In-Depth Holiday Analysis-Brand

http://www.logicalposition.com/blog/in-depth-holiday-analysis

Reviewing holiday results and putting them into context can be difficult.

Occasionally what are perceived as poor results in a particular channel can actually

be great (the reverse can also be true). I want walk you through a holiday review of

a Logical Position ecommerce client with unique situations that required some

complex analysis.

High Level Numbers:

Using the same methods as outlined in a previous article, get to the channel results

comparing year-over-year (YOY) data for your holiday period:

Notice all of the green arrows. This is a fast growing brand with good YOY metrics

all around. Revenue was up almost 28%. With transactions jumping 68% and

revenue only 28%, this normally would be a cause for concern, but because their

margins are rather large (85%) and they introduced some lower priced products

throughout the year, it’s probably okay. Here are the top session generating

channels:

Set a Benchmark:

When analyzing a holiday period YOY, it is important to have a benchmark to

compare things to, to understand whether the results are good or bad. At Logical

Position, we prefer using direct traffic as the benchmark for client growth. As a

general rule, when starting your analysis, channels that grew more than direct traffic

did well, and channels that grew less than direct performed poorly. Direct traffic for

this client had very healthy YOY growth: up 22% in sessions, 80% in transactions and

41% in revenue. Using these guidelines, you can find areas to investigate for

improvement.

The big outlier on the page is affiliates. If you weren’t aware of tagging issues in the

affiliate program last year (incorrectly showing up as referral traffic in 2014 thus the

80% drop in referral revenue YOY as we fixed tagging) then that 2000% increase

would be very impressive. Affiliates are up, but actually only around 15%. Email is up

54% and the largest driver of revenue they have, at 37.83% of total revenue. Organic

traffic is the biggest laggard in the revenue growth department. Some of this is due

to SERP changes, competitors pushing hard on SEO, and losing their internal SEO

person. We had our affiliate team reach out for an in-depth review through the

platform to better understand the lag in performance (note-our team quickly earned

the business). Email is HUGELY important to this client and they have executed a

phenomenal strategy for bringing customers back into their brand through email.

This channel’s success is even more important to this brand as you will soon learn

when we dig deeper into the paid search program.

Paid Search Results Initially Appear Poor:

Logical Position currently manages paid search for this client, so I personally am

most interested in this channel, and how our team performed. This client has a good

portion of revenue (15%) from paid media, but it’s by no means out of the ordinary.

While site revenue was up almost 28%, paid search only increased 17.94%. Healthy

direct traffic growth (YOY) usually indicates a great, growing brand, and the LP

Enterprise team usually has the paid search outpacing the revenue growth target set

by direct traffic. During this period, that was not the case and we need to explain to

the client why.

After adding revenue to the cost analysis report (Acquisition->Campaigns->Cost

Analysis), we can quickly see that Google spent almost exactly the same amount as

2014, but drove 27.43% more revenue which generated a ROAS increase of 27.64%.

Bing shows a little different picture. Spent about 30% less, for 30% less revenue with

ROAS only increasing 2.44%…not usually something we like to see.

Bing Analysis:

As Bing was down YOY, I will start there. After clicking into the bing/cpc source, I

will filter the campaigns appropriately to only show me brand campaigns. This client

has focused quite a bit of energy on their brand name and buying new customers

through non-branded terms proves very costly. Knowing that, I’m assuming this

much revenue drop had to come from branded traffic.

Branded impressions were up 71% YOY, which is usually a great sign. Everything else

paints a very bad picture. Seeing only this data with no context, I’d fire my agency

immediately. Thankfully we have other insight to put some context around this. The

brands two largest retailers were not bidding on this company’s branded terms in

2014 on Bing. They jumped onto Bing this year, aggressively. We held position on

brand terms well (1.04 in 2014 vs. 1.17 in 2015-these numbers need to come from the

AdCenter platform directly), but it came at a significant cost. CPCs were up 166%!

The CTR drop is a testament to the power of those retailers and their loyal customer

bases. They use points programs very well to insure that loyal base. Despite CPCs

jumping 166% and the introduction of less expensive product lines, our revenue per

click only dropped 34%. While the branded campaigns in Bing were down

significantly, the ROAS was still 785% (down from 3246% in 2014). This still is a

VERY healthy ROAS, but this drop meant we couldn’t pursue as many non-brand

terms in Bing and still maintain the overall 200% ROAS the client needs, so we spent

31% less.

This client will need to come up with more reasons for their customers to buy

directly from them rather than through their very powerful retailers without lowering

pricing that could hurt the luxury brand image. Those retailers’ goals are to keep

their customers and sell more products to them, not necessarily keep this brand’s

customers buying that brand. Hopefully in the 2016 holiday we will be able to utilize

ad text changes highlighting those reasons.

