The Truth About Ecommerce Agency Results: Numbers Don’t Match Claims

– Ad agencies often highlight the amount of money spent on advertising, but rarely provide accurate information on the actual revenue generated from those ads.
– Email agencies emphasize the revenue driven by email, but fail to disclose the use of discounts or the size of the email list used. The true profitability of email campaigns is often unknown.
– Both ads and email marketing require timing, understanding of unit economics and data, and basic marketing principles. Agencies should focus on driving high click-through and sign-up rates, collecting relevant data, leveraging that data for onsite experiences, and understanding the unit economics of their activities.Focus on driving consistently high click-through rates, high sign-up rates, and collecting as much relevant data as possible to understand the customer journey and leverage it into an onsite experience. Additionally, ensure a thorough understanding of unit economics and the true revenue generated after subtracting the initial cost of acquiring email addresses and any discounts or offers.Ecommerce agency observations:

1. Someone instructed all ad agencies to disclose the amount of money they have spent on advertising. However, no one can accurately tell me how much they have made from said advertising. It’s always just a few cherry-picked case studies showcasing decent to good results, usually at around 3x ROAS.

2. Email agencies love to emphasize the revenue generated by email campaigns. Yet, they fail to mention whether they used discounts, offers, etc. in those emails or the size of the email list they sent them to. Email campaigns will always generate revenue because of the intent required to sign up for an introductory offer or incentive. This intent indicates a high likelihood that people will make a purchase if you send them something at the right time. It’s a step further down the sales funnel.

What I would like to know is how much money was made from email campaigns, minus the cost of acquiring the relevant email addresses, taking into account the percentage of subscribers who converted, and the actual profit made after applying any discounts, bundle offers, etc. Most people cannot answer that question.

Here’s the dirty little secret: both email and ads are not difficult. They are all about timing, understanding unit economics, and data. They require a basic understanding of psychology and marketing principles, but not much more than that. They serve different purposes in the sales funnel. Ads aim to get the click, then the sign-up, and collect data directly from the visitor. Email campaigns aim to build trust with the brand and encourage, but not force, a purchase. They leverage the collected data to guide customers through their journey. Beyond intent-based flows, email campaigns aim to entertain and gently remind people of the brand’s existence when the timing is right. Retargeting ads are meant to entertain and build trust with the brand, highlighting why someone signed up.

Agencies should focus on the following:

– Driving consistently high click-through rates
– Driving high sign-up rates
– Collecting as much relevant data as possible regarding the customer journey
– Collaborating with brand owners to leverage that data for an optimized onsite experience
– Understanding the unit economics of their activities

Go ahead, ask your ad agency how much they have made for clients over their lifetime. Ask your email agency what the revenue looks like once you subtract the initial cost of acquiring the email address and calculate the relative profit after any offers or sales. I believe you will start to notice apattern where the numbers aren’t nearly as good as everyone claims. You have to remember the majority of people that are running agencies do not run their own brands nor do they understand business basics or unit economics. I promise you come next year, these things will be impossible to hide given the current state of the market.#ecommerce #marketing #strategy

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