View on ecommerce marketing(offline, online, various ways) and their ROIs

1. Ecommerce Marketing Analytics-
Online/Offline & ROI
By-Gaurav Goel

2. What is marketing analytics & ROI
• Marketing Analytics: Process of measuring and analyzing the
performance of marketing campaigns
Benefits:
Proves financial effectiveness
Connect market to sales
Gives consumer insights to website.
Steps to develop a marketing plan:
1. Define KPIs.
2. Collect data of all channels after running campaigns.
3. Generate reports, try to do automation of reports
4. Analyze the reports to generate insights
5. Take actions for future acc to the generated insights

3. ROI
• ROI is incremental increase in profits obtained due to that
marketing campaign
• ROI= Incremental Revenue*Margin(in %) - Marketing spend
Marketing Spend
Smart way to calculate ROI: Use the concept of “CLV”
CLV-Customer lifetime value: It is the present value of net profit
attributed to a customer during his entire lifetime association
with us as a customer.
CLV depends on avg revenue, profit%, discount rate and churn
rate. Discount rate is generally not taken into count.
CLV of a customer= Average Monthly Order* Profit(%)
Avg Monthly Churn rate

4. Marketing Methods
• Online Marketing:
 Search engine optimisation
 Search engine marketing – Sponsored results through adwords(paid results), paid links
 Display Marketing ads- Text ads, Images on google, Banners, pop-ups
 Affiliate marketing- a form of display mktng through affiliate partners
 Facebook ads marketing and retargeting
 Social media marketing through other channels
 Email marketing
 Mobile marketing SMS etc.
 Mobile app download mktng- spend to make user download the mobile app
 Loyalty Marketing-CRM
• Offline Marketing:
 TV advt
 Radio advt
 Print media(newspaper, magazines)
 Hoardings, banners at specific places
 Sponsoring special events, organising on-site events

5. Online Search marketing
• Google search
• Online marketing ROI- Easy to determine
• Method: Through web analytic tools find the source from which customer
came to website for purchase>Calculate incremental revenue generated from
every source>Subtract marketing spends>Get ROI by using formula and CLV
concept.

6. Onlinemarketingspendbreakup(1crorein1monthintotal)
• Assume marketing budget is 1 crore for online for 1 month. Lets do split across channels in this way:
Methods:
• Search, display and google are major dominant advt platforms in existence for a
long time.
• Search mktng:
 Captures the attention of user when they are actually in the process of looking for
something. Google is more intent driven and adwords has longer lifetime.
Channel Spend(in %) Spend( in amt)Ideology
Search Engine Marketing 35 35 lac Search keyword based targeting..dominant form past
SEO 3 3 lac Optimization of content, organic search
Display & affiliate 15 15 lac Displays text/image ads on google or through affiliates
Facebook Marketing 15 15 lac Audience based targeting, rising these days
Other social media 5 5 lac Will grow in future
Email mktng 8 8 lac Good conversions, content mktng trand increasing
SMS mktng 3 3 lac Pushes users to buy
Mobile app download 10 10 lacs M-Commerce increasing rapidly
In house website campaigns(Loyalty) 6 6 lac
Total 100 1 crore

7. Online marketing methods
• Facebook Ads:
 Good for creating awareness and brand building. It is very helpful- to target
specific users(acc to age, likes etc)
 Are not about immediate conversions, but long-term conversions.
 Fb ads are useful because -pictures/link, friends liked pages will make more
impact. Young generation is attracted towards discounts and new design
products.
 SEO: Depends on search engine crawlers, their algorithm keeps on changing,
we have to change our content acc. Aim is to get high ranking placements in
common search.
• Display: Visual effect, ad impressions are placed. On clicking, they take to
website.
• Affiliate: Brings traffic to our website through them.
• Other social media: Twitter, blogs etc are gaining popularity in India
• Email Marketing: Used for abandoned carts retargeting, email subscriptions,
special offers delivering.
• Mobile App Download: M-commerce is future.
• Loyalty Programme: Motive is to increase the conversions, revenues and
attract customers.

