Archive of: August, 2017

  • Today's UK mobile market

    Smart phones: 63 Million. Feature phones: 16.1 Million

    Mobile phones have become one the most effective ways of engaging with customers. Mobiles and in particular smart phones virtually encompass all other marketing channels as traditional forms of advertising can be accessed via smart phones i.e. Advertising, TV and radio etc… Across the entire marketing mix, spend on traditional forms of media have been exceeded by next-generation digital advertising, where the smart phone sits right in the middle.

    In the UK, at the end of 2016 there were 79.14M active mobile devices and only 56.5M actual mobile users. This suggests that a good number of people are probably using multiple devices for personal and work use. Out of the 79.14M active mobile devices, 80% are smart phones and 20% are feature phones. And for the majority of people it is not uncommon for them to have their smart phones by their sides for more than 16 hours, and they are the first and last thing they engage with everyday.

    For businesses targeting smart phone users via an app, it’s imperative to know what operating system they’re using, especially if the initial investment in the app is limited to focusing on Apple’s iOS or Android. At the end of 2016 in the UK, Android continued to dominate the smart phone arena with a market share of 54%, ahead of Apple on 34.7% and Windows 10.1%. But the largest tech company in the world is on the march and continues to increase market share at Androids expense and by 2020, Apple’s market share is expected to be 40.2%, whilst Android’s is estimated to fall to 50.2%

    To businesses, these combined factors make the screen on every smart phone valuable real estate, especially if they have the marketing budget to invest in creative rich media content. Consequently, smart phones have become one of the most engaging channels for businesses to reach their target audiences. However, while the majority of businesses focus on smart phone features, there are still 16.1M feature phone users to potentially consider, which presents a real opportunity for businesses using SMS.

  • ROI and ROAS

    What’s the difference?

    Return on Investment (ROI) and Return on Advertising Spending (ROAS) are two indicators that advertisers tend to confuse. Despite being different they affect one another significantly.

    So what exactly is ROAS?

    ROAS is a metric that determines the Return On Advertising Spend – the level of efficiency and profitability of e-marketing channels. The formula of ROAS is quite simple.

    Revenue ÷ Expenses

    Imagine you are marketing an e-commerce site and you want to increase traffic. You develop a number of Google Adword campaigns which quickly delivery an increase. Later down the line you analyse your campaigns for their profitability, and you discover that your campaigns achieve a total turnover of £20,000 per month at a cost of £5,000 per month.

    20,000 ÷ 5,000 = 4.00

    So for every £ you spent on your Google Adwords campaigns you earned £4.00

    Understanding ROI

    ROI differs from ROAS as ROI takes into account the amount earned once all expenses have been subtracted. In this example the purpose of ROI will determine whether the expected return on these campaigns justifies the investment? You then have to take margin rate into account which will allow you to identify your actual profits and calculate your true ROI on your channels. The formula for calculating ROI is as follows:

    Turnover x Margin rate – Expenses ÷ Expenses x 100

    Imagine that your business operates on a 20% margin rate, which would give you the following calculation:

    20,000 × 0.2 – 5,000 ÷ 5,000 × 100 = -20.00%

    Despite the ROAS being positive in terms of sales, the ROI is negative as when you apply the margin calculation, it indicates that the campaign investment isn’t profitable enough.

    ROI and ROAS differentiation

    When evaluating the performance of an e-marketing channel be sure to separate the two indicators, as this will give you a clear understanding of your investments and whether they are profitable or not.

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