This article originally appeared in The Drum on March 16. Read the full article here.
Ecommerce was already an area of growth that every organization was trying to crack. COVID-19 propelled it even further forward in a few months, which otherwise would have taken years to implement. Up until recently, marketers have considered commerce to be an additional ad placement platform. However, commerce is a seller’s world and in order to win, you need to think like a seller – someone who is analyzing how every next move could potentially sell an actual product off your digital shelf.
From CVR to CPC, we’ve been swimming in measurement related acronym soup for years. And with commerce still being relatively new, the industry has essentially turned to what’s available and relatively easy: ROAS. While it does have its merit, ROAS, or return on ad spend, was created at a time when you couldn’t correlate ad exposure to an actual sale, so this was the proxy that the industry used. Through a fairly simple mathematical formula (ROAS = Return/Advertising Costs), ROAS was the best way for our industry to understand what was working, and we stuck with it.
Moving Beyond ROAS
However, if there’s one thing we know about commerce, it’s that it’s not “fairly simple.” Every client has different KPIs and we need to also factor in additional things like incremental sale, category rank, search insights and more. What this past year and acceleration of commerce has now told us more than anything, we need to move on from ROAS as a singular metric and figure out how it works in partnership with KPI governance that allows our clients to succeed. “How do we do that?” you may be asking. Here are a few tips we’ve been leveraging for our clients.
Shift Attention to Category Ranks
The first step is to shift your attention to long tail category rank for all ASINs across the entire portfolio. The category, or sales, rank of any given ASIN is the result of how well both organic and paid variables deliver on the marketplace requirements to essentially win the buy box. A dual approach of optimization at the individual ASIN level while also correlating high propensity keywords and high impact organic variables will lead to the highest potential sales. The key KPI here is the association between category or sales rank growth to total incremental sales at the ASIN level.
Understand Keyword Language
Once you’ve understood your category rank, shifting focus onto keyword language can help move you in those ranks. And yet again, keywords behave differently across marketplaces. People turn to Amazon’s search similarly to how they use Google search. For example, on Amazon, someone may search “What’s a great Keto snack?” then they’ll start their search from there because they don’t know the product or brand they’re looking for. However, on Walmart or Target, they will have already done that research and search for the specific brand or product they want. This is much more of a utilitarian shopping experience and needs different approaches to Amazon.
The shift in KPIs to a sales-based measure at the ASIN level; an advanced understanding of marketplace and category level impact organic attributes; and finally the ability to assign intent and performance at the keyword level is the key to success as a seller.
It’s important to remember that even this isn’t a one size fits all solution. Amazon and Walmart launched their marketplaces years apart, with different strategies and rules for what works for them. These businesses have zero incentive or need to make your job easier as commerce experts. Their business histories and strategies are unique to them and therefore how you approach them needs to be as well.
What I fear is, if we don’t get this right, the industry will prioritize overall audience reach for commerce versus actual marketplace performance. That may work across other media platforms but commerce is a different beast entirely and the old marketing rules can’t simply be shifted from another platform to this one. There is a natural desire to monetize retailers in similar ways as traditional media monetization, but that is the wrong way to look at commerce. If we can be brave enough to challenge our preconceived notions of what we think works within Commerce and throw out the old rule book, we’ll be able to create a system that drives actual results.