Measuring Real Returns

by Jim January 22, 2019


Continuing to explore important metrics for retailers this week with a view to accurately calculating your return on investment. You need to know how to deduct fees, ad spend and other elements to fully understand your revenue stream. There are great products out there for retailers; you just need to know how those ads affect other avenues.

What I learned

  • Retailers are right to focus on revenue
  • Do you know what your various channels are making?
  • Why your ads should be producing 1000% return minimum!
  • The Google products that all retailers should use
  • What are your ads stealing from other avenues, and should you care?

Transcript

Hey, welcome back Rankers. How’s your 2019 so far? Good? Good.
I want to talk to you a little bit more about some of the metrics that we are looking at or the ones that really are important to our clients anyway. And when you work with retailers, they’re very focused on revenue, as you might expect. And for a good reason. And it’s really good.

Are you seeing at least 1000% return?
So one of the reports that we churn out is what are the different channels making but also more importantly, what’s the over return, and we’re saying return on investment. But basically it is what is our client paying us as the fees that we charge, plus then what are the other ad costs from say Facebook or Google or whatever else? And then what’s the revenue we’re making through that process? What are we contributing basically?

So we try to do that a little bit like Google does its return on ad spend, because as I’ve said to you before, if I’m not seeing at least 1000% return, at least 1000% return on some of those Google ad products, especially the ones that have got a bit of AI behind them, if I’m not seeing 1000% on them, there’s a problem. Or the retailer is selling something that’s unique and it’s something that takes a longer decision making a process or something like that.

But typically for your commodity type stuff, furniture, homewares, all of these things, you would imagine that you would see about 1000% return. Now, some of our clients aren’t because we’re not doing their AdWords or their Google ads, as I should say. And some of the clients that we bring on, here’s a case in point for you.

This was a client that we brought, I can’t remember whether I did this one in the show. But this was a client that we brought on last year. And last year their Google ad spend was $100,000. And their revenue from that was $25,000. Let me repeat that. $100,000 spend and the revenue they got back, not profit, the revenue they got back was $25,000.

Now, they were using those products to get people into their brick and mortar shops. Oops. No. So their Google ads is now, they’re up over 1000% return, right? So I said to the retailer at the time, why don’t you give me the $100,000, I’ll give you $50,000 back and you would’ve made $25,000 more than last year? Done. Don’t even have to buy any Google ads. We didn’t do that.

What products should retailers use?
But the return, you’ve got to measure that. So the products that I like to be using for retailers that we find are really great from Google at the moment, well of course your Google shopping. Your dynamic search ads are really cool. And the one that we’re looking at at the moment is smart shopping, which is really good. And some of those brand campaigns that we all do where the user will connect directly when they see that brand so they’re more likely to click or convert. So there’s a higher trust factor.

You see some extraordinary returns on those sorts of ads. The question that comes from that if you’re buying your own brand. And if you’re a retailer it’s not so much if you’re buying your own brand. It’s if you’re buying a manufacturer’s brand that you’re selling. People have more trust. So they’re going to convert higher. But I would see 3000, 4000, 5000 percent return.

And you’re not talking small spends. Yeah, but the question is what does that take away from organic? Did I have to pay for that traffic anyway? If you’re happy with the return, why do you care? So that’s my point.

And that is it for this week’s show. If you have any questions, if you have something you want me to cover this year, let us know. And please, tell your friends, hit the subscribe button if you haven’t already and we’ll see you next week. Thanks very much, everyone. Bye.

Jim’s been here for a while, you know who he is.

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