Marketing in a Pandemic: Riding the Surging Wave of Commerce Advertising, Part 1
As COVID-19 disrupted world economies, consumer buying behavior began to change. The pandemic has led to an increased shift in buying everyday items online, with some experts stating this crisis pushed e-commerce ahead by nearly four years.
Already the fastest-growing channel in digital marketing, commerce advertising hasn’t slowed during the global crisis. Even as many brands cut back on marketing spend in many areas, 74 percent of advertisers planned to increase or maintain Amazon Search Advertising spend levels in May. The Kenshoo Q1 2020 Quarterly Trends Report was an early indicator of the actual impact on ad performance, and despite the potential disruption, the numbers showed that spending on commerce advertising (aka Ecommerce Channel Ads) grew 47 percent year-over-year (YoY).
The increased investment in commerce advertising — even through a downturn in consumer spending and confidence — signals the channel’s growing importance with brands. By better understanding some of the nuanced factors related to the pandemic that are driving this growth, commerce advertisers can successfully navigate this period of flux and manage their programs better.
More New Shoppers Buying Online
With stay-at-home orders, many new consumers turned to online shopping. Because online marketplaces offer a wider breadth of products, greater likelihood to have in-stock items, and generally offer lower prices due to their advantageous position with manufacturers, many are likely to stay even when the pandemic eases. Unlike a decade ago when getting online products to consumers’ homes was sometimes a painful process, today’s retailers offer fast shipping; same-day delivery; and buy online, pickup in-store (BOPIS) to reduce consumer concerns.
How This Affects Commerce Advertising
Brands feel pressured to “be there first” with newcomers because of the way online store recommendation engines strongly promote previously purchased products to returning customers. Securing that first sale is key, and commerce advertising is one of the best ways to proactively reach new-to-brand shoppers.
Key takeaway: Aggressively target new online shoppers. Use “new-to-brand” metrics to increase commerce advertising bids combined with relevant messaging to turn window shoppers into customers.
Online Shopping Will Persist Post-Pandemic
Many recent consumer behavior changes are likely to persist post-COVID. In recent research from The Harris Poll, almost 80 percent of U.S. adults surveyed said they would save more and spend less after the pandemic ends, and nearly half of respondents planned to do at least some grocery shopping online.
How This Affects Commerce Advertising
Brands realize the shift to online shopping isn’t temporary. Therefore, it makes sense to build a best-in-class commerce advertising practice. Developing proficiency in this channel improves ad performance, which drives more investment to the channel.
Key takeaway: Normally, a crawl-walk-run approach is prudent as marketers and their teams acclimate to a channel. However, this shift in consumer behavior means now is the time to jump in with both feet and invest in teams, tools and processes.
Essential Products Drive More Essential and Nonessential Purchases
Hoarding of essential products helped drive the massive shift to online buying. As local stores restock essential goods, consumers continue to buy online. In May, Amazon.com sales on essential product brands increased 107 percent YoY vs. the 19 percent YoY lift in sales for nonessential product brands. In Q2, Amazon grew overall gross merchandise volume (GMV) more than 40 percent, crushing earnings expectations.
How This Affects Commerce Advertising
As consumers order more products online, it “trains” them to shop digitally more often. It starts with essential items, and then that shift in purchase behavior starts to bleed over into nonessentials. With more product searches on e-commerce sites, commerce advertising inventory rises so the levels of investment can grow accordingly.
Key takeaway: Watch metrics closely — not just for essential and nonessentials, but for all types of product segments. As consumers begin to buy more of one type of product and less of another, shift budgets accordingly.
Less Spending Means Every Marketing Dollar Counts
During this time, as consumers are hesitant to spend, marketers must be laser-focused to drive sales. Brand manufacturers rely on proven tactics to drive online sales.
How This Affects Commerce Advertising
Because it reaches shoppers at the bottom of the funnel, commerce advertising conversion rates and return on ad spend (ROAS) are incredibly high compared to other channels. This raises the channel’s priority level in the media plan because it can deliver a higher return than top or mid-funnel tactics.
Key takeaway: Fill the funnel with other channels like search and social advertising. Commerce advertising is great at closing sales, but marketers need to build awareness and consideration at the top and middle to maximize bottom-funnel tactics.
In the second part of this series, I’ll discuss the best practices advertisers can implement to successfully manage their commerce advertising programs during the pandemic.
Kevin Weiss is the vice president of client success for Kenshoo Ecommerce, an advertising technology solution for managing, automating and optimizing paid marketing campaigns.
