Online marketing is usually more cost effective and returns better conversion rates than traditional offline marketing for an e-commerce business.
Conversion rates are an important factor when it comes to measuring the success of your online marketing campaigns. By utilizing tools such as Google Analytics (GA) and specifically its e-commerce reporting option you can effectively monitor the success of your online marketing campaigns and their conversion rates.
Your conversion rate is typically calculated by taking your total number of sales, and dividing it by the number of visitors to your website in any given period. For example if 1,000 visitors generate 10 sales your conversion rate is 1%. Conversion rates differ greatly between websites. Most experts will tell you that an ideal e-commerce conversion rate is around 2.5%, although it can often be much higher than this. When it comes to targeted online marketing for example (such as Cost per Click advertising on a search engine) you may experience higher conversion rates for specific keywords that you target and specific ad copy.
GA allows you to track sales by traffic source, returning conversion rates and other useful data. You can report on the success of each of your online marketing campaigns by tagging your campaign landing URLs with unique parameters that allow you to report on each campaign from within your GA account. To create targeted campaign URLs you can use Google’s free URL builder for GA.
If you are advertising on Google itself (Paid Search Marketing or SEM) then your Google advertising campaigns will automatically appear in your GA account allowing you to quickly and easily report on their effectiveness and Return on Investment (ROI).
To calculate the return of an investment for an online marketing campaign, divide the gross profit from the campaign by the cost of the campaign. It is important to ensure that all your marketing campaigns are returning positive ROI (ROI greater than 1.0).
Popular online marketing strategies include:
- Paid Search Engine Marketing (SEM)
- Search Engine Optimization (SEO)
- Comparison Shopping Websites
- Affiliate Engines
- Marketplaces (eg: eBay)
- Social Networks
- Email Marketing
- Online Display Advertising
- Word of Mouth (WOM)
- Press Releases