The gift concierge service that uses artificial intelligence is part of 1-800-Flowers’ technology and service strategy.
New tools help retailers analyze which of their online marketing investments help drive sales.
Determining whether and how a retailer's paid search, display ads, e-mails and other web marketing investments lead to sales can feel like trying to nail down the source of a winter illness. Was it the coughing bus passenger, germs from the dirty sink in the break room, or the warm-cold-warm temperature patterns?
It's that circling chase that recently led Cat5 Commerce, an 8-year-old e-retailer that operates 10 sites including HikingBoots.com and TacticalGear.com, to recently begin using Google Inc.'s Multi-Channel Funnels tool to better understand how its customers shop. The tool, launched less than two years ago, is a feature within Google Analytics that enables users to attribute how different marketing forms contribute to a sale. That lets a retailer form a more precise view of which paid search and display ads, posts on social networks, e-mails and affiliate marketing links helped produce a conversion, and that information can help steer the retailer's future direct marketing investments.
"Effective attribution modeling is a challenge, but it's essential as customer touch points grow and our marketing efforts cross channels," says Andrew Hoefener, Cat5 Commerce's co-founder and chief operating officer. "Without an effective model, you run the risk of calling something a failure that is actually contributing key conversion assists. I wish I could tell you that we have this nailed, but it's something we're grappling with."
His concern is well-founded, as online shoppers are exposed to many kinds of ads and marketing e-mails across multiple devices—PCs, smartphones, tablets, mobile phones within stores— as they search for the best bargains and products. Last year, a survey of 16,000 online shoppers around the world by business consultancy Capgemini found that 60% of respondents expected that by 2014, the "convergence of retail channels will be the norm." In fact, 43% of U.S. adults have already participated in showrooming—when a shopper goes to a store to test out merchandise and then searches the web, often from a mobile device, for a better deal or to research products—according to a November survey of 2,249 consumers conducted by Harris Interactive Inc.
Such behavior can make tracking the influences that lead to a sale ever more challenging. And each new ad outlet further complicates measurements. "It feels like we take two steps forward, and then two steps back," says Scot Wingo, CEO of Channel-Advisor Corp., a company that helps retailers sell online at marketplaces such as eBay Inc. and Amazon.com Inc. "Right when you think you have it figured out, consumers start to use more devices."
In response to these changes, retailers are gathering performance data from multiple sources and making investment decisions based on what they can see, and vendors are stepping up with measurement tools intended to help. Research and measurement service providers are offering tools that aim to provide a more complete view of marketing investments and how one investment influences the others. Meanwhile ad venues like Facebook Inc., eager to show their worth as lucrative destinations for retailers' marketing dollars, are introducing their own tools to measure the value of their ads.
Among the most popular marketing- measurement tools is Google Analytics, a free service used by 163 of the retailers in the Internet Retailer Top 500 Guide and 300 in the Second 500 Guide, to gauge such e-commerce essentials such as where site traffic originates, conversions and the general effectiveness of online marketing efforts. Multi-Channel Funnels is an add-on to Google Analytics that compares how such channels as paid search, e-mail marketing, natural search and display ads—and the keywords, referral sources and other nails and screws of online marketing efforts—contribute to sales.
Using Multi-Channel Funnels has helped Cat5 Commerce realize savings that could add up over the course of a year. "One thing we've learned using Multi-Channel Funnels is that we have been overvaluing paid search for some of the largest keywords we bid on," Hoefener says. "The data indicates those keywords have been playing [less of a role] than we originally believed, and we are now experimenting with dialing back certain bids and measuring the subsequent impact."
He says that the e-commerce company, which operates TacticalGear.com, recently learned a lesson about the term "tactical gear," which helps bring traffic to the site. "We now believe we were overvaluing those clicks by 35% to 40%," he says. "The potential savings from that single insight could be worth tens of thousands of dollars."
Google last year also launched Mobile App Analytics to Google Analytics users, enabling retailers to determine how shoppers interact with their mobile apps. Among the metrics retailers can measure is what consumers do with a specific mobile app, such as the number of purchases and revenue generated from the app.
And about a year ago, Google started giving Google Analytics users a deeper view of how social marketing efforts pay off. E-retailers that have e-commerce tracking enabled on the free version of Google Analytics can generate a "social value" report to see how social media contributes to conversions on their e-retail sites. Google says the feature provides marketers with return-on-investment metrics that matter most to executives—conversions and bottom-line revenue—rather than data points whose impact aren't so clear, such as the number of Likes retailers have on Facebook.
The social report offers a metric called "last interaction social conversion," which accounts for sales conversions that occur as a result of a consumer clicking through from a social network to an e-retail site and completing a purchase in the same session. Retailers also see "assisted social conversions." These are sales that have come about during a designated time period—say 30 to 60 days—during which an online consumer has interacted with the e-retailer via social media and later made a purchase.