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Why Lifetime Value is the Most Important Metric in eCommerce

If you were one of the kids who sat in algebra class, half paying attention, wondering when you would ever use what you are learning – it’s time to dust off those algebra skills. In eCommerce, we spend a lot of time sifting through a long list of metrics. Conversion percentages, new customer rates, cost per order — it can all get a little overwhelming. But, what if I told you that there was one metric to rule them all? One singular metric that you could use to inform all future marketing and sales decisions and increase your bottom line?

Enter, customer lifetime value (CLV).

In eCommerce, CLV is the value that a customer will contribute to your company over their entire “lifetime” (usually 12-24 months). Essentially, it is the amount of money that they will spend on your products and services after the expenses of acquiring them as a customer. There are numerous types of CLV. The two most popular forms of CLV calculations are historic and predictive.

Historic CLV is a simple calculation. It is the sum of the gross profit from historic purchases made by a specific customer. This takes into account the expenses associated with the purchases that the person made.

Predictive CLV is generally a more worthwhile metric, albeit a bit more complicated to produce. Predictive CLV uses previous transactions, mixed with a variety of behavioral indicators that forecast a lifetime value for an individual customer. With each new purchase and new behavioral data, the Predictive CLV will change and become more accurate over time.

Why is Customer Life Value the Most Important eCommerce Metric?

Source: Kissmetrics

Customer Lifetime Value is an extremely important in eCommerce applications. In digital marketing, it gained prominence with the rise of software-as-a-service but quickly found its way into eCommerce as well. The value of the metric has made it a staple among modern eCommerce businesses.

CLV is the single most important metric for measuring gross profit and success over time. The most expensive endeavor for eCommerce businesses is generating new customers. Customer acquisition can be cost prohibitive, and returns are often difficult to forecast. CLV attempts to answer that question.

Knowing the CLV of a customer will help you to strike the ideal balance between customer retention and acquisition. Knowing at what point a customer becomes profitable, is an essential part of knowing how much budget you can allocate to a particular channel or market.

Additionally, CLV provides real insights into your customer retention strategy. A steadily climbing average CLV shows that your retention and upselling efforts are paying off and having a real effect on your customer’s chances of returning.

Calculating CLV

In order to make use of CLV in your eCommerce business, you first have to know how to calculate it. As we said earlier, there are multiple CLV versions that are commonly used. Let’s look at how both historic and predictive CLV, the two most common, are calculated:

Historic CLV

Historic CLV is a straightforward metric. You simply add all of the gross profit value up from all of their transactions. Here is the equation:

Historic CLV = (Transaction1+Transaction2+Transaction3…) X AverageGrossMargin

This is simple enough to be calculated in Excel as long as you have all of your transactional data on hand for a given customer. This should also take into account any expenses like service costs, returns, acquisition costs and other expenses to provide a clear picture of individual profit.

Of course, it can be complex to put together these expenses on an individual basis. Attributing certain costs to an individual customer is often problematic. When in doubt, use average to estimate until you can properly track expenses individually.

Predictive CLV

Predictive CLV tries to obtain an accurate CLV value for past and future purchases within your company. Here is the equation:

PredictiveCLV = ((AverageMonthlyTransactions x AverageOrderValue) AverageGrossMargin) AverageCustomerLifespanInMonths

This is a simple way to calculate predictive customer lifetime value. It provides a good picture of what the value of each individual customer is for your business. With that said — every industry is different and you may have to make specific changes to your CLV equation over time to have it accurately reflect the value of customers. There are more advanced versions of the Predictive CLV algorithm out there, and you should explore how well those options may fit your business model.


Return on Ad Spend (ROAS) is the most commonly used profitability metric in eCommerce. It measures how much money you get back for every dollar that you spend on advertising. While similar to standard ROI metrics, it provides specific measurements for each individual marketing channel.

You calculate ROAS using this formula:

ROAS = (Revenue – cost) / Cost

While both CLV and ROAS have their place, it is important that you not rely too heavily on ROAS  to gauge overall performance. ROAS-based models focus on whether your advertising is efficient but ignore if that’s the most effective way of growing your business. ROAS is all about winning that impression, click or customer engagement, but it doesn’t take into account the ultimate business measurements of profitability, margins, and new customer acquisition.

