Rent is the new performance marketing spend

Translating CPMs and CPCs to brick and mortar

The tl;dr

1. As digital brands slowly graduate to being truly omnichannel, the metrics and language we use to measure offline channels will inevitably change

2. E-commerce and digital marketing strategists often examine their spend’s performance by measuring CPMs and CPCs

3. The brick and mortar world does no such thing: sales per square foot and 4-wall contribution are the metrics of choice

4. But this will change as DTC leaders turn their attention to offline retail

5. This shift in channel attention, by these leaders in particular, will bring a new perspective to measuring rent’s efficiencies

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As digital brands slowly graduate to being truly omnichannel, the metrics we use to measure offline retail will inevitably change

And with the big shift coming from e-commerce brands, I suspect that we’ll start seeing more and more metrics from the e-commerce world getting applied to the brick and mortar side of things, if only to accommodate a new breed of offline retail leaders’ need for a familiar language.

There are three critical e-commerce metrics that are commonly used to measure the efficiency of spend to drive growth, each representing a deeper and deeper part of the customer journey:

1. Top of funnel:
   CPM or CPI: Cost Per 1,000 Impressions → measures cost of driving awareness
   = marketing cost / impressions x 1000

2. Mid-funnel:
   CPC or CPA: Cost Per Click or Cost Per Action → measures cost of first engagement with brand in that event
   = marketing cost / clicks or measurable actions

3. Bottom of funnel:
   CAC: Customer Acquisition Cost → measures cost of acquiring the customer (ie cost of converting them)
   = marketing cost / new customers

As digital brands expand into offline channels, you can bet that these metrics will make their way to stores. Ultimately stores and websites, while different channels, should be viewed with similar metrics in an omnichannel business. In both cases, you should understand the cost of getting eyeballs, driving engagement, and ultimately conversion — within and between channels so that you can allocate your growth dollars in the most efficient way possible.

To apply these traditionally-digital metrics to brick and mortar, we need to redefine the performance marketing inputs to fit the offline equivalents for each of:

• Marketing cost

• Impressions

• Engagement

• Acquisition

And subsequently identify the means to capturing the relevant data points for those inputs. With modern technology, it’s actually gotten pretty easy. Here’s how I break it down, some of the technologies that help you capture that data, and a case study example (using real — but anonymized — data) of how to use these parallel metrics to refine your real estate strategy.

The store “CPM”

Starting from the top of the funnel, we can translate e-com CPM to store “CPM” per the below: