Leggings Store Trial Campaign on Google AdWords Creates Very Positive Results, Even Tremendous, but did they?
We set up our Google+ this week and subscribed to the Google Sparks feed, and came across a Bravada press release for the success of their AdWords trial.
“LOS ANGELES, Aug 08, 2011 (BUSINESS WIRE) — BRAVADA International Ltd. ( www.OnlyLeggings.com ) announced today that its ecommerce leggings superstore, OnlyLeggings.com, completed a trial campaign on Google AdWords on Sunday, August 7 with results that it calls tremendous (sic). The Metrics of the campaign were as follows:
Total AdWords Expenditure: $758.00
Total Online Sales: $1,822.00
Less Average Online Sunday Sales: $548.00
Net Google AdWords Sales: $1,274.00
Net Gross Return: $516.00
Total Sunday Visits: 1,645
Unique Visits: 1,475
Average Time On Site: 4:57
Bounce Rate: 26.69%
Pages Per Visit: 7.70
Note, figures have been rounded off
The campaign resulted in a higher amount of sales compared to the amount of input capital. BRAVADA will be continuing its Google AdWords trial campaign for an additional week with a $500 – $1000 daily budget. BRAVADA shall continue increasing its Google AdWords daily budget as long as results are consistent with growing OnlyLeggings.com revenue and customer base. Another important future metric are return visits and purchases from new OnlyLeggings.com customers. BRAVADA believes a factorial of 0.3 – 0.6 of total sales generated to be a good measure of additional sales generated by future purchases.
The most effective keywords were: leggings, plus size leggings, lace leggings, women’s leggings and liquid leggings. BRAVADA believes the positive results are a direct result of OnlyLeggings.com having a high conversion rate due to a large legging selection, low prices, legging presentation, a clean robust customer experience and product mix and pricing structure given a weak economy and recession.”
Now I had to double check the figures as this immediately appears to be a poor performing account. They sold $1822 less normal Sunday sales of $548 leaving sales of $1274. At no point do they discuss gross profit, but sales. I’ve checked the site: let’s assume that the average sale is $25, and I would estimate the gross profit at 50% (and that’s generous, as most internet retailers have 30% margin), so the gross profit from sales of $1274 may be $637.
Here’s the issue: they spent $758 on AdWords to generate a return of $637, creating a net loss of $121.
This is a classic example of focusing on turnover and not gross profit. With AdWords and ROI, forget sales; please focus on the gross profit generated by sales.
Looking at these from another angle, alarm bells should have been ringing. Assuming a $25 order value, 51 additional sales were generated but the cost per conversion was $14 on a $25 sale!
Unfortunately the pain doesn’t stop with the financial performance. The PR team have even gone to the extent of revealing the keywords used. So I have the AdWords spend, number of orders, conversion cost and the keywords. To top this, they have revealed their budget as well.
If you’re new to AdWords like Bravada, don’t get carried away with sales; focus on gross profit. As a rule of thumb, your AdWords spend should be less than 30% of your gross profit but it is very market dependent.
Oh Bravada, if you’re reading this: the AdWords spend should have been $191, not $758. You’ve just experienced how Google generates $30 billion a year and why you wasted $567 in one day or will waste $206,955 this year!