Customer Lifetime Value provides a bigger picture look at the value of each customer and sheds light on the real world effect process changes are having within your company. While both metrics attempt to account for the expenses and spending associated with every purchase, only CLV provides a clear long-term picture of expected profits from individual accounts.

Getting Everyone Onboard with CLV


You may find it difficult to get everyone on board with integrating CLV into your daily workflows for a few different reasons. Primarily, people like to stick to the status quo and are resistant to change when current systems are “working,” despite the benefits that CLV could bring to the table. A few strategies that you can use to bring the rest of your team on board include:

Find an Advocate

Chances are, you aren’t the only person that sees the value in optimizing for CLV. Ask around, and see if you can find another advocate for your changes. Try looking outside your own department as well. One of the benefits of optimizing for CLV is that, unlike ROAS, it can have implications in other departments like Customer Retention and Merchandising.

Present the Facts

If you can’t find someone that understands the value, you’ll have to put it on display. Try to schedule a small meeting with relevant stakeholders that can help you to implement CLV into your workflows, and present them the benefits of doing so. Try to include real-world examples of CLV being used by eCommerce businesses.

Offer a Trial

Your team will be unlikely to re-work all processes to include CLV without seeing it in action first. Try to identify a few small areas of your business where implementing CLV into the workflows would make a substantial difference, and ask for approval to use it within those contexts. PLAs provide a great place to test this kind of optimization. You can select a small group of products and see what optimizing for CLV does over time and compare it with a similar set of products that are optimized for ROAS.

Customer Satisfaction and CLV


One important thing to consider with CLV is the fact that customer satisfaction (CSAT) plays a huge role. The better your customer service is, the higher the lifetime value of each customer will be. Great customer service makes them more likely they are to buy from you in the future and stick around as a customer. With that said, poor customer service can also have a large negative impact on your CLV data as well.

Adopting CLV

Customer Lifetime Value provides important insight into your operations as a whole. The big question is how much you should spend on all your advertising channels in order to achieve your total long-term revenue goals. Any eCommerce business should implement and use it frequently to measure their marketing and sales efforts.

Although it is a relatively well-known concept at this point, older eCommerce companies may be reluctant to adopt it and instead opt for more traditional metrics. In these cases, it is important to lobby for its usage and show examples of how it could have helped your business. Our research shows that when advertisers focus on long-term revenue goals, they make about 5 percent more revenue in the first year than when they focus on short-term goals like ROAS.

CLV can help to shed light on the areas of your business that must improve to increase your bottom line. Knowing customer lifetime value and profitability at the product level allows for improved paid media placement, intelligence in product pricing, and better inventory optimization.

How competitive intelligence can maximize your ROAS

Digital advertising spend in retail eclipses all other industries, but at such a substantial cost, everyone selling online wants to know how they can boost their return on ad spend (RoAS). eMarketer reported in 2016 that retailers spent $16 billion on paid digital advertising and forecasted that figure would jump to $23 billion by 2020.

Marketers in retail have a wide range of responsibilities to get customers in the physical or virtual door, such as driving brand awareness, customer loyalty, and retention. The role also covers increasing website and in-store traffic and multi-channel growth. Not to mention, development and management of best-in-class eCommerce and integrated marketing strategies that increase the retailer’s digital footprint.

All of these central tasks that make up a marketer’s role in retail all boil down to traffic and conversions. The questions that keep retail marketers up at night include: are we getting enough traffic to hit our sales and revenue projections? If not, how do we drive more people to our stores and website to buy? Digital advertising helps with this, but with the massive amount retailers are pouring into ads, maximizing the return on that ad spend is only half of the challenge. The other side is from a competitive intelligence standpoint. All retail marketers should ask themselves often: do we have a good idea of what our true tier one competitors are doing from a marketing perspective?

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Why Lifetime ROI is the only metric that (really) matters in search marketing

Why Lifetime ROI is the only metric that (really) matters in search marketing

It can be tempting, when measuring the success of your search marketing campaigns, to judge them based simply on your Return on Advertising Spend (ROAS). Or, you might want to concentrate solely on winning new customers and measure your campaign success by cost per new customer or just the number of new customers.

