There are many methods that an online retailer can use to attract customers.
Online traffic channels can generally be broken down into: organic search traffic (via search engine optimisation and content production), pay per click (PPC), social media, direct marketing, email marketing, remarketing, referral, affiliate, comparison and review sites — and also marketplace shops such as Amazon and eBay.
In the UK, Google is often viewed as the Holy Grail for online retailing and, in our experience, Google PPC does play a central role in generating this online traffic and therefore acquiring new customers.
The power of Google PPC (AdWords) is that the retailer can reach any customer in the world who searches for a particular product on Google. This opens up a direct and virtually instant opportunity to access new customers.
In addition, it creates the opportunity for rapid domestic and international expansion for companies that have a strong ecommerce website.
While this shows that Google offers amazing opportunities, the main drawback we have found is that it has a complicated, abstract model which is based on bidding on ‘words’ relevant to your product.
For example, when we started getting traction in the bike market, we had to bid on millions of ‘words’ that a potential customer could type into Google related to what they could be looking for — this was everything from colours, to styles to incorrect spelling of words.
This process was very time consuming and required constant maintenance and attention to detail. It also required new skills and this in itself is a challenge for many existing businesses needing to recruit or outsource the work.
There is also no true qualification — other than measuring results — that shows whether or not a company or individual can produce efficient and effective online campaigns.
The Core Metric: Cost Per Acquisition
Like all good business tools, retailers need to be able to assess whether Google has worked effectively.
The core metric that we use to measure the performance of any online campaign is the Cost Per Acquisition (CPA) percentage. This is calculated as ‘Total Cost to Google / Total Sales Generated by Google’.
The CPA percentage varies greatly depending on how efficiently the Google campaigns are set up and also the market you are in.
If you are considering Google as a channel, it is very important to monitor this core metric to determine its profitability as an online marketing channel.
Google AdWords (PPC) is a core marketing channel that we have used effectively for our clients to build entire online businesses. It allows fast access to many online consumers.
However, to be truly successful, you need to partner with the right provider and pay full attention to detail to ensure all areas are covered.
Note: The original version of this article was published in June, 2015.