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This post might more properly belong in a gen.video FAQ under a heading like, “Either I’m crazy or you’re crazy: my gen.video team keeps talking to me about the conversion rates but I swear that they are talking about at least two different things, maybe three or four! What’s going on and why can’t you be more clear about all of this?”
All right, that would be a really long "Q" and probably no one (other than me) gets all that worked up over stuff like this but it’s still a great little topic so let’s get into it. There are in fact two different conversion rates in the gen.video lexicon and they are totally (well, sort of totally?) different. That said, they are both conversion rates and so there’s not a great semantic for differentiating them so let’s just talk it through.
The first one is product page conversion rate. As any ecommerce pro will tell you, product page conversion rate is simply the number of unit sales divided by the number of visitors to the product detail (PDP) page. It’s so simple to calculate that it is mind-boggling to contrast the number of variables that translate into every individual product’s conversion rate. A friend of ours runs a billion dollar business from the single motto: revenue = traffic x conversion rate x price. The point? Everything you do in ecommerce will impact one or more of those three factors and so success is merely (merely!) figuring out the biggest leverage point and focusing on it.
While admitting I might be biased (as will become evident), I’d argue that of the three factors, conversion rate is by far the most important one to focus on.
Why? Let’s take them in turn.
And so we come back to Conversion Rate lifting tactics. They may be the hardest to execute but they tend to be more durable and they tend to support or even enhance vs. cannibalizing the other two factors. What are they? Well, outside of improving the product itself, conversion rate lifting tactics tend to be focused on optimizing the merchandising: more descriptive content that describes the product’s features, a higher star rating and more reviews and of course, more attractive images and videos.
Our research has shown that our videos lift product page conversion rates on average 20% (our retail partners and others have also validated those numbers). Now that’s not of the people who watch the video, that’s across all page visitors. It’s a huge number and in theory it should be a durable impact: a great video will have the same impact on a site visitor in six months as it does today. That leverage is enormous: a relatively modest product page can have $1mil in annual sales. A 20% lift in conversion rate (all else equal) would equate to an additional $200K in sales, which is a number that dwarves all but the largest influencer campaigns. Oh and by the way, that’s an additional benefit beyond the media value of the influencer campaign itself.
So what’s the OTHER conversion rate? The other conversion rate looks at how frequently the downfunnel traffic that an influencer sends to a PDP converts to a sale. We’ll call this one the influencer conversion rate. When looking at an individual campaign’s performance, it’s actually not my favorite metric because:
So why look at influencer conversion rates? The first one is that for influencers who do – across multiple campaigns and brands – outperform on this metric, it is proof-positive that they have real influence. Their audience isn’t just watching or just clicking as a show of support, they are actually buying based on that influencer’s endorsement. That’s a powerful message and one of the reasons we are featuring this metric on influencer profiles as we expand our discovery platform.
The other interesting note is that it is actually comparable to the conversion rate above. It is looking at the number of people who buy divided by visitors to a product page. In theory you could compare the conversion rate of an influencer’s post to the baseline conversion rate for the page to determine just how qualified the new traffic is. Perhaps this kind of analysis does occur with some DTC brands or even SMB sellers truly dialed in on evergreen influencer marketing (drop a comment below if you are such an expert), but in my experience with omnichannel enterprise class brands, I have never seen anyone do this kind of math…the data visibility is just too far apart in most cases. That said, the gen.video platform is just a step or two away from bringing all of this data together to provide a whole new level of insights to brands.