But, we think the true value of your campaigns is slightly more complicated. Gaining lots of new customers might sound great, but they can be very expensive to attract. And let’s not forget about returning customers. Sure they may not spend as much per purchase as new customers, but you wouldn’t want them buying a competitor’s product.

To truly understand, and be able to optimize, the value of your search marketing campaigns, you need to calculate the Lifetime Return on Investment (ROI) of each market or campaign. Lifetime ROI is primarily driven by two factors:

  • Expected market specific lifetime values (Customer LTV)
  • Campaign efficiency based on marketing investment (ex. ROAS)

A unified approach is essential to know how much you should be investing in retention vs new customer acquisition. Let’s look at each of those factors, in turn, starting with Customer Lifetime Value (LTV).

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Why top retailers are investing more in Google Shopping than Text Ads (and you should too)

Google Shopping is more popular among shoppers — and marketers — than ever before. In 2016, retailer spending on Google Shopping ads grew 36% compared to 2015. In the US and UK, spend on Google Shopping has already surpassed that of Text ads. And this increase shows no signs of slowing down.

According to Adobe’s Digital Index study of online advertising, retailers spent 47% more on Google’s shopping ads in 2016 than they did a year ago. Even Amazon has started to dip its toes in the PLA waters.

Why the shift in spend to Google Shopping ads? Because marketers at some of the world’s largest retailers see more value in them.

While Text ads probably won’t be disappearing completely anytime soon, Google Shopping is clearly taking e-commerce marketing by storm. Here’s where all that added value comes from, and why you should join the ranks in bumping up your investment in Google Shopping over Text ads.

Enticing to shoppers

First and foremost, Google has made its PLAs enticing for shoppers to click on. Search Engine watch reported that while PLAs accounted for just 37 percent of the 8 billion total paid search impressions generated on those keywords during Q2, half of all clicks were on PLAs.

And that makes sense when you compare the two side by side. If you’re looking for a product, Google Shopping ads give you far more information at a glance than a block of Text ever could.

We live in a world where images and video dominate the media we consume. It’s getting harder and harder to catch the attention of your would-be customers, so having an ad that surfaces all the relevant information quickly, and in one place is key. Shopping online is a very visual experience, and shoppers browsing online rely on images and visual content to bring them closer to products.

From a retailer’s perspective, Google Shopping allows them to present all the most important product information up front, meaning those who do click on the ad are more likely to want the product. Shopping ads show product-focused images and description, as well as price. The result is more qualified traffic that leads to stronger conversions.

On the other hand, text ads — by their definition — don’t include visuals. Product price is also not typically displayed in text ads. This means shoppers can’t select listings based on their price sensitivity, which can lead to costly, unqualified clicks.

Long story short, online shoppers like clicking on Google Shopping ads. In 2016, Google Shopping accounted for 43% of all retailers’ Google search ad clicks and 70 percent of non-brand related search clicks.

Mobile experience

Despite the meteoric rise of mobile shoppers, retailers have struggled to convert that traffic into actual sales. However, when it comes to reaching shoppers on mobile, Google Shopping ads have clear advantages.

For one thing, they absolutely dominate the screen.

Google has created an inviting and easily scrollable carousel with product images, price and brand prominently displayed. Infinitely better than a lot of mobile pages we’ve come across.

Squeezed in at the bottom of your phone screen, with much less visibility and no visual component, Text ads command much less attention on mobile. According to our data, Google Shopping ads on mobile perform 61% better than their Text ad equivalents.


If you think about the mindset of someone who would click on a PLA, it shouldn’t come as a surprise that they have a higher conversion rate than Text ads.

To click on a Google Shopping ad, the searcher needs to be interested in the product. Because all the relevant information is presented up front, there is far less risk of shoppers clicking an ad only to find that the product is too expensive or doesn’t look like they thought it would.

The data backs up this theory quite nicely. When we normalize the conversion data to make Text ads on Desktop 100, we see that Google Shopping ads bring in more than double the amount of conversions.

Unsurprisingly, since Google Shopping ad clickers tend to be closer to a buying decision, they tend to convert sooner (and after fewer clicks) than those who click on Text ads. In fact, 80% of Shopping conversions happen in the first five days.


