October 3, 2017
To Defeat Amazon Competition, Obsess Over Customer Experience
The simplest way to create goals for your digital advertising campaigns is to evaluate based on one of two main outcomes: revenue or leads, or the associated efficiency metrics like return on ad spend (ROAS) or cost per lead. But the simplest goals are not always the best. Acquiring new customers and reaching customers early in the conversion funnel often means that the direct purchase or conversion does not happen immediately after an interaction with your ad. This is frequently the case for channels that first introduce consumers to a product or brand, like display advertising, paid social advertising, and YouTube. If you only evaluate these channels based on direct ROAS or CPL, you’re sure to undervalue (and consequently, underfund) them.
Acquiring new customers through marketing requires you to adapt your strategy and goals based on what’s realistic for a consumer at that point in the customer journey. For Metric Theory clients running on a mix of ad channels, we strive to develop a strategy that adapts ad content, landing page content, and success metrics based on where that channel meets the consumer in the purchase funnel.
The following example strategy is based on Metric Theory’s work with a health and beauty company to optimize and evaluate several types of digital advertising to meet customers at the right stage of the buying funnel.
YouTube is a highly effective first touch point in the health and beauty vertical. “How to” searches on YouTube have increased 70% YoY, and searches around how to apply makeup, create a certain look, or care for your skin are particularly popular. The prevalence of these videos provides an opportunity for advertisers: we can serve ad content that delivers an answer to the searcher’s question. How exactly does this product address fine lines & aging? Why is it better than some better-known alternatives?
When building YouTube campaigns, we selected video content that clearly explained how to use the products and what benefits the user should expect. Rather than focusing on direct revenue and ROAS, we incorporated YouTube engagement metrics (earned views, earned subscribers, etc.), and view-through conversion data. While view-through revenue data can be overgenerous if taken at face value, it is a useful directional metric to determine what audiences and videos best resonate with customers.
Facebook was already driving direct revenue through our advanced remarketing set-up, but we wanted to use Facebook Ads to acquire new customers as well. At the time, we also had a robust email marketing program that was driving double-digit YoY revenue growth. Given the strong performance of our email lists, we used an email signup goal for our Facebook customer acquisition campaigns rather than just direct purchases. New users arrived on a landing page that outlined product benefits and collected email sign-ups. The new email addresses provided larger remarketing and email marketing lists, and we remarketed to them with additional resources around product benefits, as well as discounts and other promotional material. These larger remarketing pools and email lists allowed us to increase revenue from both Facebook ads and email over the previous year.
A robust remarketing program is vital if you’re investing in upper-funnel channels like YouTube and Facebook. While those upper-funnel campaigns will increase total site traffic, your remarketing efforts will bring users back to your site to close a final purchase. Particularly if your product is a more considered purchase or comes at a higher price point, you’ll likely see a sizeable portion of revenue from remarketing
Because remarketing is meant to seal the deal with customers, we recommend evaluating remarketing campaigns based on direct revenue or ROAS performance. We also recommend serving creative that is highly customized to the target audience. Dynamic ads based on the products a user viewed, and a landing page that highlights additional product benefits that the user may have missed the first time, will help to convert customers still considering a purchase. You should also test promotions to push potential customers across the conversion finish line. Promos can be particularly effective if you see a high rate of repeat buyers and are willing to take a loss on a first purchase in order to drive more long-term customers.
To acquire new customers via search, you’ll also need campaigns with research-based keywords used by someone not yet familiar with your brand. Similar to YouTube and Facebook, it’s unrealistic to expect someone doing early-stage research on a new luxury skincare product to make a purchase after clicking on their very first ad. Instead, you should expect this user to comparison shop, read reviews, and do additional research before committing to a product. Before closing a purchase, you need to build brand trust, and–especially if the product is unique or particularly innovative–convey why this product is the right fit for the searcher.
For your upper-funnel search campaigns with the most general keywords, consider evaluating by KPIs similar to the ones you use for Facebook or YouTube. Doing so will ensure that you’re maximizing the reach of your non-brand campaigns and not limiting your reach among first-touch searchers. For lower-funnel keywords and Shopping campaigns, you should evaluate directly by revenue and ROAS, although you should accept a lower ROAS threshold than you use for Brand search given the role of non-brand search in driving new customers to your product.
We always recommend robust coverage on brand keywords to seal the deal with new customers and prevent competitors from stealing your most valuable searches. Since brand campaigns are typically the last touchpoint before a purchase, we evaluate these campaigns based on direct sales and revenue, and we constantly test new creative to boost those numbers even higher.
When evaluating any marketing campaign, you should always consider where your effort fits into the buying funnel and tailor your goals and strategy accordingly. Doing so will ensure that each channel delivers an ideal user experience while helping you fill the marketing funnel with upper-funnel users while driving sales from lower-funnel customers.