Maximize ROI Investment
In today's digital age, companies have access to numerous digital marketing channels to promote their products and services. However, different channels offer different return on investment (ROI), and it is a standard practice to constantly shift budgets towards the best performing channels and campaigns.
Advertising is less effective today
Due to the disappearance of third-party cookies and increased digital transformation during the pandemic, the marketing supply has decreased while the demand has increased, causing a squeeze on returns.
Data + AI + UX
Recent advancements in Artificial Intelligence have opened a new front on user experience optimization. By investing in processing their own data, companies using AI achieve higher conversion rates and average order values. These initiatives almost always beat the ROI of their worst marketing channels. Therefore, shifting budgets towards data processing to improve UX can help companies improve their profitability.
Core KPIs for digital performance marketing:
Digital performance marketing focuses on two core KPIs, which are cost per click (CPC) and return on ad spend (RoAS).
- CPC is the cost of each click on an ad - effectively the cost of aquiring a shopper session.
- RoAS is the revenue generated from advertising spend. RoAS = Revenue/Spend from the campaign.
Datamilk's core KPIs
DataMilk increases revenue generated by the store’s digital user experience by increasing the conversion rates and AOV (average order value) which results in an increase of revenue per session. The following KPIs are used to calculate ROI.
- Cost per optimized session is the sum of data processing costs that went into a single session. Therefore the total cost for DataMilk's data processing is the cost per optimized session times the optimized sessions.
- Extra Revenue is the difference in revenue generated by the UX changes powered by DataMilk. This is measured through an AB test by comparing the revenue of the store with and without DataMilk.
- ROI = is extra revenue from AI+Data+UX/spend on data processing
Example
BetterShop is running a test with DataMilk
| Channel | ROI | % of Total Marketing Budget | Revenue Generated | Total Cost |
| Marketing Campaign 1 | 10x | 10% | $2000 | $200 |
| Marketing campaign 2 | 6x | 5% | $600 | $100 |
| DataMilk | 15x | 5% | $1,500 | $100 |
By reallocating 5% of the total digital marketing budget from underperforming Marketing Campaign 2 to DataMilk, BetterShop increased revenue by 2.5X for that investment ($1,500/$600) without increasing spend.
Conclusion
Companies get higher ROI by shifting spend from less effective marketing campaigns to AI+Data+UX.