This is because Google Shopping ads are designed to reach people searching for product-specific terms like brand name, product name, color, etc, making them a much stronger ad format to convert shoppers who have done their research and are closer to purchase. As an added benefit, these long-tail queries in Google Shopping are less competitive, less expensive, and better converting than generic search terms.


Text ads, on the other hand, are much better at capturing general traffic, because they can be directed to a general listing page for products. The problem is that the space has become quite crowded and getting your ad displayed for ultra generic terms like “heels” is now quite expensive.

Google is making the investment

It seems Google really wants Shopping ads to work. They released a steady stream of updates in 2015 and 2016 that increased visibility and improved the experience of PLAs.

Google Shopping Updates in 2015

  • Available as part of the YouTube ad offering
  • Increased the size of shopping ads on mobile
  • Shopping ads became part of the Google image search

Google Shopping Changes 2016

  • Merchant Feed Center overhaul
  • GTINs now required for all products
  • Constant experimentation with where to put Google Shopping on the results page

In February 2016, Google dropped text ads from the right side of the SERP, dedicating more space to Shopping ads at the top and right side of the page.

The enhancements show no sign of slowing down. So far in 2017, Google have added search filters to the scrollable carousel format, included a bunch more countries, and incorporated an automatic currency converter.

There’s also some evidence that Google is pushing more and more generic queries in the direction of its Shopping ads in an effort to make them more appealing to shoppers at the beginning of their journey. The proportion of generic queries we’ve seen coming through Shopping rose to 21% in 2015 – up from 6% in 2014.

The volume and velocity of Google Shopping updates show that Google is committed to delivering on its promise of putting retailers’ products in front of the right consumers.

And that can only be a good thing for the future of Shopping ads.

An advertising powerhouse

When it comes to digital retail advertising, Google Shopping is becoming the reigning powerhouse. And now is definitely a good time to jump on the bandwagon.

But, if you want to stay competitive, you do need a specific Google Shopping strategy. Google Shopping can’t just be a line on your Paid Search report. It has the potential to be a massive revenue driver – 90% of PPC revenue for some of our clients – but only when it’s handled properly. Google Shopping is a unique medium and it deserves its own unique strategy and tooling.

Not sure what that is? Sign up for our FREE 5 week Google Shopping mastery course and find out!

And if you’re looking to get a read on the performance of your own campaigns, get in touch with us for a free account check to find out how Camato’s machine learning and automation can help your business.


The ultimate juggling act: how to set your PPC budgets for the year

In winter, I plot and plan. In spring, I move” – Henry Rollins

In the world of performance advertising, spring is the right time to ‘move’ in many regards: while winter keeps us busy with peak season, spring provides the opportunity to review previous strategies, spring clean our PPC campaigns and align on new priorities for the upcoming year.

One major key to success is properly setting your annual PPC budgets and bringing them in line with your performance targets. At first glance, this might seem like a very complex task – especially if you need to crunch these numbers for various devices and paid search segments. But it’s not rocket science, and you don’t need a crystal ball to predict the months ahead.

Here are 5 steps you should follow to successfully set up your PPC budgets for the year.

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8 ways small retailers can compete with retail giants using Google Shopping (via Search Engine Land)

Think you’re too small to benefit from Google Shopping campaigns? Think again! Columnist Andreas Reiffen has some advice for smaller retailers looking to improve their Product Listing Ads.

As a small, niche retailer it can seem daunting (almost pointless) to invest too heavily in Google Shopping. After all, how could you ever compete with the major players who have far more money, products and people than you do?

Well, the good news is, it is possible to be competitive in Google Shopping as a small business. In fact, done right, Google Shopping can actually be the most effective digital advertising platform in terms of Return on Ad Spend.

Here are the top strategies to be successful as a small/medium retailer in Google Shopping.

1. Focus on your niche

As a small retailer, you likely sell a very limited selection of niche products. Whether these are your own personal brand, or from independent designers, this exclusivity is your strength.

