Advertising pays off not from the first purchase
Posted: Wed Jan 29, 2025 4:19 am
Also, when measuring the effectiveness of an advertising channel, it is worth considering the following fact: there are many areas of business where, due to objective reasons, it is impossible to recoup advertising costs immediately, from the first purchase. In this case, it is impossible to measure the effectiveness of an advertising test after the first sale. Repeat purchases should also be taken into account.
Advertising ROI
A striking example is the sale of electronic automotive mailing list equipment. The margins of such goods are quite low, but the competition among sellers is very tough. Such companies make a lot of efforts to retain the client and encourage him to make repeat purchases through promotional offers, loyalty programs, discounts and bonuses for subsequent purchases, etc.
In this case, measurements need to be made taking into account the customer's lifetime and repeat purchases. But it is quite logical that you cannot predict exactly when he will return to you for the next product or whether he will do it at all.
And again, you have two options: the first is to wait, making appropriate adjustments to the measurements taken; the second is to use the data obtained from the CRM system to calculate the average number of repeat purchases you have, and multiply the revenue from the first purchases by the resulting coefficient. Then you will be able to roughly calculate the amount of profit that customers will bring you in the future.
Multichannel
Another point to consider is related to multi-channel and the attribution model.
From the moment a client realizes their need for your product until the deal is closed, they can interact with your website a huge number of times by going to it through Yandex.Direct, clicking on ads that appear on social networks; after watching videos on the YouTube channel, clicking on a link to the website, etc.
Let's assume that after a couple of weeks from the initial visit to your site and all the accompanying actions, the customer has made a purchase. Then the question arises quite reasonably: which of all the advertising channels was the most effective and led the person to this decision?
Most organizations in these cases measure the effectiveness of advertising campaigns using the “last indirect interaction” attribution model and attribute the sale to the last indirect channel used by the customer in the chain.
All the most famous web analytics counters, such as Yandex.Metrica and Google Analytics, generate most of their reports using this attribution model. Moreover, it is considered the most familiar to everyone.
Advertising ROI
A striking example is the sale of electronic automotive mailing list equipment. The margins of such goods are quite low, but the competition among sellers is very tough. Such companies make a lot of efforts to retain the client and encourage him to make repeat purchases through promotional offers, loyalty programs, discounts and bonuses for subsequent purchases, etc.
In this case, measurements need to be made taking into account the customer's lifetime and repeat purchases. But it is quite logical that you cannot predict exactly when he will return to you for the next product or whether he will do it at all.
And again, you have two options: the first is to wait, making appropriate adjustments to the measurements taken; the second is to use the data obtained from the CRM system to calculate the average number of repeat purchases you have, and multiply the revenue from the first purchases by the resulting coefficient. Then you will be able to roughly calculate the amount of profit that customers will bring you in the future.
Multichannel
Another point to consider is related to multi-channel and the attribution model.
From the moment a client realizes their need for your product until the deal is closed, they can interact with your website a huge number of times by going to it through Yandex.Direct, clicking on ads that appear on social networks; after watching videos on the YouTube channel, clicking on a link to the website, etc.
Let's assume that after a couple of weeks from the initial visit to your site and all the accompanying actions, the customer has made a purchase. Then the question arises quite reasonably: which of all the advertising channels was the most effective and led the person to this decision?
Most organizations in these cases measure the effectiveness of advertising campaigns using the “last indirect interaction” attribution model and attribute the sale to the last indirect channel used by the customer in the chain.
All the most famous web analytics counters, such as Yandex.Metrica and Google Analytics, generate most of their reports using this attribution model. Moreover, it is considered the most familiar to everyone.