Google AdWords Analysis:

One big change in Google this year was the content network (display and

remarketing ads). Last year we were able to prospect new customers at an

acceptable ROAS using display ads, but the impact remarketing ads is having on

display ad costs for this clients desired customer made it cost prohibitive this year.

Remarketing ended up with more revenue than last year on Google (barely), but

without the display network adding to the revenue number, it hurt Google AdWords

overall revenue growth. After removing Display revenue from 2014 holiday, Google

AdWords was on par with Direct Traffic growth (over 38% YOY growth).

AdWords Branded Analysis:

By clicking into AdWords Campaigns (Acquisition->AdWords->Campaigns) and

adding ROAS as a customization, I can filter by branded search. I won’t go into the

details of how exactly I did this as we have a very complicated account structure and

labeling system on this client. If your team and/or agency labels their campaigns

with branded terms appropriately you should be able to filter the campaigns to show

only branded traffic by searching in the Advanced filter:

For brand terms, this client had to spend over 100% more for only 61% more clicks.

ROAS was down 48% on branded terms. Less expensive products on the site most

likely contributed slightly to this. Also, after speaking to the account manager, there

were some additional significant retailers that started carrying the brand this year.

Online competition increased pretty dramatically. AdWords auction insights report

will show how the competition changed YOY by advertiser on your branded

campaign. Some of the same retailers from the previous year bid more aggressively

as they realized the value of the growing brand. CPCs were up over 26% on branded

terms as the competition for top positions intensified. Also, Google this year showed

a 5-pack shopping box on their branded terms above the paid results in the middle

of the page. This moved some traffic to shopping results.

AdWords Shopping Campaign Analysis:

For this company, many shopping terms are branded terms because of their

positioning in the industry, but our account team was able to really push shopping

pretty hard and generate some great increases year over year. While some of this

was Google driving more clicks to shopping, the majority of the increase was due to

our shopping structure and negative keyword sculpting. We were able to capture 4

of 5 shopping ads and 6 of 8 when the 5 and 8-packs were shown on page 1 of

Google for branded searches.

Google AdWords Non-Brand Analysis:

The last portion of paid search, the non-brand terms. These are the people searching

for the products without including a brand term. In this industry, the

competitiveness and the tremendous level of customer research makes non-brand

advertising much closer to branding. It is nearly impossible to drive profitable sales.

The client told us to use non-branded terms as branding (it will drive more branded

searches later in the purchase cycle) and spend down to 2.25 ROAS for the AdWords

account as that is still very profitable. Non-Branded acquisitions are almost always

“new-to-file” customers and will be repeat clients more often than not. This future

income is why there were willing to spend at a loss to ‘buy new customers’. In this

case, the client spent $53k to get $9800. While dramatically better than the year

before (up 142% in revenue and up 126% in ROAS), it was a huge money loser. We

are going to have a conversation with this client about other areas of marketing that

might make more sense. For example, dollars go much further on YouTube for

branding purposes and may make a better play next holiday season. Regardless…the

client is very happy with the results (which is the real goal in the end) as their non-

branded paid search client acquisition cost is still one of the lowest among their

marketing channels.

Final Thoughts:

By showing the client our profit maximization calculations, they agreed that next

year they would push harder on branded terms, which means lowering their targets

on branded terms. The higher positions (even moving from a 1.4 to a 1.1) can yield a

good portion of clicks and much higher revenue during a high conversion time like

the holiday period. Our calculations explained that while the ROAS might be a little

lower, the overall profit to the company will be higher because of the additional

volume of sales.

Next year, it may make sense to lower spend on non-branded terms and find other

avenues to push for new customers. Even some premium placements among the

appropriate affiliates channels could lead to a higher ROI and more new-to-brand

customers. Our teams will be experimenting this year before holiday to find

additional channels that may perform at a better cost-per-acquisition than non-

branded paid search. Also, we must constantly be aware of the impact new, deep

pocketed advertisers will have on our campaigns. We defended well, but the cost

impact is noticeable. We have our work cut out for us in planning for next holiday

season, but thankfully we have another 6 months before Google holiday meetings

with clients.

If your agency is not doing this sort of analysis for you, or you don’t have an

employee/agency helping, please reach out and let’s talk. I love diving into data and

helping companies strategize and find ways to win. You can reach me at

ryan.garrow@logicalposition.com or 503.305.5583. I look forward to helping you win

online.

Ryan Garrow

https://www.linkedin.com/in/ryangarrow