By Mike Shapaker, CMO of ChannelAdvisor
Marketing gurus have spent much time examining long and short-term strategies for brands in the good times, as well as the bad. During a downturn, marketers must balance efforts to pare costs and shore up short-term sales against investments in long-term brand health.
For e-commerce brands of all sizes, digital marketing is a critical component of the marketing mix and heavily influences the future success of a brand.
The decision to either boost or reduce marketing can therefore be a difficult one. Advocates will argue that it’s the perfect opportunity to ramp up spending; with less competition advertising becomes cheaper and has greater potential to capture a new audience. Conversely, you may look to steady the ship and ensure you have enough money in the bank to cover other key areas of the business to fight future headwinds.
When budgets are tight, how do brands make the most out of what remains? In order to thrive in the new order, brands must decide whether to adopt an offensive or defensive marketing strategy. Both of these paths require businesses to adapt rapidly to changing consumer behaviour.
Here are key considerations for each strategy…
For brands that have reduced their advertising investment, the priority is maximising impact and profitability from what is left. An important first step is to reassess marketing spend at the product level, eliminating or reducing spend for products with low inventory levels, low contribution margins, and/or poor return on ad spend (ROAS). This will allow you to maintain or even increase investment in ad programmes that are contributing positive ROI to the business.
Next are techniques to help optimise campaign performance. Dayparting and campaign scheduling are essential to ensure you are spending and bidding in a smart, time-efficient way. Brands can do this by automatically activating campaigns and changing bids during hours when buyers convert, and pausing when they don’t. Audiences can be refined and segmented based on important actions or non-actions that they take on your website and product pages to encourage an ongoing relationship and future conversions. Other essential consumer insights which you can build upon include product page views, time spent on page and whether baskets have been abandoned.
Prompting your audiences with additional signals, such as recommending other products customers added to cart, categories visited or building micro-conversions (signing up for newsletters or using features like “try it on”) can also be great ways to improve conversion rates.
For brands that haven’t had their budgets severely cut, disruption can create new opportunities for expansion. As competitors reduce their budgets and scale back advertising strategies, look for opportunities to expand into high-yield advertising spaces on Google or in retail media networks. Reduced competition can often result in lower cost per click for ads. For brands on the offensive, now is the time to take advantage of tools like Auction Insights for Google to identify the gaps around products you sell.
As consumer behaviour and the marketing landscape shift and fluctuate on an almost daily basis, it’s especially important to narrow the performance reporting window across all campaigns. By doing this, budgets can be reallocated in real-time to prioritise the highest-performing products and channels. This will allow you to work proactively, rather than seeing what you should have done after the fact.
Understand the customer
Whatever strategy brands decide to follow, understanding the consumer’s new demands and behaviours should be the starting point. Brands can observe how their own product performance has shifted, as well as global data trends to see what products their customers are now demanding and redirect marketing spend accordingly.
Brands also need to recognise the increasingly complicated and ever-changing customer path to purchase from start to finish. Simple tactics like ensuring product content is up to date and consistent (not to mention, thoughtful and authentic) across all channels and that products are in stock on key sites can ease consumer hesitancy as wallets tighten, increasing the odds of consumers buying from you and not from your competition. Shoppable media and dynamic ads also ease the consumer journey by making it easier for consumers to find in-stock buying options directly from an ad, including close alternatives if a particular product option is out of stock.
With signs suggesting that the economy may struggle over peak, brands need to be prepared for a number of different scenarios. Rather than repeating previous mistakes, you should review what has worked well in the past, especially from the high-performing channels and advertising campaigns from last year, and look at what opportunities have opened up since. By focusing on what was successful previously, brands should have a clearer idea on what strategies to utilise, no matter the budget.