Ordoro Blog

I moved my What is Order Management post into a new page on the blog. You can now reach that article here.

Ever wonder if you are spending money wisely on search advertising? I recently had to go through the exercise to understand terminology and analyze if the money we spent on search engine advertising was really worth it. I figured this would be useful to others looking to do similar analysis.

Let’s start with some of the basic terminology used by search engines such as Google, Bing, Yahoo, etc. These metrics are provided to you by the search engines based on your keyword.

Impressions: The number of times a target customer searching for a keyword sees your advertised link. This usually shows up as a sponsored link on top of a Google search page in a green background.

Clicks: The number of times the target customer actually clicks on the advertized link.

Cost per click (CPC): This is the amount you pay to Google when someone clicks on your sponsored link.

Conversions: The number of times a customer (who has clicked on your advertized link) buys your product or service.

Calculated metrics:

Using the numbers above we can easily create the metrics below that can be used to assess the efficiency and economics of your keywords.

Click through rate (CTR): The CTR is a measure of how relevant your advertisement is to the customer’s search phrase. This is calculated as the Clicks divided by the number of impressions.

Total Cost: This is the total dollar amount spent on search engine advertising. This is calculated by multiplying the CPC by the number of clicks.

Cost per conversion: This metric gives the average dollar amount you spent for making one sale. This number is calculated by dividing the total cost by the number of conversions.

Cost per revenue: This metric gives you the average cents you spent to earn one dollar. This number is simply calculated by dividing the total sales you had to customers (who clicked on the advertising link and bought your product or service) by the total cost.

Example:

The table below shows examples of these calculations for an imaginary business selling two widgets as well as the total costs, revenue and average advertising costs per dollar revenue. The numbers highlighted in blue can be obtained from the search engine. In this example the business spends 8 cents of every dollar earned on search engine advertising.

Data integration was one of the hot topics at the Internet Retailer Conference (IRC) held a couple of weeks ago in Chicago.  You may ask, really? data integration a hot topic? Although speakers admitted that it is not the sexiest of topics, it is definitely one that online retailers are paying attention to.  In fact, IRC surveyed attendees and asked ‘Why invest in eCommerce Technology?’ and ‘Data integration’ was the number one reason with 42% response rate.

Todd Morris, CEO & Founder of BrickHouse Security, was one of the speakers addressing this topic and communicated an interesting perspective as a current online retailer and a past ‘evil software vendor’.   This article summarizes many of the great points made by Todd during his talk.

So, how do you know if you have data integration problems?  Basically, you might have a problem if you find yourself manually inputting the same data more than once and/or realize that if sales double you would need twice as many people.  Most probably, your business’ data lives in different places such as your shopping cart, your email inbox, order manager, CRM, etc.  And sometimes when someone asks a question, you know that you should know the answer but you don’t know where to find it – this is a clear indication for the need to integrate your data.  The goal of data integration is to provide a single view of the truth and reduce manual work and errors.

Once you’ve had enough manual inputs and errors and realize the need for integration, first take two steps back a re-think how you do things.  Think of where you would like to be and where you are now – where’s the gap? Prioritize your projects, and if data integration rises to the top of the list then it’s time to make some decisions:

• Build vs. buy
• Vendor elimination
  • Treat it as an elimination rather than a selection process – make your vendors work hard to get your business
• Product vs. project
  • Make sure that you understand whether you will be paying for a finished product that you can begin using today or if you are paying for a project which is a product customized for your needs.  It’s not that one is better than the other, it really depends on your needs, but just be conscious and aware of making this decision.
• Truly open
  • Make sure you will truly be able to get your data, and integrate with other systems easily.
• Documentation is key
• Data portability
  • If you leave the system you should be able to take your data with you

So there you go, if you think you may be wasting time on manual processes and looking for data then it may be time to take on a data integration initiative.

Todd Morris, CEO & Founder of BrickHouse Security, was one of the speakers at the Internet Retailer Conference in Chicago a couple of weeks ago.   He communicated an interesting perspective as a current online retailer and a past ‘evil software vendor’.   Here is a glimpse of the software vendors’ ‘Top Secret’ dictionary which may come in handy:

Software term vs. What it really means

• Unique architecture = Requires consulting
• Optimized database  = Closed
• Innovative = Alpha
• Paradigm shifting = Huge training costs
• Robust = Bloated and slow
• Cost Effective = You get what you pay for
• Lean code = Missing features
• Industrial-strength = Too complex to document
• Platform = You will pay  3^rd party for more features
• CRM = Can’t really measure
• ERP = Every report possible