UNCS

  ASSIGNMENT

We started cooperating with the UNCS fashion brand in March 2019. The main initial goal was to increase sales from e-commerce, primarily focusing on the acquisition of new customers. To begin with, we took over all paid channels (Google Ads, Sklik, Facebook Ads, Instagram) with the objective to focus on scaling sales.

  APPROACH

• We completely reworked the structure of search campaigns and added hundreds of new key words.
• We gradually made the PLA (shopping campaign), in which only a few products were represented, one of the most powerful advertising formats.
• We put much more emphasis on remarketing and displaying ads according to the customer’s purchasing cycle.
• We began A/B testing of various graphic and text creatives in display campaigns. From earlier loss-making campaigns, we moved to a slightly positive ROI.
• We completely redesigned the dynamic product catalogues on Facebook, thanks to which we dramatically increased sales from FB Ads.
• We added advertising campaigns in Sklik – from classical search campaigns through classis and dynamic remarketing and branding.
• We started to continuously include brand campaigns, competitions and separate communication campaigns according to a predetermined plan (Black Friday, Valentine’s Day, summer, Christmas, etc.).

However, with regards to the specific target group and based on the data, we found out that a very fast growth of the e-shop would be only possible at higher costs, in this case by essentially sacrificing the entire marketing margin.

In case of all our clients, we pay attention not only to the growth of turnover but above all to the overall profitability (for e-commerce this is doubly true). Which means that at the end of the year, the client has the highest possible pre-tax profit (or operating profit) in the income statement.

UNCS has a similar view, which is why, after the first 3 months, we significantly refocused not only the scaling of the turnover but also towards a thorough profitability control. Since 2020, we have created for UNCS a tailor-made system for measuring costs and profitability which is based on historical data and internal plans for 2020 and draws data directly from the client's accounting. The process was as follows:

• We analyzed and determined the cost structure, its development over the last year and the plan for 2020.
• Based on the data, we calculated the entire marketing budget, the maximum CPA for each activity, and the monthly budget for each channel and ad format.
• The entire strategy is based on the required profitability at the EBITDA level which the client wants to maintain.
• Thanks to this, we know exactly how much and where we can spend money, how much sales we have to generate (and what the margin must be) to maintain the required profitability.
• We manage the entire marketing simply, using 4 metrics. For a client to ascertain how we are fulfilling or not fulfilling the plan, 1 metric is sufficient - Margin on Marketing Investment Ratio (MIR).
• Thanks to MIR, the client knows immediately whether we are meeting / not meeting the required profitability and how much marketing activities have cut out of the client’s margin.

  RESULTS

During our coopration in 2019 we achieved the following results:

• 232,68 % gross margin return on investment (media and all costs for the agency included in the calculation)
• 161,80 % marginal return on investment on margin
• Year-on-year revenue growth from Google Ads campaigns by 134,61 %
• Year-on-year increase in sales from Facebook Ads by 424,42 %
• Year-on-year increase in sales from Sklik by 673,18 %

With LCG New Media, for the second year in a row we have managed not only to increase sales, but also to ensure overall profitability in e-commerce. In addition to the campaign and execution parts, I also appreciate the proactive approach to creating a system for profitability control, working with our internal data and a generally different approach than we were used to with other digital agencies. We are also very satisfied with the reporting system where we have all the data together in one place and we understand all the contexts.

Ing. Nicole Kořínková, MSc.
Social Media & Project Manager