Ad Spend Tips and Best Practices for Ecommerce Merchants

Ecommerce is thriving, with a boom in new online businesses and skyrocketing online retail sales to match. Accordingly, so too is ad spending, with US digital retail media ad spend projected to surpass $52 billion in 2023.

Despite this meteoric growth (and perhaps because of it), it has become increasingly difficult for vendors to stand out amidst growing digital competition and get the most value from ad dollars. And, in a post-iOS 14.5 world – now that Apple users can opt-out of targeted tracking – it is much more difficult for brands to track the effectiveness of their digital advertising. What’s more, the new-media landscape is inundated with advertising platforms, making it harder than ever to track impact across different channels: social media sites, search engines, and more.

Since detailed targeting options have become more challenging, advertisers must now rely on “broad targeting” – letting their advertising creative and copy lead the charge. With digital marketing costs up 20% as a direct result of Apple’s new data tracking policy, it’s crucial that ecommerce businesses focus on unpacking attribution, striving to understand which channels are most profitable and which ads are top performers on each platform. Here are some tips.

Merchants have historically faced a “black box” of consumer behavior, unsure where to target advertising spend most effectively to reach key demographics. But today, understanding where, how, and why sales are made is critical to planning strategic ad spending. When retailers can accurately attribute sales to specific ad channels or campaigns, they can: reallocate funds to bolster what has proven to be the most successful channel for advertising; understand which customer demographics are engaging more on each ad platform, and strategically adapt their media buying strategies to best reach these target consumers.

Since different ad types and platforms reach different sectors, retailers must ensure that targeted ads are relevant to each respective platform. These ads should first grab people’s attention, then use creative visuals and copy to filter for the highest quality engagements. Ads should be designed to reduce “curiosity clicks,” instead courting clicks from customers most likely to follow the ad to a landing page or website.

As consumers become increasingly familiar with (and annoyed by) ad inundation, sales attribution becomes more difficult. That’s why it’s essential to delve deeply into understanding the unique variations of the customer journey. To assume that ad performance follows the path of “view ad, then click and convert” is to lack true understanding of ad spending. Attribution tracking applications or capabilities can help sellers consider the differences between these different platforms and compare among them.

Given the vast number of different advertising platforms, sellers must avoid wasting time and resources on ineffective ad campaigns or inefficient channels. Proper attribution allows online retailers to measure the effectiveness of different ad campaigns and channel resources into the opportunities most likely to result in sales. Only 3 years ago, an aggregated analysis of around 50 separate studies led to an estimation that 40% of all media spend went to waste, a number poised to rise with the growing proliferation and diversity of ad platforms.

To combat wasted ad spend, retailers must move beyond the notion that a higher clickthrough rate is better. Yes, a steady clickthrough rate is important. But if too many of those clicks come from people who don’t actually care about visiting and interacting with the landing page, ad-attribution data will be skewed and – as many platforms operate on a cost-per-click model – money will be wasted.

The Content Marketing Institute reports that marketers use an average of 13 tactics, seven different social media platforms, and three paid advertising channels for each individual ad campaign effort. The question remains – are these funds being allocated in the most effective way, or are marketers simply trying to “spray and pray,” putting out as many ads as possible and hoping that some of them stick? When it comes to choosing where and how to advertise, quality and reliability – often only verifiable through attribution data – really matters.

Adopting an attribution attitude

There are many different attribution models, and certain models work better for certain businesses. It is critical, then, that ecommerce sellers not only do their due diligence in choosing an attribution model that best suits their needs, but that they act on the ensuing insights – all the data in the world means nothing if it isn’t properly analyzed and leveraged.

Brands that invest in generating robust customer profiles and leveraging relevant data in an actionable manner will reap rewards in the long run, rising above the growing clamor of the ecommerce landscape. And in a post-iOS 14.5 landscape, in which the onus of monitoring and analyzing ad spend has shifted back to the merchant, it’s even more pressing that ecommerce businesses sharpen up their ad attribution strategies.

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