eCommerce Advertising Analysis Tool

The Ad Efficiency Score is a formula built on 5 truths that cannot be refuted:

• On-Site Conversions
• On-Site AOV
• On-Platform CTR
• On-Platform CPM
• On-Platform Ad Spend

The Ad Efficiency Score is a formula built on 5 truths.

• On-Site Conversions
• On-Site AOV
• On-Platform CTR
• On-Platform CPM
• On-Platform Ad spend

These metrics play a critical role in analyzing the performance of advertising platforms and the revenue associated with them.

There are known issues with attribution in digital marketing. 

• Google Analytics can’t see into other platforms.
• Email, conversion tools, and advertising platforms like Facebook all want credit for sales while many of these platforms assist each other in sales.
• iOs (Apple’s operating system) made it so most users aren’t tracked.
• Cookies, little text files that identify users, are now being disabled further skewing data.
• ROAS/ROI is not reliable on GA or within advertising platforms due to multi-touch scenarios.

The Ad Efficiency Score gives a realistic look at the return on ad spend and also helps find issues within the advertising efforts. 

We recommend using this score in conjunction with bROAS and nROAS to determine the entire health of your advertising efforts. 

The higher the number, the better.

Typically, anything above a 1 is moving in a positive direction.

This would mean for every $1, you are gaining $1 in revenue from that specific ad platform.

As you use this formula, you can continue to find improvements in the score.

Areas to watch:

1. AOV: if your AOV is low, your Ad Efficiency Score will be low. The higher the AOV, the better score you will get. Look for ways to improve cart sizes.
2. If your OnSite Conversion percentage is low, your score will be low. Your Ad Efficiency Score will climb quickly if you do things to improve conversions on your site.
3. Newer brands take time to establish credibility in the marketplace. New brands tend to start with lower scores and then climb as their brand gains credibility (look to improve review scores with all your products).

Your AOV is the average online value (or average online order size). The higher the number, the more efficient your ads perform. Look for ways to increase this number. 

This number is the number of conversions (purchases) divided by the total number of visitors. 

You want this number to be as high as possible. Industry standards say a good OnSite Conversion percentage is 2-3%. 

The CTR percentage is the number of people who click through an advertisement divided by the number of people who see the ad. 

2% means 2 people click through an ad out of 100.