8. ROI Calculation Method
• Determining search/social media ROI:
1. Set conversion goals: making purchase, signing up etc.
2. Track conversions: Leads, conversions, conv rate
3. Assign monetary value to each conversion(using CLV concept)
4. Measure total benefits for each campaign(using CLV)
5. Determine total costs incurred on marketing
6. Calculate ROI as= (Profit-cost)/Cost
• Cost incurred may be calculated through two ways:
1. Cost Per click
2. Cost per mile(1000 impressions)

9. Search Marketing ROI calculation-usingCPC
• We are spending 35 lacs on search marketing in 1 month.
• ROI= 240%
• This is how ROI is calculated. So it depends on bid, conversion
rate, churn rate, avg order value, profit %.
Search ROI- CPC Method
Spend on mktng 35 lacs
Avg Cost per click (bid) 35 rs
No of clicks=35 lacs/30 1 lac
Conversion Rate of search mktng..assume 2.00%
No of conversions into buyers= 1.4 lac*2.5/100 2000
Avg order value 1800
Avg Profit % 10%
Monthly churn rate 3%
Avg CLV= 2000*10/4 6000
Net incremental Profit= Avg CLV*no of conversions=6000*2000 1.2 crore
ROI= (1.2 croe-35lac)/35 lac*100 240%

10. Display Marketing ROI calculation-CPM
Marketing spend on display(text/image ads)= 15 lacs
• ROI= 204%
• Better the click through rate, less we have to spend
Display mktng ROI- Cost per impression
Spend on mktng 15 lacs
Avg Cost per mile(1000 imp) 75
Total No of impressions displayed=1000*15 lacs/75 2 crore
Click through rate..assume 0.20%
No of visitors on website 40000
Conversion rate 1.90%
No of conversions/purchasers 760
Avg order value 1800
Avg Profit % 10%
Monthly churn rate 3%
Avg CLV= 1800*10/3 6000
Net incremental Profit=6000*760 45.60 lacs
ROI= (45.6-15)*100/15 204%

11. FacebookAdsMarketing
• FB Ads: News feed, right hand column ads- page post
text/photo/video/link…event, offer, friends like share, sponsored
stories.
• Facebook creates loyalty and brand while Google drives users to more
immediate transaction. Fb also helps in gaining marketing trends,
retargeting the users with certain behavior.
• Fb ads may not directly result in conversions since they come from clicks by
people who just saw our advertisement and not by people who were actually
looking for the product at that time(as in case of google search of a product).
• Facebook Ads displays good click through rates and performance when the
ad just go live. But, the performance decreases with time as the as becomes
old. As this happens, the cost per click increases since the CTR is reduced.
• We need to update the ads frequently to maintain momentum and keep the
clicks high and hence costs low.
• But fb branding will help in conversions in long term.
• Fb ads spending are increasing these days as fb is becoming a source of
knowing other people choice and what is in trend in market.

12. Fb ads-ROI Calculation example
• Marketing spend on fb ads= 15 lacs.
• CPM is less in facebook as it has lower CTR and CR output.
• NOTE: This is a rough estimation, as I am not sure of exact values of all these
parameters. Fb ads ROI will be good in long term as we know customer behavior, we will
do targeted ads.
• Other social media campaigns ROI can be calculated in the same way.
Facebook- Cost per impression ROI
Spend 15 lacs
Avg Cost per mile(1000 imp) 30
No of impressions placed=15 lac*1000/20 7.5 crore
Click through rate..assume 0.08%
No of visitors on website 60000
Converison rate 1%
No of customers 600
Avg order value 2500
Avg Profit % 12%
Monthly churn rate 4%
Avg CLV= 110*10/5 7500
Net incremental Profit=7500*600 45 lacs
ROI= (45-15)*100/15 200%

13. Email Marketing
Email Marketing involves advertising and promotional efforts via
e-mail messages to existing and prospective new customers.
We can send email for:
• Daily/weekly mail to subscribers(about new products etc)
• Retargeting Email for abandoned carts.
• Email for products that user looked on website but bounced.
• Transactional emails- details about transaction performed.
• Email marketing ROI is very good and trend is increasing.
Email Marketing ROI depends on:
1. Open Rate- % of people that opens mail out of total mails.
2. Click Rate- % of people going to link from opened email out of total opened
mails.
3. Conversion Rate- % of people converted after opening email.
4. Average value of a conversion and cost of sending emails.
• Email marketing ROIs are similar to search marketing.

