Scenario Presentation

Question 1
You work at Sports Basement and are selling bicycles online.
You are willing to pay $100 in marketing costs for each bicycle you sell.
You have a landing page (PDP) that converts at 10% to the checkout page.
The checkout page converts 5% of visitors.

How much should you pay Google for each ad click?

Question 2
Sports Basement decides to test a new landing page.
Early results show the PDP improves the checkout by 10%.
However conversion from checkout to purchase falls by 10%.
Assume the early results continue to follow this trend reliably for the remainder of the test.

Part A: Will this new landing page be better than the previous page or not?

Part B: If the pages are different, how many site visitors will be needed to reach a 90%
statistical significance?

Part C: With the new winning page, how much should you pay Google for each ad click?
Did it change?

Question 3
After giving it more thought, Sports Basement decides that having a flat $100 marketing cost
goal for every bike doesn’t make sense.
Instead Sports Basement decides to use an attribution model that is weighted toward the top of
the funnel, with awareness drivers receiving more credit and last touch receiving less credit.

Assume that with this new attribution the optimal budgets are determine to be:
- Brand spend is 25% of the search budget and 75% of search sales.
- Non-brand is 75% of the search budget and 25% of search sales.
- Blended cost per bike was $100.
- All other touches come from non-search tactics and have a $100 marketing cost.

Part A: What is the acceptable cost per bicycle sold for branded search?

Part B: What is the acceptable cost per bicycle sold for non-brand search?