But losses mount for the home furnishings e-retailer that went public in October.
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Adding in the marketing costs could show that campaign A is costing 30 cents per click, while B costs 11 cents. "So even though B has a lower conversion rate, it`s about a third the cost of A and the marketing ROI percentage is almost twice as high," Palmer explains. "It`s an example of how you can`t just look at revenue. You need to be able to incorporate other costs to truly understand where you should invest your dollars."
Powered by the increasing capacity of web analytics , some retailers are taking analysis a step further, incorporating product costs into campaign analysis. That allows them to see that the product they are selling on a data feed through one portal partner, for example, is much less profitable than through another portal partner. "You start to be able to gauge how one campaign or channel performs against another," Palmer says.
And it`s not just online retail`s bigger players that use web analytics at this level of detail to uncover and address their site`s hidden problems. Different pricing models are reducing the initial cost of entry. At WebTrends, for example, the baseline cost of enterprise software is about $10,000, but marketers must pay an annual maintenance fee, have the necessary hardware in place, and assign internal resources for development. Hosted service starts at around $15,000 per year. Palmer says the cost difference between the two models evens out after about 15 months.
"You`d expect that the smaller retailers wouldn`t be able to do this, but it varies by organization," he adds. "You`ve got large retailers with the staff to apply to this level of detail, but what`s interesting is the number of smaller retailers who do it because they are so resource-constrained. They really drill down into the cost of the performance of the campaigns they invest in."