14. Loyalty Marketing
• Loyalty marketing is to focus towards growing and retaining existing customers
by giving incentives.
• Majority of sales is driven by a few section of customers, we need to give
additional benefit to them.
• Spend on giving special incentives/promotions/offers to customers and it is done
in-house majorly.
• Incentives may be in the form of:
1. Special Discounts
2. Fast delivery/ less/zero delivery charges
3. Gift on Birthdays, movies tickets etc.
4. Gold/silver member acc to purchase values.
• Purpose of loyalty marketing is to:
1. Shift: Acquire new customers
2. Lift- Increase the avg order values of existing customers
3. Retention- Increase the retention rate or decrease churn rate
4. Profit Increase- Push to buy higher margin products.

15. ROI of targetted discounts
• Targetted Discounts(TD)- Special promotional discount codes
e.g. FREEDOM15, DIWALI20
• It is very easy to calculate their ROI.
• Using google analytics/omniture we can find the traffic and
hence revenue coming using these TDs.
• Hence can find ROI as we already know our marketing cost.
Special URLs
• www.amazon.com/diwali-sale
All the sales through this link will be given special discount. We
can count ROI easily( using google analytics calculate revenues
coming through this link).

16. Mobile App Download Marketing
• As m-commerce is the future and spend towards marketing of mobile app
download has to be increased
• Mobile app- shop anytime, it also promotes “Showrooming” or ROPO
effect.
• Once a customer downloads the mobile app, there is high probability he
will purchase anytime from us.
• Also, customer will browse the app in free time, hence we can know
behavior and do targeting.
• 70% android users spend 90 minutes daily in mobile apps.
• Mobile app marketing ways- Inapp and push messaging. We can give special
offers for doing trxns through mobile.
• To promote mobile app downloads- marketing will have to be done digitally
and offline. So cost is involved.
• Also, cost is involved in and giving special offers on first time purchase.
• But it will definitely give returns in long term.
• Mobile App ROI= Avg revenue per user(in CLV)- spending
Spending

17. Offline Marketing
• Doing 1 crore spend in 1 month in this way:
• Benefits:
Market Creation: Reach out to large audience, create awareness in 35+age
group and people in tier2,3 cities where they have good PPP but don’t have
awareness.
 Builds brand & customer trust- Brand will gain traction and give benefit in long term.
 TV advt creates a perception among people as a “Big company” as it comes on TV.
 Build brand credibility through special appeal(examples)”
- Amazon 1.5 million products ad- To showcase their huge product catalogue means
everything will be available.
- Snapdeal ‘savings appke haath mein’/”isse sasta kahi nahi”- Promotes moblie app
and tone is –check price before buying from anywhere. Its just in your hands.
Offline Marketing
Channel Spend(in %) Spend( in amt) Ideology
TV advt 60 60 lac Costly but helps in long term,create impact in 35+, tier 2,3
Print advt (newspaper, magazines) 15 15 lac Build brand and in far-flung areas too,bring new cutomer
Hoardings, Banners at key points 20 20 lac View has a long term impact
Events organising, sponsoring events 10 10 lac Attract quick attention and spread awareness
Radio advt 5 5 lac
Total 100 1 crore

18. Offline MarketingROI
• No direct way like online marketing to calculate ROI.
• We track the sales over and above the base sales that we got after
launching offline marketing campaigns.
• Track the change in following metrics:
 Number of new people visiting the website by typing in url or coming through
SEO.
 Increase in number of first time buyers.
 Increase in market share & SEO traffic.
 Marketplace- Increase in number of new seller requests from regions where
offline was launched.
 Getting traffic/orders from a wide variety of people from new addresses.
 Do brand awareness survey before and after the offline campaign.
 Also, increased response from facebook page, increased product search, increase
in CTR of online ads and increase in conversions.
• If we are launching campaign for a special category products through print/radio-
track the increase in revenue for that specific category.

