Retail Business
Case Study

Hypothetical Work

To renew my knowledge in Paid Ads, I conducted an in depth analysis on the earnings of a fake, mid-sized retail business.

I took on the perspective of a 3rd party service Account Strategist such as Google Ads, Microsoft Ads or Adroll, and have
broken down the statistics of the
2nd Quarter of the year

Below you will find market research,
analysis, notes for optimisation, other influencing variables, and my projections

The business & the premise:
Online fashion retailer. UK Market. Currently using various marketing channels; mainly offline. Their main campaign goal is Retargeting. They have a low budget of 5000 Euros per month for Paid Media,
with a COS target of 10%.
Provide a quarterly review, suggesting optimisations.

My assumptions on context:
They focus mainly on female clothing and accessories
Copy and creative/design decisions remain cohesive and consistent

First of all, what is Retargeting?

The easiest way to think about retargeting is via an analogy:

say you have Susan, a 31 year old who has come across your page through an ad, or been suggested to look at your page by a friend.

She has a quick browse, perhaps clicks on a few items, then decides to exit the page and refrain from purchasing

So step 1: we’ve identified a consumer who has intent - they’ve viewed pages or almost made a purchase, then decided not to

Step 2: to target once again to Susan, but in a more tailored way.

This could be online or offline, and on other websites she uses.

Via this process, we want to convert her into a paying customer, and make her reconsider

Why doesn’t she want to purchase? is now the time to remind her she gets a 10% discount when she finishes her first purchase, how can we offer her something personal to reel her in?

This is done by: delivering the right ad at the right time, using AI & Optimisation technology . We can either find, or accurately predict, what Susan is interested in, and suggest items she might like

UK Market Research: the fashion industry

Credit: Texspace Today & Marie Clare

TRENDS

Within the fashion industry itself, there’s been a steady increase in spending on clothing apparel and accessories over the past 20 years, excluding 2020

[surprising, given that the cost of living crisis has been increasing by 20%in the past 3 years (Commons Library, Parliament UK)]

the UK fashion industry is currently worth 26 billion pounds, according to the British Council, and according to Statista, in 2023, spending on clothing reached an all-time high at approximately 63.7 billion British pounds.

71% of women in the UK bought womenswear online in 2022, (says Mintel, 2022) compared to only about 50% of men

the Office of National Statistics has seen an increase over the last few months by under 2% , set to increase by August, suggesting that sales tend to increase in the months leading up to, and during the summer, perhaps in a build up to summer holidays

We’ve noticed, with help from Glamour UK, that there are many recent fashion trends happening:

- Masc/fem or androgynous dressing

- Business casual or the ‘office siren’ look

- Sheer fabrics, particularly in dresses and skirts

- Elevated sportswear

- Metallics

- Micro shorts

A trend in usage is also proving to be one of the biggest challenges: and that is = textile waste

the Waste and Resources Action Program (WRAP) ( a UK charity) outlined in April this year that

People are putting almost half (49%) of all used textiles in the rubbish bin.

On average, each person in the UK throws a shocking 35 items of unwanted textiles straight into general waste every year.

WRAP’s latest Textiles Market Situation Report 2024 reveals that the UK bought 1.42 million tonnes of textiles in 2022, most of which is not being placed in the correct bins and therefore going straight to waste

Based on current rates of growth, the textile industry would account for twenty -six percent (26%) of the global carbon budget by 2050

In terms of other resources, 2,700L of water is used to produce one cotton t-shirt, enough for one person to drink for 2.5 years
Only 30% of clothing are made from natural fibres, 70% of now comes from synthetic sources.

706 billion kgCO2 is generated each year from polyester production for textiles

Statistics like these are very important to consider on the design and pricing end

Quarterly Data

Screenshot 2024-11-19 at 12.47_edited.jpg

Overview of Performance

When spend was increased in June by 2,000 euros (up by 3.1k overall), we've seen almost double the revenue and better ROI

From April to June, we’ve seen almost double the amount of clicks, and extra 1 million + impressions, so the ads are evidently being shown in better places and have significantly been more engaging

Cost Per Click, Conversion Rate and Click Through Rate has gone up incrementally to 19 cents, 1.96% and 1.06% respectively, with CR and CTR fluctuating, perhaps due to less relevant ads or effective landing pages, so we’ll have to keep an eye on these metrics

CPC rising from 16 cents per click to 19 cents might have been a result of targeting higher-quality or more competitive keywords, which contributed to better overall performance in terms of sales

The average cart amount has gone up 3 euros

Interestingly, we’ve seen that Sales (PV) in June, performed about 2x better than Sales (PC), despite Sales PC having a longer attribution window (30 days vs 1 day). This suggests most of your customers are earlier in the purchase funnel, and indeed would benefit from further retargeting solutions, but are obviously resonating with your brand if they are converting within 24 hours of viewing

Considering eCPM

eCPM stands for 'effective cost per mille'

In programmatic advertising, advertisers bid for ad placements. Understanding eCPM helps us optimise bids by ensuring you're paying the right amount per 1,000 impressions for the expected return. If the eCPM is too high without a corresponding increase in conversions, you may be overpaying, which affects the overall profitability of the campaign.

eCPM is important as it provides a standardised metric to compare costs across different platforms.

the typical definition of eCPM = (total ad spend ÷ total impressions) x 1000,

of which your eCPM in June would’ve been 2.02

We can analyse this number over each platform, and determine which perform better, and reshuffle funds around to maximise ROI

Understanding eCPM allows you to strike a balance between the number of impressions and the cost of those impressions. By optimizing for eCPM, you ensure that the money spent on impressions aligns with the desired outcomes—whether it's clicks, conversions, or other key actions

What rates can you as a client impact?

