The Case for Share of Voice
Across retail ecommerce brands, retail media suffers from a measurement problem. Marketing cares about return on ad spend while sales is focused on driving incremental sales and profitability. Unfortunately, these two methods don’t always arrive at the same conclusion, and internal disagreements are common. Instead of declaring one method superior, both sides should instead consider using share of voice as a primary KPI for their online business.
What is Share of Voice?
Share of voice is the online version of a brand’s presence within the in-store aisle. Stores have limited space for brands to be visible and grab shoppers’ attention. Most brands are competing for prime spots such as endcaps or in-aisle displays to boost their reach. Share of voice translates this concept online by providing a percentage measure of how prevalent brands are on their digital shelves when compared to the total category. The digital shelf is defined by a collection of related keywords that shoppers search when looking for a specific category or solution. Instead of a physical aisle that inhabits a predefined space, the digital shelf can be almost endless. There are thousands of relevant keywords where brands can appear.
Similar to a brand’s presence on the physical shelf, share of voice as a percentage metric is a zero-sum game. For one brand to appear more frequently, other brands must appear less often. And just like the physical shelf, brands can get ahead by sponsoring products for premium placement. Unlike the physical shelf, a brand’s presence and the very construct of the digital aisle itself are constantly changing, demanding real-time brand engagement to achieve the best results.
To determine a brand’s share of voice, each relevant search term is weighted by its search volume. The more popular a term, the bigger its effect on a brand’s share of voice. Similarly, brand placements within each search term are also weighted by their position from the top. The brands that first appear under a popular search term will benefit far more than brands that appear only after shoppers scroll down to view more results. Brands can improve their share of voice by appearing in higher placements for more popular search terms. A successful brand should occupy several of the first available results for at least some of the most popular search terms in their category.
Improving Organic Share of Voice
How can a brand improve the likelihood that a search term will include its product in a favorable placement? To boost organic share of voice, brands need to know a special formula. Search results are a function of two factors: keyword relevance and contribution profit. More formally…
Search Rank = F (Total Profit Over 1000 impressions, keyword relevance)
Keyword relevance is straightforward. Having the right words in the title and description that closely match desired search terms increase a brand’s chance of obtaining better placements. Keeping product page content quality high more generally also boosts a brand’s visibility across keywords.
The second factor requires more explanation. Contribution profit here is defined as profit-per-product for the retailer over the past 1000 product page impressions. Brands have two ways to improve. First, they can improve the profitability of their offer either by lowering costs and passing those savings on to the ecommerce platform or by raising MSRP or reducing discounts to boost retailer profitability for products with low price elasticity. More profit per conversion translates to more total contribution profit. Second, brands can improve conversion by changing the content or by altering the offer itself. Higher conversion per 1000 impressions means more volume and thus more total profit.
For brands to gain the most visibility, both of these factors should be addressed. Products with high conversion but low profitability will still struggle to obtain favorable placements for popular search terms. Similarly, a highly profitable product that nevertheless converts at a low rate will also struggle since low conversion is indicative of a poor shopper fit.
Share of voice can also be improved by increasing ad spend for search terms relevant to a brand’s offer. Using sponsored ads enables brands to proactively take control of their strategy, targeting specific use cases and shoppers to gain the upper hand.
Benefits of Share of Voice
Why is share of voice a great KPI? Let’s compare. ROAS may perform well as a backward-looking indicator of ad spend efficiency, but it is less suited to determine where a brand’s dollars should be spent in the future. Enter share of voice. Unlike ROAS, share of voice is a leading indicator of sales. If a brand’s products are more visible via relevant content, high contribution profit, and a robust ad campaign, shoppers will gain awareness of the brand and purchase it more frequently. Brands can more easily chart a path to growth with a smart share of voice strategy that incorporates both organic and sponsored results.
Tracking share of voice allows for more insights into opportunities on the digital shelf that a brand might be missing. The more nuanced the approach, the more powerful the results. Some examples are as follows:
- By tracking which keywords or rising and falling, brands can uncover opportunities to boost share of voice and grow incremental sales.
- By keeping a close eye on the competition’s keyword strategy, brands can steal their momentum.
- By constantly experimenting and tweaking their strategy, brands can harvest powerful, new keywords and reach more shoppers.
- By adjusting to search term changes in real-time, brands can ensure their ad spend remains as efficient as possible to protect their ROAS.
Compared to ROAS, share of voice is an inclusive metric also capable of leveraging powerful insights that can chart the course for a brand’s future.
CommerceIQ makes it easy to track, analyze, and even automatically align your retail media strategy with constantly changing conditions to maximize your Share of Voice for the lowest possible cost. Click below to learn how we helped one vitamins and supplements brand improve its top 3 share of voice while also increasing ROAS.