19. TV Viewership Method of ROI
• TV viewership method may be used, but it is not much reliable as
there is dependency on viewership.
TV Ads viewership method ROI calculation
Total budget for 30 days 60 lakhs
spend per day=60 lakhs/30 2 lakhs
Avg rate for a ad slot on a TV channel 1 lakh
No of channels we can take 2
Take 1 channel each in News, entertainment(star plus/colors/sony) Target a
wide variety of people
Avg viewership on each channel each day 30 lakhs
Total viewers of all channels in 30 days=30 lakh*2*30 18 crores
% of uniques visitors to website after watching TVC in 30 days 0.20%
No of extra people visiting in 30 dayss=18 crore*0.20 3.6 lakhs
Conversion rate 3.00%
No of conversions in 30 days 10800
CLV of 1 buyer 2500
Total incrmental profit of campaign= 10800*2500 2.7 crores
ROI=(2.7 crore-60 lakhs)*100/60 350%

20. Special events/Onsite promotions
• We should spend some budget on doing on-site promotions-
setting kiosks at crowded malls, markets etc. so as to
demonstrate the ease and benefit of online shopping and to
create brand traction.
• Special campaign in tier 3 cities/towns along with expansion- so
as to make people aware of online shopping, how it is done. Tier
2,3 cities has lot of potential, as people there don’t have good
and organised options to buy from.
• As per the industry trends, 70% of ecommerce revenues will
come from tier 2,3 cities in future.
• Launch special campaigns to promote among youth/colleges as
they will be potential buyers in future and also help in creating
awareness among their parents.

21. Reevaluating the investment after
one month to start fresh
• In next slides, we will see how to predict
ROI and plan fresh after doing this one
month campaign for next months marketing
campaigns.

22. ROI Change prediction
• We can do this by analyzing past data and creating models using
regression techniques.
• Marketing Mix Modelling(MMM) is used to estimate the effect of
various marketing strategies on revenue and then forecast the
future.
• Basically we have to find a relationship function between a set if
independent variables and a dependent variable.
• MMM is more helpful for online marketing ROI prediction.

23. Plan aFresh for online marketing
• It will be based majorly on performance of past campaign
analysis of all the channels. Increase investment in profit making
channels.
• But we will have to consider the market situations- possibility is
one social channels has gained more popularity in the market in
this time, so we need to focus on these market scenarios.
• Market trend and technology is changing at rapid rate, hence
social network trend is also changing.
• Sometimes, temporary fluctuation in sales may happen due to
economic/political/social changes. We need to be aware of that.
• Season based- For ex: Purchase will increase near
winter/summer season start or festivals, we should spend
more on promoting those products before this time and launch
special sales during end of season sale

24. Plan afresh for offline(TV) marketing
• Offline marketing spend should be a cyclic process.
• Once we have spend on it for 1 cycle, now tone it down.
• We would have gained many new customers in previous cycle of TV
advt, now we need to boost sales by increasing conversions from
these people.
• This time we should reduce offline advt budget, and put some
money in giving offers, discounts, promotions, vouchers and
other incentives- so as to increase conversions and repeat
purchase rates.
• For next TV advt campaign , we should showcase advt on different
channels this time and in different region, so as to gain traction in
many more areas in a cyclic manner.
• Also, spend some budget on regional channels
• When we are closer to festivals or sports(cricket tournaments),
launch TVC aggressively.

25. Conclusion
• Ecommerce marketing is must to boost sales and build brand.
• Digital marketing is for immediate sales, offline is long-term.
• Only 17% of Indians uses internet now, the number will increase at a higher rate
and hence ecommerce penetration.
• Young generation is tech-savvy, have spending habits and potential.
• Ecommerce market will grow at a rapid rate in India.
• Price war is not a good method in long term to boost sales.
Customer satisfaction, better user experience, excellent services, more product
categories and catalogues and controlled sellers will help in long term
• Also, focus on increasing NPS of website.
• Hence keeping in view the potential of market, marketing spend should increase
overall in a calculated way.
THANK YOU