Subscribe to join thousands of other ecommerce experts
Today we added two new strategies to our ‘Advanced Bid Strategies’ and the ‘General Bid Strategy’ fields in our dashboard. You can now use a maximum ‘Cost-Revenue-Ratio’ (CRR) and a maximum ‘Cost-per-Acquisition’ (CPA) strategy with Whoop!.
Why did we make these changes? While we realized that the ‘Cost-Revenue-Ratio’ (CRR) is not used very often by our English-speaking customers, in German-speaking countries it is a frequently used performance indicator when it comes to measuring the performance of online advertising campaigns (CRR in German: “Kosten-Umsatz-Relation” or “KUR”).
The Max. CPA Strategy enables Retailers who currently do not track revenues but only conversions to optimize their Google Shopping spendings. You can also use Max. CPA if you already track revenues but want to optimize by Max. CPA. We strongly recommend to use the Minimum ROAS or Maximum Cost Revenue Ratio if you already track your revenues. We will post an article on that topic tomorrow.
What is the Cost Revenue Ratio (CRR)
In a few words, the CRR is the reversed Return of Advertising Spend (ROAS).
Remember: The ROAS is calculated by dividing the revenues by the accrued costs (revenue ÷ costs). If you just switch the denominator and numerator you’ll get the CRR which is as easy to compare as the ROAS:
CRR is mostly used as Percentage (just multiply the division with 100). So if your CRR is 5% it means you spent 5 $ for a revenue of 100$.
The lower the CRR, the more efficient is your performance or: the lower the CRR the better, generally speaking. So the CRR is essentially how much you need to spend to make a dollar.
What is MaxCRR and Average CRR?
If we are talking about CRR, we mean the average CRR which you will see for your campaign results: the MaxCRR is the limit you are willing to spend in exchange for revenue earned (Note: This is based on single transactions.) Let’s say you defined a MaxCRR of 20 % – some of your Google Shopping products overshoot that limit and some of your products will perform with very efficient CRRs. So you want to downgrade the overshooting products to meet your maximum CRR constraint and therefore increase your efficiency without harming your revenues much. The CRR could be fine, even with many products overshooting your CRR-Limit if they are heavily subsidized by well-performing products. So you should always know how your accrued costs and revenues are distributed if you are looking at your average CRR. This is the same for the ROAS (Minimum ROAS vs. Average ROAS).
Note: More features have been added since this article was published. Whoop! is now better than ever. Contact us to learn more.