,3 cities has lot of potential, as people there don’t have good and organised options to buy from.

• As per the industry trends, 70% of ecommerce revenues will come from tier 2,3 cities in future.

• Launch special campaigns to promote among youth/colleges as they will be potential buyers in future and also help in creating awareness among their parents.

Reevaluating the investment after one month to start fresh

• In next slides, we will see how to predict ROI and plan fresh after doing this one month campaign for next months marketing campaigns.

ROI Change prediction• We can do this by analyzing past data and creating models using

regression techniques.• Marketing Mix Modelling(MMM) is used to estimate the effect of

various marketing strategies on revenue and then forecast the future.

• Basically we have to find a relationship function between a set if independent variables and a dependent variable.

• MMM is more helpful for online marketing ROI prediction.

Plan aFresh for online marketing

• It will be based majorly on performance of past campaign analysis of all the channels. Increase investment in profit making channels.

• But we will have to consider the market situations- possibility is one social channels has gained more popularity in the market in this time, so we need to focus on these market scenarios.

• Market trend and technology is changing at rapid rate, hence social network trend is also changing.

• Sometimes, temporary fluctuation in sales may happen due to economic/political/social changes. We need to be aware of that.

• Season based- For ex: Purchase will increase near winter/summer season start or festivals, we should spend more on promoting those products before this time and launch special sales during end of season sale

Plan afresh for offline(TV) marketing• Offline marketing spend should be a cyclic process.• Once we have spend on it for 1 cycle, now tone it down.• We would have gained many new customers in previous cycle of TV

advt, now we need to boost sales by increasing conversions from these people.

• This time we should reduce offline advt budget, and put some money in giving offers, discounts, promotions, vouchers and other incentives- so as to increase conversions and repeat purchase rates.

• For next TV advt campaign , we should showcase advt on different channels this time and in different region, so as to gain traction in many more areas in a cyclic manner.

• Also, spend some budget on regional channels• When we are closer to festivals or sports(cricket tournaments),

launch TVC aggressively.

Conclusion• Ecommerce marketing is must to boost sales and build brand.• Digital marketing is for immediate sales, offline is long-term.• Only 17% of Indians uses internet now, the number will increase at a higher rate

and hence ecommerce penetration.• Young generation is tech-savvy, have spending habits and potential.• Ecommerce market will grow at a rapid rate in India.• Price war is not a good method in long term to boost sales.

Customer satisfaction, better user experience, excellent services, more product categories and catalogues and controlled sellers will help in long term

• Also, focus on increasing NPS of website.• Hence keeping in view the potential of market, marketing spend should increase

overall in a calculated way.

THANK YOU