June 12, 2008, 12:00 AM

Testing keeps marketing spend where it works hardest, iFloor.com CMO says

Retailer iFloor tests the power of its online marketing program by temporarily dropping it, CMO Theron Andrews tells audience at IRCE.

In testing how well its online marketing efforts were driving both online and offline sales, multi-channel retailer iFloor tried something few retailers venture: it ceased all online marketing for a few weeks to see what would happen. That revealed its online marketing program had been effective at driving sales in both channels-after a few weeks, store visits it was able to trace to Internet-generated leads dropped by 60%, and site sales dropped by 30%, Theron Andrews, chief marketing officer of iFloor.com, told attendees at the Internet Retailer Conference and Exhibition in Chicago this week.

In his session, “Budgeting: Balancing store investments and web site investments,” Andrews emphasized the importance of testing to determine which elements of marketing spending deliver results and which don’t. “When it doubt, cut it out," he said. “Test the impact of eliminating certain elements and evaluate the return. Is the revenue loss, if any, offset by the savings?”

Andrews said temporarily suspending the company’s online marketing was an effective way to learn about its value, given that iFloor had the ability to quickly restore those efforts. Andrews added that the company had the flexibility to undertake this test for a few weeks because it is privately-owned and didn’t have to concern itself with any possible effect on share price or valuation.

Other, less drastic tests of marketing efforts also can yield insights, iFloor found. For example, the retailer had been advertising in newspaper inserts in an effort to drive store and web traffic. Andrews said that while the company had spent about $70,000 on the newspaper insert program, he had tracked only one $1,200 sale as a direct result of that campaign.

Reviewing a broad spectrum of marketing vehicles used by multi-channel merchants, Andrews characterized print, radio and television ads as “blunt instruments.” Their usual metrics of sales volume, traffic or call volume and brand awareness don’t account for variables such as complete impact, he said. Additionally, their effectiveness is hampered by the fact that they don’t reveal who is buying what, and they’re vulnerable to what he termed “creative management of reporting tools,”-tampering with report content.

Direct mail’s metrics of response rate and matchbacks provide some added information beyond sales volume and traffic or call volume, but they may not give an accurate view of campaigns since they don’t reflect variables including competitive impact, post office delivery issues, and potential report tampering, he said.

Andrews labeled online marketing such as search engine marketing and e-mail marketing as “the new breed,” capable of serving up precise metrics to inform marketing spending, such as such as cost per action, cost per click, and return on ad spend. Because they take time to manage and they require management tools, both programs can be costly, but they can produce a higher return than traditional marketing methods, he said.

“If you know what you’re getting from your advertising spend, and it delivers positive ROI, keep doing it,” Andrews advised session attendees. “If you don’t know what you’re getting for your spend, can you find out? And if not, is it worth doing at all?”

IFloor is No. 178 in the Internet Retailer Top 500 Guide.

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