Selling products that aren’t sold by Amazon or a hundred other retailers, means there’s less competition to appear in Google Shopping for relevant searches. Even better, if you create and sell your own label you won’t have any direct competition in terms of brand queries. Private labels have the added benefit of commanding higher margins, making them a smart investment for any business.

Focus your campaigns on niche, new or unknown brands and try to get these products exclusively.

2. Segment your campaigns effectively

The key to creating Google Shopping ads with great ROAS is making sure they reach the people who are most likely to buy. In the example below, you can see that query A is much more specific – and therefore likely to convert – than query B, yet the bid is the same. Your strategy should be to leave the generic traffic to your competitors and get more of the high-converting traffic to your business.

To generate the maximum amount of sales from Google Shopping, you want to make sure your ads appear for these types of “high-conversion” queries. As with any form of paid media, that generally means bidding slightly more.

But, reverse engineering of Google Shopping has revealed that simply bidding higher on your PLAs makes your ads attract more low-quality traffic. Instead, you want to focus on displaying your ads for specific queries, which tend to convert much better. This is why segmenting your campaigns correctly is essential.

By segmenting your campaigns into the type of queries that receive high, medium and low conversion rates (this will likely differ from business to business) you can set bid amounts that correlate to the user’s intent. That way, you bid more for “high-converting” queries and low for “low-converting” queries.

Here’s a more detailed description of how campaign segmentation works.

3. Incorporate natural language in Product Titles

As a retailer selling new or small, unknown brands it’s unlikely that you will get a high volume of search traffic looking for that brand specifically. Instead, you want to focus your attention on popular natural language queries that describe your products.

You can use Google’s keyword planner to identify the queries that most closely match your product offerings – remember to focus on products that are unique to you. Once you’ve identified these queries, append them to the beginning of the relevant Product Titles in your Product Feed.

This method will help Google be better at finding and surfacing your products when they match the query. It will also make your products look more relevant to shoppers. In many cases, updating your Product Titles with natural language queries can double, if not triple, your impressions without the need to increase your bids, making it a cost-effective way for smaller retailers to compete.

Here’s a handy guide for writing more compelling Product Titles.

4. Use Geotargeting

Another way to make sure your ads are reaching those shoppers most likely to purchase your products is through geo-targeting. Obviously, you first want to make sure you are only advertising your products to people in the areas to which you deliver.

But, you can also use geotargeting in a more granular way by bidding higher for your ads to show in very specific areas. For example, if you are a high-end fashion retailer, you may want to bid more for ads shown in high-income areas where the people searching are more likely to be able to afford your products.

Use something like this buying power map to help determine where your ads would have the most impact and invest heavily in those areas.

5. Leverage RLSA lists

Because Google Shopping is usually a lower funnel advertising medium (ie people generally click on it when they are close to a buying decision), retargeting lists can be extremely useful.

These lists allow you to bid more for ads that will be shown to people that have already visited your site – and therefore are more likely to purchase your products. You can even make these lists more specific by targeting customers who have purchased before, or just those with an Average Basket Value above a certain amount.

6. Don’t bid too much

No one ever wants to bid more than they have to. But, it’s especially important to remember when working with limited budgets, that simply increasing your CPC is not the answer to getting more sales in Google Shopping.

Bidding in Google Shopping works very differently to traditional PPC bidding. Instead of decreasing marginal revenue, there is an S curve.

Essentially, in Google Shopping there is a minimum bid amount to be entered into the auction, then for small bid increases we see a huge jump in conversions, but at a certain point the bid becomes too high and the conversion rate plateaus. When the bid is too high, it means Google is showing your products for very generic queries that are unlikely to convert.

If you’re not paying attention, it’s easy to overbid on your Google Shopping campaigns. Setting and forgetting your bids is simply not an option. Instead, you need a system of incremental testing, measuring and tweaking. Make small changes in your bids and see what happens to your CR. If it goes up by a lot, try increasing the bid a bit more until you see a very small (or no) change in CR. If you don’t have the time to manually test all your bids, you should invest in a

tool that can automate that process for you.

When in doubt,  it’s much better to be highly targeted with your bids – through RLSA lists, geo-targeting, campaign segmentation, etc – than to try and “outbid” any major players through raising your base CPC.

