How ecommerce brands can optimize advertising in a recession
- To ensure economic stability through the recession and in the long-term, brands must optimize their digital marketing strategy.
- While it’s natural to decrease marketing spend during times of change, average acquisition costs are decreasing for many brands.
- During a recession, companies will often see lower CPCs and CPMs as well as higher conversion rates.
- While consumers are at home during the coronavirus pandemic, social, mobile and OTT usage have increased; advertisers should invest in these channels as a result.
- As companies update marketing budgets, understanding the overall business impact of marketing and understanding attribution is increasingly important.
The coronavirus pandemic has quickly resulted in one of the worst economic downturns in U.S. history. Presently, pure-play ecommerce companies with strong financials and differentiated products are doing well in comparison to companies with unprofitable or break-even business models.
Furthermore, companies with strong distribution facilities and good supplier relationships are well-positioned for recovery and success.
Nonetheless, the massive change to consumer behavior is likely to weed out 10-20% of digitally-native vertical brands.
With business stability on the line, marketers must identify proactive steps to ensure economic stability in the long-term, and one of the first steps they can take is to adapt their digital marketing strategy.
How to optimize advertising
Consumer behavior changed rapidly this year as people adjusted to stay-at-home measures, and it will continue to shift as businesses and workplaces take steps to re-open.
Marketers must evaluate their advertising campaigns with the consumer in mind. They can take the following steps to find success:
Evaluating marketing spend
It’s natural for ecommerce brands to decrease marketing spend during times of change. For some companies, these measures are prudent.
Those that have ample inventory, however, may see average acquisition cost decrease as competitors reduce spend on channels like Google, Amazon, and Facebook.
In the midst of a recession, companies will often see lower CPCs and CPMs as well as higher conversion rates.
Investing in social media
Social media usage has risen significantly, and marketers should shift investments toward ads and creative, particularly video, that do well on social.
“Considering that consumers around the globe are already leaning into the growing array of content options and channels, a 60% increase [in social media usage] is significant,” according to a study by Nielsen.
Facebook-owned WhatsApp experienced a 40% increase in usage due to the COVID-19 pandemic.
In addition to scrolling and posting on social media more often, consumers are streaming more content at home. HBO reported that “the percentage of people binge-viewing series has increased 65 percent, while movie watching is up 70% on HBO Now.”
Brands should take advantage of OTT advertising due to the increased available inventory and lower eCPMs.
Instead of opting to use set CPMs, brands can benefit from advertising programmatically, making use of real-time market shifts that result from lower streaming costs. As they invest, they’ll need to make sure they fully understand attribution in OTT channels.
Providing a seamless mobile or in-app shopping experience is essential as consumers increase mobile usage while home.
To optimize for mobile, brands should make sure ecommerce sites are responsive, have a site speed under three seconds, and present an ideal user interface for mobile shopping.
As they evaluate data to understand consumer demand, teams can also invest in software to help automate shifting advertising in response to consumer trends. In addition, mobile bid strategies should be evaluated to see if it’s worthwhile to invest in mobile ads as usage increases.
As companies update marketing budgets today and as the recession continues, understanding the overall business impact of marketing is increasingly important.
Another best practice during this time of uncertainty is to use incrementality testing to best estimate allocations, in addition to traditional multi-touch attribution tools.
Those who succeed will be those who are prepared
Unfortunately, we are only at the beginning of our current recession. The companies that succeed will be those that put a plan in place laying out distribution and marketing investments through this crisis.
To make the most informed decisions, marketers will need to understand how their audience’s behavior is continually changing and identify proactive ways to update their advertising investments accordingly, investing in social, mobile and OTT, while monitoring attribution.
Jason Roussos has over 20 years of experience in business development, ecommerce, technology, B2B and startups. As the SVP of Strategy at Adlucent, Roussos is focused on helping clients improve both revenue and profit growth through innovations in technology and digital marketing strategy.
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