When creating a marketing plan or deciding how to allocate resources – retailers must decide what acquisition channels to focus on, and which channels provide the best sources of traffic and return on investment. Retailers looking to grow their business need data to estimate where they aim to be in terms of traffic, conversions and revenue. Before investing a lot into one channel over another, it’s useful to get an idea for how a channel performs generally – so that investments currently being made will pay off in the short, medium and long term.

We benchmarked 10 of our clients who span a range of sectors, with a wide variety of customer acquisition techniques (notably excluding affiliates or marketplaces). We wanted to find out which channel is responsible for driving the most traffic and what percentage of traffic converts through that channel.

The results from these 10 retailers are presented below, showing how each channel performed in terms of percentage of traffic, percentage of sales, and percentage of revenue. The second-last column shows how much each channel varied from the average order value (AOV) for the whole site. The last column, Efficiency, describes the revenue generated relative to traffic. This is calculated by dividing the percentage share of revenue by the percentage share of traffic. The higher the number the better. This is similar to Per Visit Value (PVV) in terms of establishing how efficiently a channel delivers ROI for the traffic it generates.

Survey of Value of Channels for 10 Irish Ecommerce Retailers

Findings

Organic Search is unsurprisingly the channel that performs best as far as these retailers are concerned.

Accounting for 40% of the traffic on average, organic search was responsible for almost half (49%) of total revenue across all channels. Focusing on organic search traffic has a lot of beneficial carryover to other channels. Producing blog/website content provides extra content that can be shared via email and social media. Generating quality backlinks has a carryover effect in terms of referral traffic.

Organic search is followed by CPC Ads, which accounted for just under 30% of total sessions, 23.5% of transactions and 22% of revenue on average. PPC performance depends on the retailer, it is often easy to increase the efficiency of the spend by eliminating non-converting traffic (by keywords, targeting, & bidding) – and it’s easy to drive more traffic by increasing spend, but whether or not to do so depends on a company’s ROI.

Organic and Paid search combined accounts for 70% of all the traffic driven to our sites. As unnerving as it may seem, retailers are at the mercy of search engines, so developing a strong search marketing strategy is paramount, but it would also be useful to consider how to optimise alternative sources of traffic.

Email: Email marketing brought in 5.84% of overall traffic, however orders that arrived through email tended to be above the site’s AOV. While driving less overall traffic and revenue, email offers some contingency against search engine mishaps such as getting hit by an algorithm change, or competitors who rise in SEO ranking.

These findings show that of the retailers surveyed email is underutilised – the chart below taken from the Marketingsherpa Ecommerce benchmark study shows that 95% of retailers they surveyed are investing in email marketing. It’s important to note that this chart shows the interest among those surveyed but not the level of investment.

 

 

Email marketing requires an investment in a service provider. Extra investment should mean more personalisation and automated emails, translating to more traffic and conversions for ecommerce stores. Marketing through email also requires that you build a list, which can prove a challenge for ecommerce managers. Smaller retailers may struggle to see results from email marketing until enough subscribers are acquired. Having a list building strategy to capture relevant addresses is important to have in place. Almost all of retailers use email to some extent, however not all are maximizing it’s potential.

Referral Traffic: The traffic and efficiency of this channel depends on the types of site doing the referring. Obtaining links from sites which will drive potential customers is different from obtaining a link from a website with the intention of raising the SEO ranking.
Partnering with, and driving traffic through affiliates is becoming more common and should not be overlooked. Data from Custora (shown below), which analyzed US based ecommerce retailers in Q1 & 2 of 2015 shows that 17% of ecommerce orders in the first 6 months of 2015 came from traffic that arrived through an affiliate. Despite the lower margins, affiliate marketing can be an effective way to acquire customers and traffic which can pay off further down the customer lifecycle.

Custora Pulse Q2
It’s interesting to note the spread of traffic sources that Custora reports above. There is a marked difference in the reliance on Organic and CPC channels to drive orders when compared with our benchmark data. In particular it is encouraging to note that Email drives over 15% of orders (compared to 4.27% in our data) and Affiliate can also drive a very significant volume of orders to ecommerce sites.

This definitely gives scope for improving and extending the mix of traffic sources for the retailers we surveyed.

Social Traffic: Our benchmark table shows that the share of traffic from social media is quite low (2.92%), as is the revenue generated directly (1.2%). However the benefits of social media in terms of branding and direct traffic are not apparent from the data. This seeming lack of traffic and revenue isn’t stopping companies from investing in social media – more people reported that they are investing in social media marketing than any other channel besides email (see the MarketingSherpa data above). This could be because building and maintaining a strong social media presence often requires significant extra resources. Interestingly – in the MarketingSherpa benchmarking study (see chart below) ecommerce managers reported that social media was less effective at driving significant traffic in proportion to the revenue they took in. The more revenue a company generated, the less social media contributed to overall traffic and revenue.

 

 

In Summary:

Search engine traffic is the primary source of visitors to ecommerce sites and the most efficient channel in terms of the retailers surveyed.

Email is underutilised among the retailers surveyed, some do not use any email marketing, and others run minimal or sporadic campaigns.

Social media does not drive sales directly, despite reported investment by companies surveyed in the MarketingSherpa study.

Paid Search remains a strong traffic source, driving 30% of surveyed retailers traffic and 25% of transactions on average. As Google shopping and social media continue to grow as PPC platforms the prevalence and effectiveness of PPC as a channel looks to remain stable.

Marketing effectively through all of these channels (besides PPC) requires a strong and diverse content strategy – publishing and promoting content is key for ecommerce retailers.