Many eCommerce companies experienced serious success during the pandemic. Growth jumped by 17.1% from 2020 to 2021, as more consumers switched from in-store to online shopping.
But as recession approaches and customers spend less, many retail businesses are considering cutting back. In 2022, eCommerce growth almost halved, plummeting to 9.7%. That’s partly why Amazon, the world’s largest eCommerce retailer, is planning to cut 10,000 jobs in 2023.
Staying in control of your marketing budget can help you avoid making drastic cost-cutting decisions. There are lots of ways to generate more revenue without spending more — it’s all about optimising your eCommerce marketing efficiency. This can lead to real-terms growth, even in a recession.
In one of our recent webinars, Google Ads expert Miles McNair outlined why now is the time to leverage automation and optimise your paid media campaigns to do more with less:
You can see based on the last three, four, five years that [paid media] is getting more automated. So how can we make that mental switch and make the most out of it? That’s what I’m trying to do with my eCommerce clients, and the results speak for themselves – they keep getting better.
In this article, we’ll explore six ways you can boost marketing efficiency at your eCommerce company, including:
- Collecting and using first party data
- Creating effective retargeting campaigns
- Getting more from automated campaigns
- Optimising your landing pages
- Improving product management workflows
- Eliminating ad fraud
Marketing Efficiency Ratio
Understanding the marketing efficiency ratio (MER) metric will help you get more from your eCommerce marketing budget. Your MER gives you an overarching view of your total marketing spend and revenue. Unlike ROAS, there are no problems with attribution — your entire spend is under one umbrella, giving you a clear picture of your return on investment. Use the simple formula below to calculate your MER:
Total revenue ÷ total paid media spend = marketing efficiency ratio.
This metric gives you more control over your paid media spend, and helps you make smarter spending decisions without relying on third party reporting platforms.
It isn’t meant to guide your paid media-buying decisions at the ad or campaign level. Instead, it helps you understand marketing costs as a multiplier of revenue generation. For example, if you spend £2,000 across paid channels and generate £10,000 in total product sales your MER would be 5 (or 5x spend).
So what can you do to push your MER in the right direction? Let’s dive in.
1. Collect More First Party Data
Privacy laws are getting stricter. Regulations like GDPR mean that companies can no longer freely collect and share data as they did in the not-too-distant past. This is great news for individuals. But advertising platforms must now restrict the data they share with advertisers – which means you won’t be able to rely on third party data for much longer.
After several postponements Google is now set to ban third party cookies in 2024. So advertisers have just one year to start collecting their own first party data for marketing purposes.
This may seem daunting, but it’s a great opportunity for eCommerce businesses. Collecting first party data now will put you in a strong position when Google eventually goes cookie-less – but it can also help you improve your marketing efficiency right now. You have the chance to collect the data that’s important to your company. That means you can:
- Segment your customers into accurate personas
- Create more targeted content, campaigns, and offers
- Build better relationships with your customers.
Cultivating relationships will be key to getting through the recession. By collecting customer data through quizzes, social media polls, and other engaging strategies, you can better understand and connect with your customers, ultimately improving communication and building a stronger brand following. You can collect first party data by:
- Asking users if you can use their data at the point purchase (e.g. mailing list sign-up)
- Conducting social polls — find out what your customers pain points are and what they want.
- Asking for reviews — learn what customers like and dislike about your products and service.
- Using offers and discounts to incentivise customers to provide extra information — some retailers offer birthday discounts or freebies in exchange for the customer’s date of birth.
2. Double Down on Retargeting
It’s easier, quicker, and cheaper to reach people who already know your brand than it is to continuously convert new customers. One study found retargeting encouraged almost 15% of eCommerce site visitors to return within a month. So retargeting should be a key tactic for retail businesses looking to improve their marketing efficiency.
Retargeting builds brand awareness, and enables you to reach people who have already shown some interest in your products. Even if they don’t make a purchase at the point of seeing the ad, they’re more likely to remember you if they’ve had repeat exposure to your brand via retargeting campaigns. So when they’re ready to buy, you’ll be the brand they search for.
Retargeting even works without third party cookies. You can also use it across all your paid media platforms, including Google Remarketing, YouTube retargeting, and social media sites.
3. Optimise Your Automated Campaigns
Automation is the future of paid media marketing. That means marketers must embrace Performance Max and other automated campaign types to improve eCommerce marketing efficiency.
The earlier you embrace Performance Max, the sooner you’ll see results. Google Ads specialist Bob Meijer has had great success after experimenting with its full capabilities :
For my eCommerce clients, who are mostly focused on transitioning from smart shopping to Performance Max, I ran product listing ads only in my PMax campaigns. I didn’t add any assets at all, to make sure the transition to Performance Max was smooth. That went OK — I saw the same results as the previous smart shopping campaigns. Then I started experimenting with the full capability of Performance Max — adding all the assets like logos, images, videos, headlines, and additional product feeds — and that’s when I started to see great results.