7. Decrease your prices

If you do sell some of the same products or brands as your competitors, you’ll often get more out of Google Shopping by decreasing your prices then by just increasing your bids. This may sound somewhat counterintuitive, but it has to do with Google’s algorithm for selecting which products to show.

In an effort to make Google Shopping more appealing to online shoppers, Google seems to have what we call a “low-price bias”. That means, given the choice between two products, Google will almost always choose to show the cheaper of the two, even if the more expensive product has a higher bid. In fact, if your products are too expensive Google may refuse to show them at all.

According to Google, their algorithm doesn’t favor cheaper products. Rather, they apply a machine learning algorithm which reacts to what users like or dislike. In this case, users apparently dislike high prices and therefore the algorithm chooses lower priced products. Either way, the bottom-line is the same: price matters.

In order to compete against bigger online retailers, you may want to consider lowering your prices – at least on the items that you sell in common. In reality, once you get people to your site they’ll often end up buying something other than what they initially clicked on. Think of these lower priced products as “gateways” to your site. Once a shopper is on your site you can try to upsell them to another (or more) product and add them to your retargeting lists for future promotion.

If lowering any of your prices isn’t an option, try focusing your campaigns on the items you sell that are more competitive in price for their category. Overtime, you’ll gather data on which products perform the best in Google Shopping and can start to focus your energies on those products.

8. Take advantage of “Purchases on Google”

Creating a good mobile experience is hard. It requires a lot of design and development experience – which you may not have access to as a small retailer. But, with mobile sales growing by the day, it’s important to make the mobile buying experience as pleasant (ie. easy) as possible.

Google recently introduced “Purchases on Google” – or a Buy Button as some have called it. At the moment it’s an opt-in service that allows retailers to let Google handle the mobile online transaction in Google Shopping without sending the shopper to the retailer’s mobile website.

Some major retailers are concerned about losing control of their opportunity to upsell and/or retarget shoppers once they’ve clicked through to their site and therefore are hesitant to adopt this feature. But, for a small retailer, it’s could be an opportunity to increase mobile sales without having to invest too heavily in a mobile website or app.

At the moment Purchases is only available to a select group of beta testers so you may need to get in touch with Google directly and see if you can get access to it.

Invest smarter, then grow

You don’t necessarily have to invest a ton upfront to make Google Shopping successful for your business. Take time to refine your strategy, and make sure you know (or find out through testing) the answers to these questions:

  1. Which products make you stand out from the competition?
  2. What types of shopper queries indicate high-conversion potential?
  3. Which words or phrases do people search for that could describe your products?
  4. Where do your customers (real & potential) live and what other areas have similar demographics?
  5. How long is your conversion cycle? What is the optimum timeframe to wait before retargeting someone?
  6. What bid range is most efficient for your products?
  7. How competitive are your prices?
  8. How good is your mobile site (or app) at converting?

Once you’ve created highly efficient Google Shopping campaigns, you can begin to ramp up your spending and aim for a larger market share.

The most important thing to remember as a small/medium retailer is to focus on what makes you unique. This uniqueness is why someone would choose to purchase from you in the first place and it’s also what will make your ads stand out both to Google and online shoppers.

See the original article on Search Engine Land

Why PPC is the perfect way to expand into new markets

Launching a new international market is a challenge every growing company will face sooner or later. Knowing where, when and how to launch are all keys to making sure your international growth is a success.

Marketing has a key role to play when entering new markets. It’s their responsibility to gather market intelligence and devise an operational strategy for gaining new customers.

We’ve worked with a number of companies on new market launches, and in our experience, paid advertising provides the perfect medium to both explore and enter into a new market. Here’s an example of how we helped a major luxury retailer expand their online presence.

Country selection

Selecting which countries to venture into is the single biggest task in any internationalization project. Interestingly, lack of data is rarely the issue with internationalization research.

Good sources to draw data from include:

  • Search data – ratio of brand and non-brand searches, search volumes
  • Internal company data – past performance and forecasts of international organic business
  • Primary market research data – brand awareness, brand recognition
  • Secondary socio-demographic research – population, income distribution, average income
  • Industry reports – supplier landscape, international e-commerce and luxury forecasts, ad spend
  • Country reports – technical reach of internet technologies, mobile share, English proficiency

We like to keep things simple, so we bucket data into three dimensions – potential, conversion opportunity, and per capita value – which can be handily multiplied into a rank table. The model looks simple on the surface, but what goes into the three buckets can be quite complex once you take into account validity across countries and harmonization of different data sources.

