USING STORY & DATA TO INCREASE AOV AND CONVERSION RATE

ABOUT ME

Marketing, Analysis, & Product Development for…

• SourceKnowledge • Keeward Ventures • Frank & Oak

JUSTIN ADLER @thejustinadler

My projects have been featured by…

• VentureBeat • Tech Crunch • Fast Company • SXSW Interactive

THIS IS NOT HOW ECOMMERCE WORKS

WHERE NEW PURCHASERS COME FROM

9%

45%

27%

18%

DirectOrganicPaidOther

OBSERVATIONS

• Websites aren’t physical spaces, so you can’t depend on foot traffic.

• Organic traffic is free (yay!) but is hard to scale and measure. You could spend a lot of time on a campaign and get anemic results.

• Paid traffic is scalable but can be extremely expensive (not yay!). You could spend a lot of money and get bad traffic.

WHY YOU NEED TO INVEST IN ACQUISITION

INVEST-OR-KILL METRICSCustomer Acquisition Cost (CAC)

The cost of customer acquisition (CAC) is the amount of money you have to spend to get one customer. You always want your cost of acquisition to go down. For example, your CAC is $40 if you need to spend $200 to get 5 visitors to buy on your store ($200/5=$40).

Single Day Activation

A basic projection model that you can set up to forecast the percentage of customers who convert from a campaign based on 24 hours of data. This model is necessary as most users that are acquired will take longer to activate into customers. Look for at least a 1% conversion rate - and a significant sample size.

Average Order Value (AOV)

How much does the average customer spend when they shop on your site? To calculate this value, find the average of all orders places on your site. Measure against the CAC of a traffic source to figure out if it’s delivering value for your business.

THE PROBLEM WITH PAID ACQUISITION

FIRST PURCHASE AOV SEGMENTED BY ACQUISITION SOURCE

AOV

60

120

180

Acquisition Source

Paid Organic

OBSERVATIONS

• Typically the AOV from paid acquisitions is significantly lower than organic.

• This correlation can also generally be observed through other metrics such as: Lifetime Value (LTV), Conversion Rate (CVR), Order Frequency, and Churn.

• We can conclude that users who are acquired through Paid channels do not perform as well - but why?

WHY PAID DOES NOT PREFORM

PROSPECTING

A prospective client sees a video or

display ad creative.

ON SITE ENGAGEMENT

The prospect visits the brand’s e-commerce site.

EVALUATION

They research the brand or product.

REMARKETING

The prospect is cookied after they visit the brand’s site and served ads that reinforce the

conversion.

THE TRADITIONAL ACQUISITION MODEL

• If the prospect does not take action in the prospecting phase you may misattribute the conversion and ROI of a campaign.

• Depends on the prospect interacting with the first ad they see. Generally a prospect must be exposed to a campaign 5 - 7 times before interacting with it - even if they’re interested in the products being advertised.

• Remarketing only takes place after the site visit.

WE WANTED TO CREATE A SMARTER WAYFOR BUSINESSES TO ACQUIRE NEW CUSTOMERS

ON SITE ENGAGEMENT

The prospect visits the brand’s e-commerce site.

THE IMPROVED ACQUISITION MODEL

• Each unit has a specific purpose. The video communicated brand values, while the display units reinforce the messaging in the video.

• Creates a narrative for the brand and moves the prospect through a sequentially optimized campaign.

• When the prospect arrives at the brand’s site, they have a full understanding of what the brand’s story is and feel more secure transacting.

• First party data allows for total attribution across channels and platforms.

• The ad bidder can use information from the brand’s BI/CRM system to rank the value of conversions and make smarter buying choices.

PROSPECTING

A prospective client sees an brand forward video

creative.

SEQUENTIAL REMARKETING

The prospect is served sequential display ads that reinforce the conversion

based on engagement with the video.

MACHINE LEARNING

Each conversion is ranked based on AOV and time to CAC

and the ad buying model is adjusted.

BRAND STORYTELLING IMPROVES PERCEPTION, VALUE, AND TRUST.

HOW COMFORTABLE WOULD YOU BE MAKING A LARGE FIRST PURCHASE ON THIS SITE?

POSSIBLE PAIN POINTS

• Will the quality be acceptable?

• Will the fit be acceptable?

• Will the order arrive in a timely fashion?

• Is the brand/company trustworthy?

CASE STUDY: FRANK & OAK

CASE STUDY: FRANK & OAK

THE PROBLEM

Users acquired through paid media have a lower conversion rate, lower AOV, and lower LTV compared to users who join through earned media. Why? Because banner ads are not an effective means of conveying the brand’s story or value.

OUR SOLUTION

Use video to create a brand forward first touch targeted to the brand’s core demographic. Key audience members were re-engaged with sequential cross-media messaging. SourceKnowledge’s proprietary bidder optimized the campaign to reduce the CPA and increase the value per conversion.

CASE STUDY: FRANK & OAK

RESULTS

• Individuals who had been exposed to the video creative first, were 84% more likely to engage with a display unit than the control group.

• Conversion were 10% more likely in users acquired by this campaign.

• First time purchasers who discovered the brand through this campaign bought for 20% more than site-wide AOV (average order value).

• Delivered 3.5M impressions that were targeted to M18:40.

THANKS! QUESTIONS? AMAWANT TO LEARN MORE? @THEJUSTINADLER