Parfym partnered up with Kuvio with one strategy in mind. Profits and growth. An equation that rarely adds up – but shifting from the traditional way of optimizing, reporting, and analyzing the top-line revenue to profits was a game changer which then shifted Parfym’s development towards profitable growth.
Advanced reporting on profits across the entire channel and marketing mix, enabled us to shift budgets accordingly. This, alongside real-time profit optimization in Google ads, allowed us to focus on maximizing incremental profits after advertising spend instead of maximizing revenue with a given return on ad spend. Parfym achieved a 303% incremental uplift in profit after advertising spend with the help of Kuvio.io
Kitchentime, who uses Bluebird Media as their digital marketing partner, had – like many other e-commerce businesses – difficulty with attaining profitable results from Google Ads. Kitchentime focused on total revenue, but when they switched their bidding strategies to maximise total profit, they were able to increase their gross profit by 71% compared to the same period the previous year, after deducting marketing costs.
“ – The mistake that many e-commerce businesses make is that they optimise their bids to maximise revenue or transactions, but in order to achieve sustainable growth they should be optimising for profitability. Thanks to Kuvio you can send profit as a signal to bidding algorithms to maximise profitability in absolute terms rather than revenue. ” - Patrik Segersven, Head of Paid Search & Analytics, Bluebird Media.
Kuvio only acted as a facilitator for Google’s smart bidding algorithms to make better decisions. Kitchentime previously used ROAS (Return On Ad Spend) bidding, which means that Google adjusts bids to maximise revenue given a certain ROAS target. This likely means that Google favours selling products that are as expensive as possible and that have the highest possible sales volumes. As many e-commerce businesses know, however, is that it is not necessarily the most expensive and certainly not the products that have the highest sales volumes that are the most profitable for the business. By feeding Google’s smart bidding algorithm profit rather than revenue, we force Google to find the most profitable sales rather than those that have the highest revenue.
Rajala Pro Shop changed to optimising their advertising against profit rather than revenue, and increased their average gross profit while simultaneously decreasing their advertising spend for the same amount of revenue.
Rajala Pro Shop operates within the camera retail industry, where much business value is driven by kickbacks from suppliers based on purchasing prices. As top-line revenue does not account for kickbacks, this business value was difficult if not impossible to effectively take into consideration when using revenue target-based bidding. Further, as Rajala sells both new and used equipment, the jurisdictions in which they operate impose different VAT percentages across the product range. This is not taken into account either when only using total revenue as the signal.
Using Kuvio, they set up a custom profit calculation that took into account both the kickback structure and the different VATs across the product range, which enabled detailed real-time per-order profit calculations. Feeding this signal into their marketing platforms, they are able to optimise on the business value that actually matters to them – profit.