Potential: How many potential customers are there?

Measuring a country or region’s potential is about the size of the target market. This does not mean the total population of that country – unless you have a very generic product – as not everyone will find your offering relevant. Total population figures are not a good choice of metric when it comes to the potential for most brands.

For example, if you’re a high-end fashion company – while everyone will buy some clothing from time to time – luxury fashion brands hardly address a country’s total population. Instead, they concentrate on the upper end of the market and leave the majority of customers to others.

For our client, we approximated their target segment as anyone with a “personal annual income of more than $50k”. We then sourced an authoritative study comparing the size of this segment across countries. The resulting target segment size gave us a far more valid impression of each country’s potential to order from a luxury retailer than the top line population figures could.

Conversion Opportunity: How easy can we convert those potential customers?

While potential target size is certainly important, you also need to analyze the likelihood of converting that potential on the macro level.

Think: how accessible is the market?

This dimension will likely hold the most indicators within the country selection model – simply because of the number of obstacles you can think of in successfully bringing a product to a foreign market: Be it language barriers, entrenched competitors, differences in supplier landscape and in demand structure or even the gut feeling of the more senior business development managers.

For our client, we analyzed a plethora of data points from the sources listed above. From this data, we identified the five variables most closely correlated with business performance across countries and subsequently developed an algorithm to normalize and aggregate data from different sources, keeping the logic flexible at the same time. The model was flexible enough for client stakeholders to introduce their first-hand view of the business and re-weight the different variables of the index.

Per Capita Value: How much is each potential customer worth?

Once you’ve found out how many potential customers there are in each country and how difficult they are to get at, the missing link is to measure the revenue per capita you can expect.

An example here would be the ARPU (Average Revenue per User), a measure widely used in telecommunications. Alternative approaches might draw on the average basket value per country – often you can find existing business data or get competitive intelligence sourced from consultancies or even assess investor relations filings of the publicly traded companies amongst the competition.

Output – Choosing a market

Once you’ve researched reliable and comparable data for all countries on the longlist, calculating the total size of the opportunity is simply a question of multiplication. The hard, but crucial, work is in data collection and blending different data points into index values in order to produce a summary value for each country on each dimension. Here’s what that analysis looks like for our client (who is based in the UK).

This table of overall potential shows that the Americas have the greatest potential for our client, with the EMEA region runners-up and Asia Pacific finishing third.

Looking at the dimensions plot clarifies that although APAC had the highest per capita income (bubble size), our research and experts on the client side judged it to be less accessible than the other regions. The prime reason for finishing third though is the limited target size. This also is what sets up the Americas as the top-grossing region, trumping better accessibility and higher per capita customer value in Europe and the Middle East.


We then worked through the rankings on the more granular country level and, together with the client, suggested a final list of countries to tackle.

Entering the market

Once you’ve chosen your markets for expansion, your next task is figuring out how to tackle said market efficiently. Different media channels have different strengths and weaknesses, including the channels’ carrier medium, the environment it operates in or the audience it attracts.

Again, we think paid advertising should be your initial go-to medium. It has little upfront costs, can be scaled quickly, continuously optimized and offers granular cost control mechanisms and impromptu results as well as the ability to act on those results. It’s the ideal tool to use when entering a new market:

Ramp up time and scalability

When expanding internationally, you want a solution that allows you to be agile. Internationalization strategies should favor channels that involve no or little upfront production/adoption cost, are quick to setup and easy to scale once they prove their value.

PPC is a featherweight in setup cost since ad copy is cost-effective to produce. Google Shopping is even easier – all you need is a Product Feed in the right language. Also, a sufficient share of voice can be reached in many countries through just one big provider of search services, doing away with variations in format and inflated transaction cost.

Related: Go global and break into new markets with Google’s new PLA features

On the billing side of things, pay per click and daily budget caps allow for the required flexibility to start fast and scale sustainably.