Successful PPC is a process of continuous refinement and optimisation. To see better results with an automated PPC strategy, you’ll need to invest time in optimising every element of your campaign.
Your data also needs to be clean and reliable. Automated campaigns are initially driven based on historical conversion data, so feeding the algorithm with low quality inputs will give you poor results. That’s why you need the right conversion tracking systems in place before you get started with automation.
A platform I regularly use is ProfitMetrics.io — they’ve created a feature called ‘Conversion Booster’. It combines Google tech with offline conversion tracking. By leveraging these kinds of tools for my clients I improved my conversion insights by as much as 20%. That’s huge when you’re using Performance Max. It gives you additional conversion volumes the algorithm can learn from to better optimise its bids.
Read our webinar write-up to get more Performance Max optimisation tips from Google Ads experts Bob Meijer and Miles McNair.
4. Optimise Landing Page Conversions
An eCommerce landing page should compel people to buy. Don’t just rehash your product pages. Research suggests product page visitors are 72% more likely to bounce than landing page visitors. So it’s important to optimise, track, and hone your landing pages for optimum performance.
If possible, experiment with new messaging (ideally based on information collected from your customers). This is especially useful as the world enters a recession. As buyer spending habits change, they may respond differently to your messaging. For example, consumers are likely to be particularly responsive to value-for-money-based messaging and bundle deals in the current economic climate.
Like with paid ads, you need clarity around landing page conversions so you can tell whether they’re improving or damaging your marketing efficiency. Calculate your current conversion rate before making changes so you can compare results. Even a small improvement can boost your overall eCommerce marketing efficiency ratio over time.
If you don’t have the resources to roll out a full review of your landing pages, these small tweaks can have a big impact on conversions:
- Make sure images are high-quality but quick to load – slow page speeds are a serious barrier to conversion.
- Use bullet points to get key information across – reach skim-readers with compelling quickfire selling points.
- Add customer reviews and testimonials – boost brand trust by including testimonials from real customers.
- Remove clutter and excessive CTAs – each landing page should focus on a single conversion action, in this case a direct sale of your product.
5. Improve Product Information Management Workflows
Retail marketing efficiency isn’t just about ad spend. It’s also about operational efficiency. Improving your product information management (PIM) workflows means you’ll spend less time sharing, managing, and retrieving product information, and more time marketing your goods. A good PIM workflow should:
- Make all key product information available to relevant team members
- Contain quality images (and ideally video) of your products
- Include up-to-date information around shipping dates and/or lead times.
Your PIM system should contain all the key information about your products, so teams can find what they need in just a few clicks. This saves them time, improving operational efficiency and ensuring your customers get fast responses and great service. You can improve your PIM workflow by:
- Audit your PIM workflow regularly — ensure it’s being updated correctly and on time
- Ask your team what information they need — your PIM workflow should benefit your team, so ask them what information it should give them to improve their efficiency.
- Assigning responsibilities — ask staff to keep the PIM system up-to-date with specific information (for example, your photographer/designer can upload approved product photos, while warehouse or logistics staff can keep track of average shipping times).
6. Eliminate Bots & Fake Touchpoints
Bots, fake accounts, and invalid ad interactions are a huge barrier to eCommerce marketing efficiency. They waste budgets by generating clicks and impressions that will never convert.
The fake traffic then skews your analytics, causing inaccurate audience data to be fed into your automated ad campaigns. As a result the algorithm can end up chasing more lower quality conversions, leading to more wasted budget.
Up to 25% of ad spend is wasted on clicks from fake and invalid sources. Lunio’s automated click fraud solution prevents bots and fake users from seeing and clicking on your ads.
We’ve help eCommerce companies like Blendjet and SomProduct save thousands in ad spend every month — so they get better results while reducing costs. Since using Lunio, SomProduct has saved more than £9,000 every month and seen a 19% increase in the quality of their site traffic.
Lunio works across all ad platforms, including Performance Max, Google Ads, Meta, Twitter, TikTok, and other social media sites. No matter where you place your ads, Lunio identifies and eliminates users who won’t convert, slashing your cost per acquisition and maximising your marketing efficiency ratio — so 100% of your budget is spent on genuine buyers. Want to see it in action?
Get Real Terms Growth by Boosting Your eCommerce Marketing Efficiency
With optimised data, campaigns, and operations, your marketing efficiency ratio will quickly tip in favour of revenue — without increasing your spend. In fact, many retail companies find they can reduce costs and still improve results.