How testing offers in display ads can increase CVR and margin
Published: February 27, 2017
Author: Michaela Ferowich
During the holiday rush of Q4, many retailers tried to win each and every consumer’s heart and wallet through advertising. Many of them used display advertising to target their audience with a special offer or discount.
Offer display ads are a great way to entice the consumer to click and purchase the product at a lower price. These offers are generally used by retailers large and small, in hopes to garner the sale, without hurting their bottom-line profit too much.
Display advertising spend rises around Black Friday and Cyber Monday for the holiday push. This year, one of my clients wanted to run offer ads over the course of November and December – focusing on Black Friday and Cyber Monday.
We split the offers between three different discounts that we served to their audience:
- Offer 1 – the richest, most valuable offer
- Offer 2 – middle-of-the-road offer
- Offer 3 – the lowest, least valuable offer
After splitting the audience into groups and assigning one to each creative, we let the test begin. All three offer creatives and audiences received the same budget and spend.
Over the holiday weekend, the push in spend and offer ads led to an increase in conversions and, in turn, a lower CPA. After the Cyber Monday push, we analyzed performance by creative/offer.
We came to find that the audience exposed to Offer 3 rarely converted or purchased the item, which led to a high CPA.
Meanwhile, Offer 1 and Offer 2 each resulted in great performance, with similar conversion volume and CPA even though they were different offers.
The client planned to continue running the best-performing offer throughout the holiday season. Offers 1 and 2 performed similarly despite Offer 1 providing a larger incentive for the customer. Therefore by choosing Offer 1, the client would lose more of their bottom line. For this reason we recommended that they run Offer 2 because we knew it would perform similarly, but with a higher profit margin.
An additional tip: It is always a best practice to run different offers/discounts to different audience segments so they don’t see conflicting messages. It also gives the opportunity for different ads to be evaluated on individual performance. Overall, the richest offer does not always perform the best when comparing it to different offer messages.
To learn more about 3Q Display advertising, contact us. We’d love to hear from you!