eCommerce Podcast
Mastering Marketing Spend: A Financial Perspective
Oct 26, 2023
Discover the importance of vigilant monitoring and precision in measurement for enduring success. Uncover the aftermath of overlooking optimization and its impact on revenue. Unwrap the mystery of target contribution margins and communication with marketing agencies. Learn how to harness 'imperfect' data to discern the pulse of your business. Navigate the lesser-known pathways of business metrics and adjust your business sails monthly for the fast lane.
51:03
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Quick takeaways
- Understanding contribution margin and blended return on ad spend (ROAS) is crucial for efficient marketing budget allocation and decision-making.
- Clear communication and monitoring of key metrics like blended ROAS and average click-through rates can help optimize marketing campaigns and achieve profitability.
Deep dives
Understanding the Importance of Contribution Margin and Blended ROAS
For e-commerce businesses, it is crucial to understand the concept of contribution margin and blended return on ad spend (ROAS). Contribution margin refers to the amount of revenue retained after deducting variable costs like cost of goods sold, shipping, and payment processing. This helps determine the amount left for marketing spend. Blended ROAS is calculated by dividing net revenue by total ad spend and provides insights into the overall profitability of marketing efforts. Setting a target contribution margin and blended ROAS helps guide decision-making and maximize profitability. Monitoring these metrics on a monthly basis is recommended for accurate performance evaluation and decision-making.
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