September 30, 2014

Ecommerce Research Chart: ROI on marketing spend

SUMMARY: How can marketers get bigger budgets? More resources? More buy-in and authority from business leaders?

The answer lies in three little letters that loom large over every marketing department — ROI.

Read on to see median ROI data from companies at different revenue levels, ranging from just under $10,000 per year to nearly $1 billion in overall revenue.
by Daniel Burstein, Director of Editorial Content

In the MarketingSherpa Ecommerce Benchmark Study survey, we asked marketers …

Q. Please indicate the 2013 level of the following metrics and their ongoing trend.

One of the metrics we asked about was "ROI Percentage of Marketing Spend."

We also asked: What was your company’s all-channel revenue in 2013? We then segmented the ROI responses to this question by company size to create the chart below.

Take a look at the data to benchmark your company’s performance, and keep reading for anecdotal evidence about high and low ROI tactics:

View Chart Online

Click here to see a printable version of this chart

Medium-sized ecommerce companies reported the highest median ROI — 50% ROI on marketing spend — while companies on either side of the revenue spectrum reported lower ROIs.

Very small ecommerce sites — those reporting $10,000 revenue or less — also reported the lowest return on their marketing investments with a median of only 5%.

Outliers with very high ROI

In the chart above, we used the median responses to provide a picture that more accurately represents the revenue groupings of ecommerce companies. This is for the same reason that the Census Bureau reports median household income — just one Bill Gates can significantly skew the average.

When we look at the mean as compared to the median, we see there are many outliers at the very high end. For example, while the median ROI for companies with more than $100 million in revenue was 23%, the average was a whopping 166%, indicating some seriously successful marketers are in that group.

Is marketing ROI being consistently tracked?

One of the most interesting numbers from our Benchmark Study survey is not in the above chart. While 445 marketers answered the question in the Benchmark Study survey about marketing spend, only 206 marketers (or 60% of that group), answered this question about ROI.

Could it be because they simply do not know what type of return they are getting on their investment?

Accurately calculating ROI can be a challenge. As one marketer explained in the Benchmark Study survey, "By marketing in multiple areas (retargeting, display, PPC, organic, affiliates and email), it is tough to track your actual ROI from customers and find which channels attribute the most revenue. Keeping a simple model to A/B test is an important key to our marketing success but is a huge challenge in many organizations."

However, as we learned in a recent MarketingSherpa case study, the ability to accurately calculate marketing ROI can be very rewarding for a marketing department. The Portland Trail Blazers were able to generate 630% ROI using dynamic ticket pricing, testing and other tactics.

With this campaign, the team saw "just how much more leeway you can get in terms of your marketing dollars if you can prove that your marketing dollars are making the company money," said Dewayne Hankins, Vice President of Marketing and Digital, Portland Trail Blazers.

Which tactics generate the most (and least) ROI?

Keeping these principles in mind, which tactics and channels are generating, and which are hurting, ROI for marketers? Below are some anecdotal pieces of advice from a few of the 4,346 ecommerce marketers who completed the Benchmark Survey study:
  • "We also use price comparison websites, which deliver a very high ROI."

  • "Contact center remarketing is the real deal and can generate significant ROI based on getting callers and browsers to re-engage the company for a second chance to purchase."

  • "2013 was again the year of digital marketing. 80% of emails go unopened. Research needs to develop strategies to increase open rate and ROI of email marketing. The main challenges we have in email marketing are to give the best options to clients and track the behavior of consumers."

  • "Low ROI came from existing affiliate deals."

  • "The effectiveness of social media and the ROI on social media initiatives — this is something where we feel we have to invest simply because everyone is doing it, and if we don't, we simply fall behind. But hard conversion is hard to measure."

  • "Bad ROI for CPC [cost-per-click ads] and no solution yet."

  • "Reduced ROI for CPC."

  • "Starting remarketing efforts to send online ads to callers and visitors, which have generated 1,000% ROI so far."

Related resources

MarketingSherpa Ecommerce Benchmark Study — Made possible by a research grant from Magento, an eBay company

Personalization Marketing: 630% ROI for Portland Trail Blazers via dynamic ticket pricing

Content Marketing: B2B ecommerce blog post garners 2,000 likes in first week via strategic Facebook Promoted Posts

Social Media Marketing: Small sporting goods store sees 1,100% ROI with Facebook coupon

Ecommerce Research Chart: Discover your unique ecommerce success score

Ecommerce Research Chart: Website usability and revenue growth

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