HomeBlogData-analysisThe ultimate marketplace analytics guide The ultimate marketplace analytics guide Marketplaces are increasingly growing in popularity. Nearly 50% of customers worldwide start their search for a product on a marketplace (1). COVID-19 has stimulated the popularity of marketplaces as well (2). To become successful, you must understand the analytics that come with selling and advertising on marketplaces. This article will take a deep dive into marketplace analytics and show you how you can act on these analytics to improve your profitability. The ultimate marketplace analytics guide1 Marketplace analytics concepts1.1 Financial1.2 Marketing metrics1.3 Marketing efficiency2 Analyzing your marketplaces3 The right tools Marketplace analytics concepts We have broken the concepts down into two sections. Financial metrics and marketing metrics/efficiency. Each with its subsequent concepts: Financial Sales Ad Spend Digital Non-digital Marketing Metrics Impressions Clicks Efficiency ROAS CPM CPC/PPC CPA (ACoS for Amazon) CTR CVR Search Impression Share In this article, we will explain each term, and show what strategies you could implement. If you are comfortable with the above concepts, you can skip the concepts part and go straight to ‘analyzing your marketplaces’. Note: some marketplaces use different terms for the same concepts, in this article we have tried to include all of them. If we are missing anything, please let us know at [email protected], and we will adjust the content of this article. Let us dive in! Financial The main financial metrics are sales and ad spend. Sales are the number of units sold multiplied by the sales price. Ad spend can be split into digital and non-digital. When working with marketplaces you will mainly focus on the digital aspect. But e-tailize will allow you to add your non-digital metrics to your analytics. As these will help you determine a high-level strategy and valuable insights. Sales and ad spend are not metrics you will analyze daily. See them as indicators of the path you are on. You will, however, adjust your ad spend on a daily or weekly basis. How you adjust your ad spend is determined by your analysis of the marketing metrics & marketing efficiency. Marketing metrics Once you start spending on marketplaces you will pay based on either impressions or clicks. These metrics are more of an indication than anything else, see these as a ‘proof of pay’ from the marketplace. These metrics are not actionable. That is where the marketing efficiency metrics come in. Marketing efficiency The following concepts are the bane of your existence as a marketplace analyst. If interpreted correctly, you can adjust and allocate your spend in such a way that efficiency will be optimal to your desired scale. So let us break them down: ROAS – return on ad spendROAS is similar to ROI (return on investment). The major difference is that ROAS looks specifically at the cost of an ad campaign, versus the overall investment that may be counted in the metric ROI. What ROAS is deemed successful is highly dependent on your business targets, product, and market. ROAS on itself is non-actionable, but it gives great context to other marketing efficiency concepts. CPM – cost per milleCPM is a concept that refers to the advertisements bought based on impressions. You do not pay for performance (like sales), but per thousand ‘impressions’ your desired campaign receives. Buying advertisements based on CPM is a way to increase brand awareness, but not necessarily to sell products or services. Moreover, CPM is not a good metric to base decisions on, as a common criticism of CPM is inaccuracy with counting impressions (3). CPC (or PPC) – cost per clickCPC is a concept that refers to the advertising bought based on clicks. This strategy is mostly used when advertisers or companies have a specific budget (4). You are buying people’s attention, so it is an expensive bidding strategy, with higher engagement. Which could result in a better ROI (5). This strategy works best if you analyze and adjust it on a daily or weekly basis to make sure it is running efficiently. CPA – cost per acquisitionCPA is a concept that refers to the advertising bought based on conversion (or action). It is mainly used to tightly control your advertisement spend. CPA will help you prevent spending money on search terms that may not directly drive business. As you will likely use this campaign to increase your ROAS, you should focus on keeping the CPA at least below your LTV (lifetime value customer). Note: when using bidding strategies like CPM, CPC, and CPC, keep in mind that you are likely bidding on the same keywords as your competitors. CTR – click through rateClick through rate is the number of clicks divided by the impressions. Marketplaces often use CTR as an indicator of search intent. The higher the CTR the higher the marketplace will rate your ad as ‘relevant to the customer’. Which in turn will increase efficiency. How good a certain CTR is, depends on many factors. You should look at benchmarks to determine if you are on target. If not, there are many actions you can take to increase your CTR. CVR – conversion rateConversion rate is an important metric to keep a close eye on. You can use this metric to determine if your ad or product is serving the right people at the right place and time. Furthermore, if you should alter certain aspects like audience, imagery, CTA’s, prices, etc. to increase CVR. SIS – search impression shareSearch impression share is defined as the number of impressions you have received, divided by the approximate number of impressions you were eligible to receive. Having a high search impression share means that, on average, you are listing above your competition in the search listings on a marketplace. Search impression share is closely tied to budget, but you should not use your budget as the first lever to increase search impression share, as this will be very inefficient. CVR, bids, targeting, and CTR are all metrics that influence your search impression share, and you should optimize for these first. Give us those e-digits. You won’t regret it. Get weekly blogs in your inbox Please enable JavaScript in your browser to complete this form.E-mail *Submit Analyzing your marketplaces Once you understand the above concepts you can use the following steps to analyze your marketplace and act on the data. These are the steps you should follow: Step 1: determine strategy First, determine the role of marketplaces in your strategy. How much time and money are you going to invest in marketplaces? Are you going to use marketplaces as a brand-awareness tool, or as an efficiency tool? In general, we have seen that, many entrepreneurs have changed their strategy to be more focused on marketplaces after COVID-19. For example, this year alone its projected that around 1.4 million new sellers will join Amazon (6). Step 2: centralize marketplaces Second, centralize your marketplace management. If you manage more than one marketplace, you should centralize these with a platform like e-tailize. This will save you time, and allow you to centralize analytics. Centralizing analytics is by far the most important to becoming successful at marketplaces. Step 3: analyze, and shift spend Third, the main way to determine how to shift spend is by analyzing where you can get the best efficiency, and scaling that further until you see diminishing returns. Where that point of diminishing returns lies is based on your strategy. Is your goal to increase brand awareness, or to efficiently convert customers? Shifting spend or changing budget happens on each level: Account Marketplace Campaign Product category Product Ad Keyword Click here for an example of each level Step 4: determine strategy Lastly, you should analyze your data and with this data, you can decide for each level what is underperforming and what to optimize or change. The best way to do this is to structure your decision-making process so that you are always making decisions in a data-driven way. One of the best ways to do this is by building decision trees and use your targeted results a decision driving factors. Click here for an example of a decision tree for Facebook. We are working on flowchart templates specially designed for marketplace analytics optimization, we will make sure to link those here once done. The right tools The first step in becoming successful at marketplaces is a solid foundation. That is where e-tailize comes in. We have built a proprietary platform that will help you centralize products, advertisements, and analytics. Besides our AI and machine learning algorithms we also have a knowledge base of tutorials and articles to help you become successful at making the most of the marketplaces.