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This post was originally published on Incubeta’s blog.
Seeing stores close and all the doom and gloom on the news, you can completely understand why brands are becoming increasingly panicked about the state of their business and as such are rethinking their media strategies.
Industries like travel and entertainment have been forced into shutting up shop as leaving the house becomes more and more discouraged around the world. The retail world, however, is a bit more of a mixed bag; some verticals are in decline, while others experience somewhat of a mini-boom, but with constantly changing governmental regulations, can we expect this to continue?
As the situation develops, with new policies and fluctuating consumer confidence, how can you promote your businesses while minimizing risk? We’re going to take a look at 5 things businesses can be doing right now to improve efficiency and ensure the profitability of marketing campaigns, both in the short term and the long.
One of the most obvious steps to guarantee return on your ad spend is to factor product margin into your campaigns across all levels. This may seem obvious – of course you’d want to promote your higher-margin products more aggressively – but you’d be surprised how few businesses are set up to do this.
Pushing the cost of producing each product into the product feed allows you to make more intelligent business decisions throughout your marketing efforts. You can optimize Shopping campaigns towards profitability and you can ensure high-margin products are the ones getting displayed in carousel creatives.
This is hugely valuable in any situation, but with the profitability of your campaigns under a microscope, particularly with a lot of retailers running various promotions in an attempt to liquidate their stock, it becomes even more important now. Incorporating margin into bidding and creative decisions should be one of your highest priorities, but it’s also important to incorporate other factors. Does one product happen to have a higher lifetime value than another? Does a particular product often lead to sales of complementary goods and increased basket value? These are all things you should consider when implementing your product bidding strategies.
In a similar vein, incorporating stock levels into campaigns is vital to ensure campaign efficiency. Platforms such as Google will help you to stop running ads for individual products which have run out of stock, but should these campaigns have been shut off before this point? Do you want to be wasting your ad spend on a product that’s only available in an XXXL that no one wants to buy? Conversely if a product is selling itself via organic channels, do you want to be using up valuable budget promoting these products?
Product stock levels can even be used for goal setting and planning. If liquidity is an issue for your business as the economy begins to slow, you can also leverage your stock levels to dictate the ROI goals for various products, loosening efficiency targets for product ranges with a stock surplus to help sell them quicker.
Pay It Forward
Since the start of Covid-19, many advertisers have had to completely rethink the way they use their resources. As brands reduce spend in certain areas they may now have some saved ad spend as well the human resource that was required to deliver it. How can businesses repurpose that resource, in a manner that will benefit the company in the long run?
This is a great opportunity to pay your money forward, where possible, to longer-term success. We’re seeing brands invest their spare resources into training and upskilling their staff, investment in bigger SEO and CX projects, and even running in-depth Analytics projects. These kinds of activity mean that when business returns to normal, ad spend is being utilized as efficiently as possible.
External Data Sources
We as marketers have a tendency to believe that any change in campaign performance was driven by the little tweaks we made, but this couldn’t be further from the truth. More often than not, a big swing in performance is down to an external factor beyond our control. Being able to factor those drivers of demand into campaigns will allow for far more efficient use of ad spend.
For instance, performance can live or die based on where competitors prices are set. There are tools available that will collate the pricing levels of your competitor set, benchmark against yourself and push this data back into your feed – allowing you to make the most of your comparative advantage.
Demand for some products is largely dependent on things like the weather or even sports schedules. Sadly for all of us, weather and sport are most likely not having quite the same impact in the current climate, but again setting up campaigns to ingest this sort of data is another example of long term projects that can be tackled now!
The final thing to explore when seeking profitability from campaigns is actually oft-overlooked, and that’s pure performance marketing. Continuing to stump up the money to meet minimum spends or committing to platform fees for top-of-the-line campaign management technology can be a daunting prospect during times like these. Performance marketing offers an alternative. By engaging partners on a pay-per-sale format, you can guarantee marketing campaigns at a risk-free, fixed return on investment.
Affiliate marketing has often been dismissed as nothing but cashback and voucher codes. Today though, you can get everything from search to display to social campaign management at fixed costs per acquisition (CPAs). In this arrangement, all media costs are covered upfront and brands are only charged a pre-agreed commission based on total revenue (or action) driven. Not only does this give peace of mind in uncertain times but it also incentivizes your partner to drive the best results they can within that fixed ROI goal, as the more sales they drive the bigger their fee.
Just like the more traditional agencies of the world, many businesses operating in this space utilize elite technology like the Google Marketing Stack or Kenshoo. Where they differ is that performance agencies often cover these costs themselves too, and also regularly include services like feed management or creative execution free of charge as it’s in their interests to do so.
This sort of model might not work for everyone and now may not seem like quite the right time to switch over a particular channel. However, the beauty of the performance model is that it can act very much as an extension of your current campaigns. Brands can engage agencies on a performance model to support territories or channels that aren’t getting the attention required and often on shorter-term contracts.
These are incredibly uncertain times for advertisers, and for a lot of brands, marketing their business might be a luxury they don’t think they can currently afford. Hopefully, by implementing some of the steps above, marketers can return to trying to grow their businesses, safe in the knowledge their campaigns are driving effective, profitable returns.