Adidas, with the help of the digital agency iProspect, made a serious attempt to determine ROI on their mobile strategy. The process involved determining the conversion rate for those who clicked on the store locator page, the likelihood of purchase and the average purchase price. Here were the assumptions:
20% of those who click on the store locator page go to an Adidas store.
13% of all shoppers who walk into an Adidas store make a purchase.
The average store purchase is $71.
So far I have no problem with the analysis or the assumptions, though I have no way of independently evaluating them. iProspect’s next set of assumptions begin to lose credibility because they seem to embellish the numbers when they don’t say what they would like to hear – that mobile delivers a positive return on investment.
My first criticism comes when iProspect then assumed that the average purchase price for customers who click through the store locator page was higher than the average customer, now at $80 and that these customers converted at a 20% rate. Despite the embellishments the agency still found a negative ROI on a $1million investment in mobile.
Using the new assumptions iProspect then took the 494k clicks on the store locator page over a certain period of time and did the following calculation:
494k clicks on store locator page x .20 store visits x .20 purchase @80 = $1,580,800
The analysis then reasonably added the $230k in sales generated from direct mobile clicks plus the additional sales based on those who clicked on the store locator page for a total revenue of: $1.81 million.
The problem with the analysis is that it assumes that everyone who goes to the Adidas store locator page is a new prospect who was not planning to go to Adidas that day or on another day to make a purchase. Those who click on the store locator page may already be Adidas customers who would spend $80 on a purchase anyway. Therefore, to attribute the full value of the conversion to the store locator page only accounts for the last click. The result is a limited view of the purchase funnel in an attempt to boost mobile value.
That said I do not denigrate the value of mobile, just that marketers should be clear on what the numbers really mean. When agencies embellish the value of their efforts masked by metrics, they lose credibility.
Source: The Full Value of Mobile Case Study: adidas and iProspect explore an innovative approach for measuring mobile’s impact on in-store conversions, 2012 Google.