COGS — Cost of Goods Sold — A Dream Come True

Analytics · By On · 2 Comments

The Cost of Goods Sold (COGS) VISTA solu­tion is one of my favorite solu­tions because it gives con­text.  As we all know data are basi­cally use­less with­out con­text and rev­enue is no excep­tion.  What would you rather have A) $1,000 in rev­enue or B) $100,000 in rev­enue?  Ok, I am obvi­ously going to have a twist here. Here is more con­text, prod­uct A, with $1,000 in rev­enue only costs $1, whereas prod­uct B costs $99,999.  I am sure you under­stand by now that Com­pany A is mak­ing more money.   They are net­ting $999 where Com­pany B is net­ting $1.  So in con­clu­sion data with­out con­text might lead you in the wrong direction.

The Solution(s):

Adding con­text to data is obvi­ously impor­tant but how to do it is not as obvious.  There are three solu­tions that will solve the prob­lem of get­ting COGS data into your Omni­ture reporting.

  • First, you can tag the pur­chase page with an incre­men­tor event that will hold the COGS of the prod­uct. The main prob­lem is a web savvy user will be able to see that information.
  • Sec­ond solu­tion, is to tag the pur­chase page the same way as you would in the first solu­tion, but instead you can tag with an encrypted value. And you can request a VISTA solu­tion to decrypt the encrypted value.
  • The third solu­tion is the COSGS VISTA Solu­tion which will act in the same way as the first and sec­ond solu­tion but every­thing is han­dled server side. It requires no change to your implementation.

COGS VISTA Solution:

The COGS VISTA Solu­tion is a DB VISTA solu­tion that auto­mates plac­ing an incre­men­tor event into hits with a pur­chase event.  Let’s talk about what you get after every­thing is setup.

The below image is an exam­ple the Traf­fic Sources > Search Key­words — All report.

There are three met­rics in this report that are not nor­mally available.

  • Cost of Goods — Is the cost of the goods sold where the user searched for a key­word and made a pur­chase because of it.
  • R — COGS — Is the rev­enue minus cost of goods sold.  This met­ric is your basic net profit met­ric.  You can use this met­ric to ana­lyze the true income you get from each keyword.
  • Gross Mar­gin Perc — Is the gross mar­gin per­cent­age.  In other words, it is the per­cent­age you are prof­it­ing from the key­word.   If you take a look at the exam­ple report you can see “pda” has a 73% mar­gin.  That is def­i­nitely a search term you want to put more resources into.

Below is a sec­ond report Search­Cen­ter > Campaigns.


Again, this report has met­rics that are not nor­mally avail­able.  Also, this report only works if you are a Search­Cen­ter customer.

  • ROAS [COGS] — Is your return on ad spend tak­ing into con­sid­er­a­tion your COGS.  This col­umn will be extremely valu­able as you will be given a more holis­tic view of how your ads are per­form­ing. Clients that imple­ment the COGS VISTA solu­tion often find cam­paigns that are pro­duc­ing neg­a­tive rev­enue when they look at the ROAS[COGS] met­ric.  This met­ric is cal­cu­lated as such (Rev­enue — COGS ) / Key­word Cost.

The two reports pic­tured above are only a cou­ple reports out of hun­dreds you can pull that uti­lize the COGS met­rics.  There are sim­ple reports such as the prod­ucts report, and there are com­plex reports such as female users who came from a search engine who posted a comment.

If there is one point to remem­ber from this entire post it is this:

The COGS VISTA solu­tion will give you a more com­plete view for all reports that involve revenue.

What is needed from you:

The COGS solu­tion needs you to pro­duce a table with the prod­uct ID and the cost of the prod­uct.  This can be done man­u­ally and if you have a lot of prod­ucts or have prod­ucts that change often then it can be done pro­gram­mat­i­cally.  There are a lot of com­plex sys­tems out there so it is dif­fi­cult to judge sim­plic­ity, but in my expe­ri­ence with my web­site  it took me no more than two hours to set up a script that would update the COGS table once a day.   Your engi­neer­ing depart­ment should be able to set up a sim­i­lar script in a rea­son­able amount of time.

As always, post your com­ments or e-mail me at pearcea (at) adobe​.com.  It is your com­ments and e-mails that keep me post­ing and give me ideas for future posts.

Other posts you might be inter­ested in:

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  • http://www.rumble.net/ Simon Rum­ble

    Yep, been after this one for a long time! For those of us in subscription-based indus­tries (tel­cos etc) the next step is to post back actual mar­gins on a per-customer basis. Then you can track life­cy­cle cus­tomer value all the way back to cus­tomer acquisition.

  • http://trip.com Abhi­lash

    Hi,
    We are using COGS VISTA rule to process the rev­enue data. The pri­mary goal of using VISTA is NOT to pass the rev­enue data over the web. (Ex. s.product = “;id;1;price,”;s.tl();) and Vista is able to achieve the goal.

    But, we have been using the stan­dart event ‘pur­chase’ and the default name of that event is ‘Rev­enue’ and the Type is ‘Currency’

    The cor­resond­ing event used by VISTA is ‘event7’ named as ‘Custom7’ and the type again is ‘Currency’.

    Now we need to assign the value of this ‘Cus­tom 7′ to ‘Rev­enue’ so that the cur­rent reports will start read­ing the data from the new VISTA vari­able and we can stop send­ing the rev­enue data over the web.

    If it is not pos­si­ble to do this assign­ment, we will have to change all our cur­rent reports to use ‘Cus­tom 7′ and that will be a painful process, as we have mul­ti­ple users and mul­ti­ple reports.

    Can any­one help us in this regard?
    Thanks
    Abhilash