Any ideas on how to measure the effectiveness of eCommerce ads?

Some things we need to know:

How long have you been running ads, how are you tracking the response, and are you making more in net profit that you're spending?

track your customer visits, the time they spend on your page, sales from new customer

ROAS is the only measurement that matters to me. Did I spend more on ads than the profit I derived from them over the lifetime value of those customers. If so, I stop those ads. If I made more than I spent, I'll run the ads until they don't.

If you are running an ad for say a necklace... you should have a specific landing page / product page for that ad...so you know exactly how many people hit the page and how many people buy - this is in my mind the perfect world.

Anything less than that and you then follow Dave's advice ( solid advice )

The issue here is when you are running say multiple ads - in in a perfect world you are sending each ad source to its own lander, so you can track each specific ad traffic source, vs just one lander and multiple sources... this gives you a idea of how effective things are, but not a exact Source A is not selling and Source B and C are selling... hey I need to drop A or change A to perform better.

As an example right now I am running a facebook ad(s) with 21 segments - meaning there are 21 separate ads being served to different demographic targets. each and every one is going to its own lander page. I am not relying on facebook analytics of clicks etc... I know based on my own analytics, who is clicking what and from where, and very clearly knowing of that, who is buying.

This method removes any and all of the guess work out of the equation - and allows you to optimize your efforts - separating what works from what doesnt work, and allowing you to test and change what isnt working into something that does.

Hope that Helps!

I am not a digital marketer myself but as small shop owner who has run ads to promote business I can say that the best method to analyse if your ads is improving the conversion rate is to compare the ad price verus the number of sales in terms of the revenue. If the revenue is greater that the ads price then surely it is working. The ads will generate traffic but increasing the sales is another point. Measuring the success by revenue is one of the methods I want to adopt.

Various metrics are used to determine how effective your eCommerce advertising campaign is. Cost Per Acquisition (CPA) is a measure that is not affected by abandoned carts but considers total marketing, and advertising expenditure as well as the number of paying customers.

Cost Per Acquisition should be compared to previous periods and industry averages to get a fair picture of your business. Also, the Return on Sales (ROS) measure can be useful in analyzing the overall effectiveness of your digital marketing campaign.

To determine the effectiveness of your advertising campaign, it is necessary to know what you want to achieve with the ad. Next, you should determine what type of information you need to analyze the results. Event tracking is a useful way to do so.

For example, you can calculate the conversion rate from viewed to purchased products by subtracting the number of completed orders from the number of viewed products. Similarly, CPC enables you to see how many unique visitors click on the ad and click through the ad.

There are couple of methods how to measure the success of all your e commerce activity. For this measurement, marketers use several vital variables: customer acquisition cost (cac); order value (or average order value); bounce rate; social media engagement. These aren't all the metrics, but I used these ones, they helped me a lot.
As for the CAC and AOV the CAC is measured by the total amount of sales and for a certain period, dividing the number of new acquired clients. AOV - the division of your total revenue and total amount of orders for a certain period.
Bounce rate shows the number of people who entered your e commerce website, and vanished. 45% is the average for e commerce business, try to keep it on this level or lower.

Social media engagement shows you how much traffic you have managed to attract due to social media, significant variable, but not always, in case your ad campaign doesn't imply using social networks.

If your CTR is high, then this is a good indication that your content is effective.