Recovery. Confidence. Spending. These are terms that will that will be welcomed by retailers
across the world as the global economy inches away from recession. They
will
now be looking to capitalise on the more optimistic outlook and report
more
positive results.

We are clearly not out of the woods yet, so all such
supporting marketing
activities,
such as search, need to be justified with accurate measurement. However,
to
date there has been a fundamental flaw in the way that it is measured
and could
prove to be a major stumbling block.

The main problem is
the primitiveness of measurement capability
. All revenue optimised against
search is simply picked up by the conversion tag and pushed into the optimisation
technology as “Revenue”. While this is undoubtedly an important category, there
are many significant factors it doesn’t take into account, such as whether that
order was actually dispatched, if the details changed later and what the actual
margin was for that order in real terms.

So, how have retailers
got around this obstacle? This information is critical to measuring e-commerce
campaigns. Alarmingly, this has been executed through guesswork and averaging
out – hardly the best tool for any form of measurement. ROI expectations can
currently be increased or decreased for protection against cancellations and
delivery charges. Different ROI targets can also be implemented for sets of
keywords that tend to sell certain products.

Take Mother’s Day,
for example. Higher margins could be placed on keywords related to flowers than
those related to chocolates to allow for the variation in margin between the
two product lines. Seems logical enough. However, what happens if the user
comes to the site and buys both flowers and
chocolates – hardly the most unbelievable situation to happen around
Mother’s Day.

The retailer then faces a dilemma. Which margin do you use? The
high margin target you allow for the flowers or the low margin target for the
chocolate? The truth is either way is wrong. In fact, it has traditionally been
impossible to solve as you can’t tell in advance the mix of products that
keywords will sell and what true revenue and margin will be by picking this
information up at the point of transaction.

This leaves
retailers with a vast data problem. Millions of pounds could be going through
their site, yet the numbers being reported and optimised against simply do not
match the actual revenue numbers that the CFO will see at the end of the month.

The knock-on effect
of this problem is huge. Firstly, there are the restrictions this brings. Retailers
cannot push online as hard as they could because they need to leave buffer
zones of ROI to allow for the unknown. Secondly, there is the time (and
therefore money) drain. A huge amount of time and resource is spent trying to
reverse engineer the actual revenue numbers to what happened a month earlier.

Every
sinew of a retail organisation should be spent trying to bounce back from the
difficulties of the last two years and increase sales and efficiency, not
meeting barriers and backtracking on what happened 30 days ago. For many
retailers, their online store may now be their biggest store. Yet due to these
hurdles, it is the store they actually know the least about. It is hardly an
exemplary business model.

But if this issue
has been impossible to solve, then surely all companies are in the same boat
and there is no competitive edge to be had? Maybe previously, but that is
certainly not the case now.

Search marketers therefore need to go through a fundamental
shift in the way they are capturing revenue
. Rather than relying on capturing
revenue at the point of transaction through a tag on the conversion page, they
should be looking to actually integrate with the very numbers the client is using
internally, whether through ERP or an order management system from the likes of
Oracle and SAP.

This way, search
marketers can understand revenue based on what was actually shipped out of the
door. With visibility of delivery costs and varying margin based on the mix of
products actually bought, also comes visibility of their true ROI.

This
flexibility enables marketers to set varying targets for many different aspects
such as new versus repeat business, lifetime value, upload offline revenue that
was converted via call centres etc… However, the killer advantage on top of
this is that these numbers are the same that the CFO will look at the end of
each month.

As recent research has
revealed that two thirds of organisations believe search is going to be the
most important marketing channel in
2010
, the
ability to demonstrate measurability will allow clients to push search even
harder and see greater rewards through being confident with aggressive margin
expectations.

Would you be happy
to push harder if you knew for a fact that revenue generated at a keyword level
will actually hit the bank account? Search marketers who are deploying
integration techniques are seeing instant results
. There’s no reason why you
shouldn’t experience the same.