In its second-largest acquisition, Amazon buys the company for $970 million.
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Motorcycle Superstore also found that ads grow stale quickly. After a consumer sees the same ad a few times, he's less likely to click on it. So now it keeps ads fresh. Hetland has about 10 ad versions for each segment, which he updates whenever the metrics start to show a decline in click-throughs, which is usually every few days, but at least once a week.
Overhauling its ad lineup has helped Motorcycle Superstore's click-through rate jump nearly eight times higher than its old average to 0.39%, which translates to less than five cents spent per click. The retailer's first quarter revenue attributed to Facebook ads alone rose nearly 75% this year over last with no extra ad spending. Those results are leading the retailer to increase its Facebook ad budget from its current acquisition campaign budget of about $5,000 per month, Hetland says.
"We were pretty astonished at how effective we could make these ads," he says. "Our next step is to move towards more revenue-driving campaigns."
The big picture
While some retailers dig into the value of each ad or click from Facebook, children's clothing manufacturer and retailer Tea Collection takes a different approach. It evaluates the value of social media according to its ability to influence the lifetime value of individual customers. The idea is that a customer who regularly engages with the brand on Facebook will become loyal and spend more over time than a customer who only visits the site and buys once, says Jennifer Chen, the retailer's director of e-commerce. She measures the value from all its social media campaigns as the return on a fixed cost: the price of one employee, social marketing director Sara Martinovich, working on social media full time.
"If we measured ROI strictly from referrals and transactions we'd be missing a large part," Martinovich says. Her strategy is to engage customers wherever they are so they'll think of Tea Collection when they're ready to buy, even if they haven't recently visited TeaCollection.com. One way she does this is by hosting a monthly photo contest for Tea Collection Facebook fans, who post pictures of their kids wearing the brand's apparel. Fan votes determine the winner, who receives a gift card. The contest gets about 100 submissions a month, and those submissions attract other fans to the retailer because "when their friend shares the photo of their kid in Tea and they have to come over to our page to vote, they are learning about our brand," she says.
Martinovich also maintains multiple Pinterest boards for the company, pinning images of not only apparel but also travel destinations, recipes and the clothes-making process. "If we just posted kids clothes from Tea every day, it would look a lot like our web site and wouldn't be very fun to engage with," she says. It has paid off on the retailer's e-commerce site. Consumers who click from Pinterest to TeaCollection.com have an average 15% lower bounce rate and average visit duration 10% to 20% longer than other shoppers.
The retailer feeds this data—collected using the free version of Google Inc.'s Google Analytics—into PivotLink Corp.'s RetailMetrix management software to dig deeper into what's happening. That software aggregates social media figures with data from the retailer's web site, order management, warehouse management and accounting suites. That enables it to run reports that tie demand, shipping, customer demographics, clicks, bounce rates, conversions and any other available metrics together. The idea is to connect social data to more traditional marketing and sales information.
"We can map those orders back to the customer and show how valuable they've been in the past, where we got them, etc. You can get all the analytics to lead you to not look at the world in transactions, but look at it in customers," Chen says. That way, Tea Collection can feed customers more personalized marketing and content that's likely to lead to more engagement, brand loyalty and eventually sales.
That type of agility requires a retailer to stay abreast of data. When Facebook changed its news feed algorithms last September to display posts more selectively, based on a fan's level of engagement with a brand, the Active Network's Facebook views halved overnight, Ramers says. With more than 700,000 fans, the drop was stark. "If you aren't measuring, you just kind of throw your hands up in the air and say, 'I don't know, Facebook changed something,'" he says.
Fortunately, the Active Network already had a mandate to track everything it posts and was able to determine that the change actually resulted in a net profit: although posts appeared to fewer consumers overall, they appeared to greater numbers of the brand's most enthusiastic fans, and click-through rates tripled. "Without that data at my fingertips, I wouldn't be able to explain the net," Ramers says.
Rather than simply treading to keep afloat in the social sphere, the Active Network and other metric-hungry retailers are finding ways to make social media work for them.