There are several metrics you can directly impact based on your decisions related to campaign setup, targeting, and engagement strategies. These are crucial for understanding performance and optimising the campaign for better results.

Overall, done via their content, design and SEO

These are:

Click-Through Rate (CTR):

Through the ad itself, the copy, and targeting. By refining ad messaging, including strong calls to action (CTAs), and ensuring the ads resonate with the target audience, you can drive higher engagement.

Conversion Rate (CR):

By optimising landing pages, ensuring a smooth user experience (UX), and aligning the ad message with the landing page content to minimise bounce rates and lead to higher conversions.

Cost Per Click (CPC):

You can lower the CPC by improving ad relevance through better keyword targeting and quality scores (for search ads) or by experimenting with audience segments to find those most likely to engage at a lower cost.

How do the above affect Cost Of Sale (COS)?

Think of COS as the inverse of ROAS...

Overall we can lower the amount used for online advertising, which is the main goal: creating a better spend to revenue ratio

I.e. we want your money online to go further, by either spending less for the desired result, or having more budget to be used elsewhere

So, the lower the CPC, and the higher the CTR and CR, the more you save, and therefore the more room in the budget

TARGET REVIEW

Calculate COS by client spend ÷ revenue generated

We have gone over budget for the month of June, but as said previously, we can see that the increase in spending had a significant impact on revenue

This number can be reviewed in line with progress made

It fluctuated between:

COS April 9.04%

COS May 11.03%

COS June 9.59%

Overall COS seen =

11,539.14 ÷ 116,944.12

.= 0.0987 = 9.87 %

.: Yes, just above target, as the goal is for this number to be as low as possible

Optimisation Suggestions

I would recommend staying with CPC as a strategy (over CPM), as we would still be aiming for retargeting, and CPM focuses mainly on impressions (but we are pushing for sales)

As CPC is largely up to live bidding technology, its hard to recommend a change directly, apart from capping the cost. Most technology directly factors in expected CTR, ad relevance and landing page experience to CPC

We could consider capping the CPC at 0.18, to better keep within the budget (the sweet spot between 0.17 and 0.19 in the last months)

and hypothetically result in COS of 9.09%, assuming the content and strategy stayed the same, lowering the cost to 5299.74 for the month

However, lets not be scared of a higher cost per click if it means higher sales, and better COS, as per 'low risk low reward' thinking

Depending on the relevance and strength of your ads, this number could increase with higher bidding if you wanted to cement a higher spot on the display pages, or decrease if this relevance and quality encourages more clicks

You were under budget in the months of April and May, so we could use that money saved to keep this momentum going

Keep in mind, it also depends on what your competitors are doing, and if their campaign is more relevant than yours; we'd need to consistently review this.

Also, keep an eye on sales PV, as they are substantially providing more of a stream than PC, and aiming to stay within the subconscious of consumers, as they are obviously remembering you and taking action

Projections

After gaining this momentum, we project the campaign to stay on an upward course

Keeping up with these rates from June, I’d project Revenue of just under 60,000 Euros, allowing for similar conversion rates whilst also staying within CPC budget

However, if a larger allowance was used in costs, effectively staying over budget, this number might increase even more

CTR would stabilise between 1 and a half to 2% with potential for a further increase, however this depends on consistent content within the ads themselves, and not changing too much on the creative side

We could expect to see Clicks of 30-40 000, and impressions surpassing 3 million, but definitely need to place more emphasis on clicks if we are still aiming for retargeting, as most likely the customers we are targeting have already contributed to previous impressions

CR: would also stabilise, with a great chance of increase of around 2.2%, due to the momentum of impressions and further established brand image in the front of consumers minds

CPC could rise to 20c and above, depending on your capping preferences and the competition

I’d project Sales PC and PV to increase another few hundred, with sales PV still taking the lead

Average Cart will likely remain the same with a few euros increase, but by using a loss leader or a form of summer sale, this could increase the cart by up to 50 euros

All of this is possible by:

Keeping content consistent so that we can also better analyse the other variables, rather than multiple of variables changing
Making sure we continuously aim for higher conversion and click through rates, and targeting
Can still be done whilst keeping within a COS target of 10% or less

TV Campaign Suggestions: How We Can Help

Tv is a huge driver to the web, acting as a main vessel for awareness

let’s capitalise on this, by syncing the timing of the TV ads with our online ads

Tv ads will spike interest on the web and on socials; we can push ads at the time the tv ads airs, giving consumers opportunity to react in real time. Hence, we would make sure our tools are ready before it airs, as well as suggestions on what metrics you want to look for specifically, allowing for overall better preparation on our end

Continued ad airing:

Ads should be pushed in the weeks or so after viewing, to keep your offer fresh, and cemented in the minds of potential customers
This is also an opportunity for you to provide further discounts or offers if needed

Increase bidding on clicks:

Locking in a higher spot on search engines or better placement for display ads

SEO optimisation:

Ensuring relevant keywords are available (including keywords from the ad, in case they missed your name)

Cohesion needed across all platforms:

Ads that appear in other formats should have the same look and feel as your tv ad
CTAs align with what is on TV
Need to promote the same offer, if not better
We don’t want to confuse consumers or dilute the brand effectiveness

Traffic Attribution:

On your end, we'd also suggest that for the duration of the campaign, you could add a section in the check out, asking where they heard of them or what inspired their purchase today

Through these ideas, we are sure we can work together to create a high performing integrated campaign

Retail Business Case Study