Continuing with Example 1 from class, suppose the cost per click went up to $0.95. What is the revised monthly net profit and ROI? Is it still worth it at the lower conversion rate higher cost per click?
Continuing with Example 1 from class, if the cost per click is $0.75 and the conversion rate is 15%, what is the ROI for the campaign? Is it still worth it at the lower conversion rate?
A charity website collects donations for cancer research. They are considering a sponsored post on Facebook where they will pay $0.54 per click. Potential donors who click on the sponsored post in FB will get sent directly to the charity’s website (not to the FB page) where they expect 4.5% of the visitors to make a donation. On average, their donations are $25. What is the ROI for this campaign? Should they pursue it? What is the key assumption of that your analysis in problem 3 makes? Explain it as you would to the director of the charity.
Continuing with Example 2 from class, list three ways that you might improve the email click-through rate and three ways that you might improve the conversion rate. Provide your answer as a numbered list. Use your own creativity.
Continuing with Example 2 from class, suppose that email team has proposed a change in the design of the emails that they believe will increase the click-through rate on the emails to 10.2%. The website team also has proposed a design change to the product listing page that they believe will lift the conversion rate to 13.2% without changing the average order value (AOV) of $37.20 or the average margin of 36%. The product design team has proposed a cost reduction in the manufacturing process that will increase the average margin to 40%. Which improvement will result in the greatest improvement in ROI for the campaign? (Analyze the three improvements separately, holding everything else fixed.)
Continuing with Example 3 from class, recompute the ROI for the Groupon campaign where you assume that the costs of the investment is the $2,600 loss that you get from the initial Groupon transaction and the return is the revenue you get from the subsequent repeat transactions.