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By now I hope you have begun to catch your breath after the insanity of the just-completed 2006 holiday season. It was the wildest ride we have been on in a long time! Now that the dust has settled, I am happy to report that the season was a success for most food mailers.
We will be reporting on catalog mailing results from the holiday season in the next issue of the Food-by-Mail Industry Update (FBMIU).
In addition to mailing results, we have started compiling e-commerce response data specific to the specialty food industry that many of our clients and other companies have been asking for. In this issue of the Update, we will be highlighting some or our key findings. Our hope is that this information will give you a frame of reference as you begin analyzing your own e-commerce results from holiday 2006.
Pay Per Click (PPC) Search Engine Marketing
The following are compiled Google results from October 30, 2006 through December 24, 2006 from a sampling of several specialty food companies we work with
Branded vs. Non-Branded Keywords
When managing our PPC campaigns, we find it extremely important to break out the branded keywords from the non-branded keywords to get a true reflection of the success or failure of a campaign.
We defined branded keywords to be any key phrase containing the company’s trademark name. (i.e., 5th Food Group or 5th Food Group Marketing would be our branded keywords). Non-branded keywords are everything else (i.e., Food Marketing Consultants).
Of the food companies we work with, branded keywords accounted for 2.9% of the amount spent on PPC but accounted for 64.8% of the PPC sales. We also found a direct correlation between branded keyword activity and direct mailing activities (i.e., catalogs arriving in homes, space advertisements and even email campaigns). In other words, and not surprisingly, more offline marketing activity generated more people searching for and clicking on the company’s name.
Branded vs. Non-Branded Keywords Key Word Stats
Click Thru Rate (CTR) calculates the number of times an ad is clicked compared to the number of times an ad is shown on Google’s Search Engine. Our plan goal was to have at least a 2% CTR.
In all cases, the branded keywords had a higher CTR than the non-branded keywords. The branded keywords’ CTR was 3.1 to 22.3 times greater than the non-branded keywords’ CTR.
For branded key words, the average CTR was 23.52%. For non-branded key words, the average CTR was 3.50%.
Average Cost Per Click (CPC) calculates the average one pays for a click. Our goal was to have a competitive position as long as the keyword was converting at an acceptable cost per order.
In all cases, the non-branded keywords were more expensive than the branded keywords. The non-branded keywords’ average CPC was 2.7 to 36.8 times greater than the branded keywords’ average CPC.
For branded key words, the average CPC was $0.08. For non-branded key words, the average CPC was $0.86.
Conversion Rate calculates the number of orders generated per click. We utilized Google’s conversion tracking software to track the conversions and sales generated by Google. Our plan goal was to have a conversion rate that was on par or better than the overall website’s conversion rate.
In all cases, the branded keywords had a higher conversion rate than the non-branded keywords. The branded keywords’ conversion rate was 3.6 to 24.6 times greater than the non-branded keywords’ conversion rate.
For branded key words, the average conversion rate was 19.62%. For non-branded key words, the average conversion rate was 4.09%.
Average Order Value (AOV) calculates the average value of an order. Our goal was to maintain the same AOV as the overall website.
In most cases, the branded keywords had a higher AOV than the non-branded keywords. We only had one client that this was not the case. In all other cases, the branded keywords’ AOV was 1.1 to 1.6 times greater than the non branded keywords’ AOV.
For branded key words, the average AOV was $101.24. For non-branded key words, the average AOV was $79.99.
Cost Per Order (CPO) calculates the average amount spent (on the key words) to generate an order. Our goal was to generate orders at breakeven or better; the target CPO was dependent on the individual client’s profit margin.
In all cases, the non-branded keywords had a higher CPO than the branded keywords. The non-branded keywords’ CPO was 16.1 to 409.5 times greater than the branded keywords’ CPO.
For branded key words, the average CPO was $0.43. For non-branded key words, the average CPO was $21.16.
Cost as a % of Sales (COS) calculates the amount spent on the key words as a percentage of sales. Like CPO, our goal was to generate orders at breakeven or better; the target COS was dependent on the individual client’s profit margin. In general, we shot for 25% COS on non-branded keywords.
In all cases, the non-branded keywords had a higher COS than the branded keywords. The non-branded keywords’ COS was 24.8 to 470 times greater than the branded keywords’ COS.
For branded key words, the average COS was 0.42%. For non-branded key words, the average COS was 26.45%.
Sales- to-Spend Ratio calculates the ratio of sales dollars to the cost of the key words. It is the invert of the cost as a percentage of sales (COS) stat. Like CPO & COS, our goal was to generate orders at breakeven or better; the target sales-to-spend ratio was dependent on the individual client’s profit margin. In general, we shot for 4-to-1 ratio on non-branded keywords.
In all cases, the branded keywords had a higher sales-to-spend ratio than the non-branded keywords. The branded keywords’ sales-to-spend ratio was 24.8 to 470 times greater than the non-branded keywords’ sales-to-spend ratio.
For branded key words, the average ratio was 235–to-1. For non-branded key words, the average ratio was 4-to-1. The overall average sales-to-spend ratio was 10-to-1.
We will be releasing the full results of our first annual Specialty Food Online Industry Response Benchmarks in early February.
To view and download a copy of the full results at that time, visit our website at www.5thFoodGroup.com.
We hope these response statistics will be helpful to you as you begin analyzing results of your own holiday 2006 e-commerce efforts and start planning for the holiday 2007 season.
Happy New Year
Tony Cox
President
The 5th Food Group and Catalog Solutions, LLC
ABOUT 5TH FOOD GROUP & CATALOG SOLUTIONS
5th Food Group helps specialty food catalogers and internet marketers grow and make more money by developing, managing and implementing their mail order and online marketing programs. We are the only catalog/internet marketing firm that works exclusively in the specialty food industry. Helping smaller companies or large companies with small mail order or internet divisions is what we do best.
Visit us online at www.5thFoodGroup.com to download a copy of our free booklet, The Seven Habits of Highly Ineffective Catalogers, and for information on our fully guaranteed introductory program called JumpStart.
WILL YOU BE ATTENDING THE FANCY FOOD SHOW IN SAN FRANSICO?
Mo Frechette, my friend and client of Zingerman’s Mail Order fame, and I will be co-presenting a workshop titled, 10 Steps to Increase Website Sales and Profits. The workshop will be held at the show on Monday, January 22 from 8:30 to 10:00 AM. For more information, visit the NASFT’s Web Site. We’d love to see you there.
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