Intelligence gathering

Especially when venturing into uncharted territory, you want your chosen channel to produce intelligence on the go rather than require copious intelligence to get started. Instead of putting a lot of upfront work into pinning down targeting criteria, you want a campaign that can be continuously optimized.

PPC records a high volume of interactions, which lets advertisers confidently optimize on the fly and gives them tremendous insight into what makes people tick in each market. With so much data being collected instantaneously, you can quickly spot trends and react to specific market challenges.

Related: How to squeeze every last drop of performance from your paid campaigns


Internationalization projects typically work across departments and have a high strategic importance to the company – which means a high degree of visibility. Experienced international expansion teams, therefore prefer media channels that offer granular cost control mechanisms and impromptu results as well as the ability to act on those results.

Firstly, PPC produces fast results, so that project leaders will have something to report on almost immediately. Secondly, looking at the customer journey, PPC interactions are very close to the transaction that produces tangible results for a company (ie sales) – so project leaders will be able to report on KPIs that are highly meaningful to the business. After all, in PPC, advertisers only pay if people were interested enough in an offering to click on it.

Related: Why Lifetime ROI is the only metric that (really) matters in search marketing


When it comes time to expand your brand internationally, it’s easy to overlook medium sized opportunities that would be more receptive to you product because other countries impress by sheer scale or have high net worth per capita. Which is why it’s essential that you do your homework.

PPC presents the perfect medium to both explore the potential of new markets and begin your entry strategy. It’s a lightweight advertising platform that provides the needed flexibility and reporting capabilities to sustainably catapult your business into a new country.

Numbers aren’t everything: How to find the right Attribution Model for you

Accurately attributing sales to your marketing activities is one of the most important – and difficult – jobs of a Digital Marketer. There are so many paths a customer could take to reach your purchase page, and not all of them are easy to measure.

Even if you just focus on the digital channels (because they’re easy to measure), the raw numbers don’t always tell the whole story. Sometimes you have to dig a little deeper to get to the truth.

Take one of our clients for example – a high-end, one-brand, designer furniture retailer.  As you might expect, their website isn’t selling products one buys on impulse. Instead, conversion paths are extremely long, with over half of all traffic coming from Paths with 6 steps or more.

Now, these guys had a pretty young account and it was growing rapidly. To make sure they invested their money in the right places, they needed us to assess the optimal spend for different channels. What we found, was that the performance reported on Non-Brand Text Ads (AKA “Generic Search”) seemed extremely poor at face value.

That seemed a bit strange to us, so we assessed the conversion paths and tested different attribution models in the Analytics Attribution Modelling tool.

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Guide to bid management in google shopping

Guide to Bid Management in Google Shopping

How much should you bid in Google Shopping?

This is one of the most important questions digital marketers face when managing any PPC campaign. Bid too low and your products won’t get chosen. Bid too high and you’ll waste money on irrelevant traffic that doesn’t convert.

Striking the right balance in bidding is essential to the success of your Google Shopping campaigns. Good Bid Management in Google Shopping is all about making Bid Adjustments – increasing and decreasing bids with a focus on optimizing performance.

In this post, we’ll show you how to adjust your bids to increase quality traffic and maximize ROAS.

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The Omnichannel challenge

The Importance of On- and Offline Sales – How Companies are tackling the Omnichannel Challenge

In the heyday of the dot-com era, we all thought the intent was going to kill the physical store. And indeed, with tanking earnings and emptying malls it can sometimes feel like we were right. In 2015 there were over 200 million digital shoppers who spent an impressive $249 billion.

But, despite these figures, 85% of retail sales are still projected take place in physical stores. Still, it’s clear that the retail industry is reinventing itself. Slowly but surely, companies are devising retail models that work for people who are making increasing use of a growing array of Internet-connected tools to change how they search, shop, and buy.

A complete retail strategy is one that encompasses on- and offline experiences. Both channels are still extremely relevant and retailers cannot rely on two separate strategies.

The traditional brick-and-mortar store and the online retail world are converging into one customer shopping experience. As our world becomes more and more digital, customers are increasingly using more than one channel in their purchasing process. This has led to a phenomenon called omnichannel shopping.

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