Avenue A: Measuring Click-Through Not Sufficient
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A new study from Avenue A suggests that while driving visitors to your site is one thing, converting them into customers is quite another.
The study, conducted by Seattle-based Avenue A's in-house research group, the Atlas Institute, concludes that the more a product costs, the less likely potential customers are to complete an e-commerce purchase.
Those conclusions might seem obvious, but the fact that users often begin, then abandon online purchases has vexed e-commerce marketers since the industry began. Studies on the subject vary on just how widespread the problem is, but one report by the NPD Group suggests almost three-quarters of online consumers have abandoned a purchase.
The Avenue A study then seems to suggest that by putting additional marketing behind high-ticket products and services, marketers can reduce the chances of their being abandoned at the checkout counter.
According to the study, industries that specialize in higher-ticket items have higher average consumer drop-off rates when compared to other industries.
Financial services and computer electronics, for instance, have more than a 70 percent drop-off rate; while sports, food and drink, and family-oriented e-commerce sites experienced less than a third of that figure.
According to the study, Web sites that averaged transactions greater than $500 exhibited the highest drop-off rates, generally greater than 80 percent. Sites with low product consideration or transactions that averaged $100 or less typically displayed drop-off rates lower than 40 percent.
During the four-month study, the Atlas Institute looked at drop-off data from 26 Avenue A advertisers, and counted the percentage of consumers who made it to the final step of the purchase or registration process on a Web site without ultimately buying or registering for the product or service.
As a result, advertisers need to address whatever issues are restricting a consumer's willingness to complete a transaction -- especially if their abandonment rate is higher than the industry standard -- according to Atlas Institute director Young Bean Song.
While it's not necessarily surprising that bigger purchases require greater consideration time, the applications to the Web marketing industry are important. For one, marketers have to spend more time coaxing consumers to complete the sale, rather than just hyping their product.
"It's critical for a company to understand the importance of tracking a user's activity not only from the advertisements to first impression, but throughout the sales process," Song said. "By [examining e-commerce abandonment], an advertiser has the necessary data to optimize their sales process, thereby significantly increasing their chances of closing the sale."
Another implication of the study is that e-commerce abandonment might be a better metric than click-through rates to judge the effectiveness of an ad campaign for online sellers.
That suggestion plays nicely into the hands of many other Web marketing services firms -- including Avenue A -- which maintain that online advertising has underused and under-valued branding capabilities that can't be measured by click-throughs.
"Drop-off rates provide yet more evidence that advertisers can not base their campaign effectiveness on click-through rates alone," Song said.