In 2020 and 2021, we witnessed the single greatest acceleration of the use of e-commerce in our history. As a result, the way people buy and the way brands transact changed in many ways, and it’s not likely to go back. With this new glut of activity, and with multiple parties often needed to complete one transaction, marketplace analytics have become a necessity for success in branding and marketing.
Although online marketplaces facilitate a vast centralized supply and demand platform, there is still a need to improve cooperation and functionality among parties. Each e-commerce marketplace has its own unique dynamics and a useful and effective analytics regime can mean the difference between success and failure
Below I’ve curated everything you need to know about measuring the performance of online marketplaces.
There are two primary financial metrics to measure when analyzing marketplaces: sales and ad spend. Measuring these elements can help a marketplace chart a feasible growth course.
Sales metrics, put simply, represent the multiplication of the sales price by the number of units sold on the platform. Ad spend, on the other hand, refers to budget spent on either digital and non-digital ads. For marketplaces, the ad spend metric is always digital. For a more robust insight into the cost, however, marketing teams may also consider non-digital ad spending.
It’s never necessary to evaluate sales and ad spend daily, monthly reports will do. As indicators for your company’s path, however, you can adjust them as often as you like, daily or even hourly (if you so choose), in order to find the sweet spot.
Marketing metrics are designed to help brands in the marketplace understand the landscape and make actionable plans for growth. Here are marketing metrics every business needs to prioritize.
Return on Advertising Spend (ROAS)
This metric is more of a subset of return on investment (ROI). ROI is different from ROAS because the ‘investment’ in this context most likely involves budgets beyond just advertising, including elements like taxes and shipping costs. ROAS is specific to ad spend alone.
It’s an important metric because it allows your company to analyze the results generated from your investment in ads. For ROAS to be a useful measure usually depends on the brand’s target market, ad type, and products.
Although the ROAS concept itself isn’t actionable, it’s effective in giving context to the overall marketing efficiency of your brand.
Cost Per Thousand (CPM)
The CPM metric amounts to an analysis of what you’re paying for your digital impressions. Grouped together in thousands, you can gain a general insight into whether a brand awareness campaign is making headway.
Although some say CPM is basically inaccurate as a metric, it depends on what CRM you use and your campaign. Above all, you’ll want to keep your costs per thousand impressions as low as possible.
Cost Per Click (CPC)
This metric refers to a form of advertisement where you only pay for the clicks. This is the best ad campaign to opt for if your business is working with a specific budget. Here, you’re going beyond just awareness—you are paying for attention.
Consequently, CPC is an expensive marketing strategy but promises a better engagement ratio. The better the engagement, the higher the chance of having a better ROI. However, to make the CPC technique more effective, ensure that you carry out daily analysis and adjustments.
Cost Per Acquisition (CPA)
This metric reflects your conversions and is the best strategy if you have a minimal budget. It prevents you from spending money on efforts that don’t directly influence growth. As a result, campaigns based on this model have a higher chance of improving ROAS.
Click Through Rate (CTR)
You get the CTR value by dividing the number of clicks by the impressions. Marketplaces use this metric to quantify search intent. When the CTR is high, it indicates that the customer finds the ads relevant to the marketplace and, hence, efficiency increases.
The effectiveness of a CTR depends on several values. If any of these factors aren’t up to par, you must make a change.
Conversion Rate (CVR)
This is the metric to focus on to know just how valuable people find a product or ad. A high conversion rate means the product serves the right people at the right time and place—basically that you’ve hit your target audience. To improve the CVR, focus on enhancing CTAs, prices, audience, and ad imagery and quality.
Search Impression Share (SIS)
This is the actual impressions count divided by the potential impression count. It may sound a little vague, but all you need to know is that the higher the impression share, the higher your chance to scale above your competition.
You shouldn’t need a restricted budget to have a better search impression share. To improve the SIS, focus on optimizing CVR, CTR, targeting, and bids.
From Data to Insight to Action
To maximize the benefit from data marketplaces, you can follow these steps.
You can’t conduct marketplace analysis blind. First, you must have a clear understanding of goals and audience and you must have a strategy that applies clarity, consistency and alignment. Read up on all things TopRight strategy here.
Above all, knowing your target will inform the strategy you employ. This requires audience analysis and a smart marketing team with a good CRM.
2. Centralize Marketplaces
Ensure you manage your marketplaces from a central dashboard. Doing this will save time and resources. You’ll get a better overview of platforms you sell as a (data) vendor, and having centralized marketplace analytics is vital to success.
3. Analyze and React
It’s vital to find ways to improve your systems continually. Analyze areas where you can improve efficiency. Know your goals, study the realities, and make decisions that bring your closer to your target.
4. Refine Strategy
Marketplace analytics exists to help you improve your strategy, so always refine your approach until you see steady growth. And then—keep refining! Analyzing your data helps you identify underperforming areas and effect changed, but that doesn’t mean one day you will attain perfection. Your brand and team have to find a structure that ensures the facilitation of data-driven decision-making.
Today, it’s critical to get a measurement and analytics foundation setup correctly so that you get the most out of an online marketplace. Hopefully these basic example metrics shared here can help guide you toward success. But if you have more questions or you’d like to learn more about how to transform customer experiences through marketplace analytics, contact TopRight here. Then subscribe to the TopRight blog. Or connect with me on Twitter and on LinkedIn. You can learn more about how to bring simplicity, clarity, and alignment to your brand’s story, strategy, and systems in our bestselling book: Marketing, Interrupted.