Something was bothering Rob Trauber last year.
The CEO of women’s apparel brand Johnny Was had just seen the Los Angeles-based company expand to 50 stores with more on the way and a double-digit annual growth in sales to $100 million. The brand was also a top seller in outlets such as Nordstrom and Neiman Marcus. The future looked very bright for the 30-year-old company.
What kept Trauber up at night, however, was his sense that its marketing was slipping. Johnny Was had a strong catalog business. But it was looking to do better on the direct-to-consumer side and was trying out paid media on Facebook, Google search and others. And like most emerging brands, making that marketing cost effective was critical.
A veteran retail pro with executive experience at Coach, Nike, Cole Haan and others, Trauber worried about attribution measurement. The company had boosted its investment in ecommerce, and accordingly wanted to know where its online customers were coming from. Had they clicked to the site from an ad on Facebook? Google? Pinterest? Did they check in after getting a catalog in the mail? Did some do all of these before a purchase? Out of 1,000 conversions there might be 2,000 websites claiming consumers clicked over from their site to Johnny Was.
“It was almost an existential problem,” Trauber says. “We spend money on media buys based on who’s claiming credit for moving customers to our site. If Instagram is saying our ads there are creating sales for us, how do we accurately track that? How do we really know where they’re coming from when you have all these media channels?”
However, multi-touch is becoming less of a factor. Part of the reason is that consumers might use a number of devices when shopping, which makes them more difficult to track. Another issue is that higher security concerns are causing customers to regularly reject tracking cookies: One estimate is that 64 percent of advertisers see their cookies rejected by consumers.
Trauber tried a radical approach, severely cutting media spending for a couple of months to get a baseline of where traffic would be with minimal advertising. “Oddly enough, we still saw traffic and conversions climb,” he says, “although we knew that wouldn’t be sustainable.”
He also tried retargeting services, which “chase” possible consumers with display ads after they click away from a brand’s site. And he took a deeper dive into Johnny Was’ catalog side. “Catalog is somewhat easier to track, since we know who received a catalog in the mail. If we see that customer purchase, we can make a reasonable assumption that the catalog drove that conversion.”
As he looked into how the marketing was working, Trauber suspected the growing unreliability of multi-touch was affecting media spending and began to ask other retail executives about their experiences.
“One thing this reflected for me was that to be a profitable retailer today you need to know more than merchandising and logistics,” he says. “You’ve got to have a good grasp of data science. I asked around and was led to the people at Measured and met with their team to see what we could do differently.”
Founded by attribution experts Trevor Testwuide and Madan Bharadwaj, Measured’s methods are based on incrementality measurement. Always-on A/B testing experiments look at the data generated by each visit and conversion to see where customers came from and how they were directed there. “With multi-touch attribution you’re taking the data and stitching together these customer journeys to see where they first saw an ad, where they last saw it. It becomes complicated and difficult to track,” Bharadwaj says. “What we do is test each channel to see which are the most effective for a retailer.”
Measured collects transaction data from the retailer and analyzes it with the data provided by paid and unpaid media suppliers. “We help brands figure out the lifetime value of each customer based on the channel source they’re coming from. They can see how efficient they are in their media buys.”
Trauber and his marketing team saw some surprising results when they carefully looked at the data. The company had recently begun a marketing push on YouTube and the initial consensus was that it was getting some traction from the investment.
“When we looked at the numbers on Measured, however, we saw it wasn’t as productive as we’d thought,” Trauber says. “Our customers tend to skew a little older than the typical YouTube viewer, but the issue may be the types of videos we’re doing on there. Bottom line: We have to look at what we need to do better on YouTube.”
The other big surprise they had was that retargeting wasn’t as effective at drawing in traffic as Facebook advertising. “We were focusing the majority of our dollars on retargeting and a small percentage on Facebook. However, we saw that Facebook ads resonated with our customers, so we reallocated and now they’re 30 percent of our ad budget.”
The overall result is a more targeted marketing strategy for Johnny Was. “We’re now able to figure out the incremental marketing cost of each customer. We can see if it’s worth spending more in a particular channel because we’ll see very quickly how the profits from each sale measure up to the cost of the media buy,” Trauber says.
The other advantage for Johnny Was is that Measured’s services give it the capabilities of larger retailers. “I was at a conference listening to marketing executives from Nordstrom and Walmart talk about their efforts with incremental testing and realized that although we’re significantly smaller we’re all doing the same thing,” Trauber says.
“Until recently only the big guys could do something like this, but now smaller retailers can get that edge as well.” STORES
John Morell is a Los Angeles-based writer who has covered retail and business topics for a number of publications around the world.