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The Shift from Proxy Metrics to Lifetime ROI – Retail Benchmark Report, Part IV

Written by: Cheryl Morris, VP Marketing

When examining retail KPIs at the audience level, it is clear that higher funnel metrics are not proxies for ROI. For example, while male audiences averaged 15% higher CTRs than female audiences during the first three quarters of 2013, male audiences averaged 26% lower ROI (see Figure 21).

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Likewise, while male audiences averaged 9% lower CPCs than female audiences for the first three quarters of 2013, male audiences averaged 28% lower RPCs (see Figure 22).

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A similar trend is apparent when charting KPIs of traditional age ranges (18-24, 25-34, 35-44, 45-54 and 55-64) – which collectively represent 36% of retailer ad spend in the first three quarters of 2013 (see Figure 23).

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While audiences in lower age brackets averaged 40% higher CTRs than older audiences, the older age ranges averaged, in some cases, double the ROI (see Figure 24).

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Similar trends surface when comparing RPCs and CPCs by age range (see Figure 25).

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This trend of proxy metrics not being predictive of ROI continues to emerge when examining KPIs by day of week. Retailers averaged the lowest CTRs on Mondays and Tuesdays, yet also attributed the greatest revenues on these days (see Figure 26).

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Additional inefficiencies and opportunities emerge when charting spend and ROI on a daily basis. For example, while in aggregate retailers are allocating the bulk of budgets on Thursdays, they reap the greatest ROI from Saturday through Tuesday (see Figure 27).

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Strategy Recommendations

Recommendation #1: Proxy metrics like CTRs and CPCs are not necessarily predictive of return. Retailers moving beyond optimizing for proxy metrics to lifetime value and lifetime ROI will spend their media dollars most effectively. (Note: While this report examines ROI on a 30-day attribution window, retailers measure ROI differently and most leveraging Nanigans utilize a longer lifetime attribution window.)

Recommendation #2: Retailers should analyze the performance of their Facebook advertising spend on a daily basis to understand inefficiencies and opportunities.

This is the last of a four-part series highlighting Facebook advertising benchmarks for the retail sector going into holiday shopping season.

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