At the height of the COVID pandemic the might of ecommerce was laid bare. In November 2021 the UK saw a total of 321 million ecommerce transactions, according to Statista. That was a 19% increase compared to November 2020.
With such a colossal number of conversions, businesses in the sector collectively raked in huge revenues with relatively little effort. But this is only one side of the story; the ecommerce boom also led to a significant increase in return rates, which adds considerable logistical and cost implications, and eats into the bottom line.
In more recent times, economic and political uncertainty is creating a delicate balancing act for the ecommerce industry. Cost of goods is increasing whereas consumer confidence is decreasing, so businesses need to rethink their marketing strategy and drive incremental gains.
In a digital environment that’s built on data, sorting the signal from the noise is key. But it’s something organisations often fail to optimise. Instead, the cacophony drowns out the key note you’ll need to identify to make gains.
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Connect Marketing and Business Goals
Part of the reason for this is a tendency for companies to view marketing objectives and business goals in isolation when connecting them should be high on the corporate agenda. Marketing is rarely held accountable beyond the initial purchase and many advertisers are still optimising for revenue.
The move to more automated campaigns has changed the marketing landscape. AI is central to powering digital ad campaigns — and we can be certain there’s much more innovation to come — but its black box nature leaves many advertisers struggling to optimise campaigns like Performance Max. This makes bidding for the right signal even more important as it becomes a key lever for performance.
Google recently announced advertisers will soon be able to optimise for profit and to switch between profit and revenue optimisation with no impact on performance. This allows advertisers to take a step closer to connecting marketing effectiveness with business goals and make smarter strategic decisions. I’m sure it won’t be long before Meta and TikTok are offering a similar solution.
Three Ways to Boost Digital Ad Performance
Bidding on the right signals will help fuel the bottom line. Aside from profit, here are three other ways you can leverage first-party party data in bidding algorithms:
- Beyond average return rates: High product return rates can cripple your margins. While many platforms suggest adjusting conversion values based on average return rates, the approach is simplistic and overlooks variations across markets, product categories and even seasons. Instead, train the algorithms with granular return rate data to make more relevant conversion value adjustments.
- New customers matter: Customer loyalty is valuable, but neglecting new customer acquisition is a recipe for stagnation. Traditional strategies might inadvertently prioritise existing customers due to their conversion history and propensity to buy. Tell algorithms new customers are worth more by adjusting their value.
- Stock management: Algorithms love a good seller, but they can over-promote items with low stock. This harms both sales and customer satisfaction. Conversely, overstocked items can eat into profits. The key is early detection and being proactive. Integrate data into your algorithm that will identify potential stock issues and adjust the bid strategy accordingly. Reduce waste on low-stock items whilst helping to clear high-stock items.
Send the Signal and Watch the Results
Data is the catalyst of more effective algorithms. In a world powered by AI, quality data and the insights driven from it can be the difference between beating or lagging behind the competition.
Ecommerce marketers must learn how to leverage first-party data effectively or risk being outmaneuvered.
To get started, the first ingredient is to create solid data foundations so that your data — a unique strategic asset — is ready to be deployed. The second ingredient is your imagination, which is the only limit to how far you can go in activating data to keep your marketing impact, and business growth, ahead of the competition.
Jess Dickenson is Managing Director of Precis Digital and is responsible for leading the agency’s growth in the UK market and delivering innovative and integrated marketing solutions to clients. Precis, a data-driven digital marketing agency founded in 2012 by three former Googlers, keeps its globally based clients at the forefront of marketing by taking an integrated approach to strategy, media buying, data activation and creative. Its digital experts act as strategic partners for growth and digital excellence, while its proprietary technology, named Alvie, packages some of the most important solutions in a marketer’s toolkit for the agency and in-house teams to use: from data export and reporting to predictive modelling, bidding signals and attribution. Precis works for major fashion brands such as COS, Arket, &Other Stories, Acne, Reformation, Alexander Wang, Anine Bing, NN07, Nudie Jeans, Fjällräven as well as many other industries.
