Shopping advertising during economic down turns
Many shopping advertisers are thinking about the impact of an economic downturn and the anxiety of consumers to buy goods. However, economic downturns have often helped organisations to stand out. That is why my goal is to help you, as a marketing manager or business leader, to make decisions and a plan in case the economy worsens.
Impact of marketing spend during economic downturns
A report that is available to Google partners provided some great resources to learn more about the impact of marketing spend during economic downturns.
In 1999 Tony Hiller led a study in which he divided 1,000 firms in the USA and Europe into three groups based on how they spend money during an economic downturn. In the recovery phase he compared the profits of the organisations. And the winners were those organisations that were able to increase their marketing spend.
Source: Marketing during and after recession, International Journal of Business and Social Science
In the publication about marketing during and after a recession there are more sources pointing to the same conclusion. So, should you immediately increase your budgets and profits? No, definitely not. However, it does give you the opportunity to compete both on a product and organisational level with other organisations who are cutting or maintaining their shopping ad spending. Next to evaluating if you should increase your ad spending, it is wise to focus on the efficiency.
Role of senior marketing positions: CMOs and Digital Marketing Managers
During the economic downturn in 2001 a study was conducted by the American Business Media, they found that 97% of the business decision makers agreed that it is important to continue investments to remain competitive. However, many organisations do tighten their decision making and expect more reasoning behind investments. This is where CMOs, Digital Marketing Managers and Team leaders should step up to highlight the importance of advertising and to show what they are doing to optimise their spending.
Optimising your Shopping Ad spend
There are many ways to optimise your shopping ad spend. To help you we created a check-list that you can bring to your seniors to show how you are optimising your spending.
- Reducing time on manual labour
Experimenting with solutions in the advertising space can save you a lot of time. Just a few years ago some people would spend their day doing keyword analysis to add or exclude keywords for ad accounts, now a lot of those tasks are automated by e.g. Google Ads.
While some organisations are still hesitant about Performance Max, this will become the primary method for Google shopping ad campaigns. That is why I would recommend to start experimenting with Performance Max campaigns as this can save time while managing different channels and according to Google will also help you to maximise your campaign results. To make the most out of Performance Max campaigns and learn about the structure options read this article.
- Out-of-the-Box cost savings for Shopping Advertising
It is definitely worth investigating how you can make more out of your existing investments, with just some easy steps. Here are some tactics that Shopping Ad specialists should consider:
– Prevent click-fraud like ClickCease or PPC Shield state that they can help PPC advertisers to prevent 20% of their budgets to go to waste
– Collaborate with a Google CSS partner (self-plug: using Producthero you can get a 20% discount on your Google Shopping Ads cost per click and you get a tool to optimise your product titles)
- Optimising your campaigns and existing advertising budget
Another great way to maintain your budget is by creating a strong strategy on how you manage your budgets. One of the strategies that we developed and taught to over 6,500 e-commerce organisations is to create campaign structures in which you allocate budget based on how products perform.
Changing your strategy can be a crucial differentiator because 50% of the advertising costs are usually going to products that underperform. This is a huge waste as 80% of sales comes from less than 10% of the products. Some retailers who use this strategy see increases of 44% in their revenue.
Discover more about Labelizing products based on their performance
Tips from four PPC and Advertising experts
During these times it is wise to get external advice. So, we helped you to stay ahead by asking PPC experts across the globe if they have advice for e-commerce and retail leaders on handling an economic downturn. Here is what they say:
“While you may be tempted to market various products to appeal to as many customers as possible, a recession isn’t the best time to do that. Instead, determine which products are the most popular with your consumers and double down on those. Consider halting the promotion of other products.”
Bob Meijer, Google Ads trainer & coach @ PPC Mastery
“Facing economic headwinds, many companies think about efficiency and cutting costs. Fair enough. And historically, we’ve obsessed over CPC and bidding. However, these activities are now delegated to automation, and CPC is more of an observation metric than an input metric.
If you look instead at VPC (value per click), you are no longer micromanaging unit costs, but maximizing your revenue. VPC is the product of channel optimization and e*commerce optimization – it’s a unifying KPI that positions paid media as a value center rather than a cost center.”
Mike Ryan, Portfolio Strategist @ Smarter Ecommerce
“In a downturn, efficiency matters. The quick wins I would implement are three-fold.
Firstly – send profit data in to your Google Ads account so your tROAS is hunting for margin, not just revenue. If you struggle to get the data into Google Ads, start simple and label products and/or product categories by profit margin. Set ROAS targets appropriately.
Secondly – review high impressions terms with above average ROAS, but low CTR. Improving click-through rates on those terms can give you an uplift to known good, but under-serving search terms.
Finally – you should be doing more outside of the ads account. Review your ‘Buy-to-Detail Rate’ inside Analytics; focus on higher viewed products with below average Buy-to-Detail Rates. Your opportunity here is to optimise those product pages vs competitor offerings.
Conversely, high buy rates with low views are products that potentially need pushing harder via your paid channels.”
Ed Leake, Managing Director & Founder @ Edleake.com
“When facing economic downturns, businesses often tend to cut marketing budgets and focus more on retention actions. Although it is an understandable move, it is critical to understand that retention marketing is primarily driven by other mostly paid measures. Without a steady flow of new visitors and customers, retention marketing will soon run out of fuel.
My recommendation is to become lean, while maintaining strong marketing. Question unused resources, optimise COGS, fulfilment costs and dig deeper into pricing and assortment analysis. You’ll be surprised how much potential lies hidden in such simple areas
Top level marketers can support and advise precisely here. Marketing has long since ceased to be just a question of campaign set-ups, but an area of comprehensive analyses and individual consulting.”
Benjamin Wenner, Growth Hacker @ Benjaminwenner.com
Advertise more efficiently
While some organisations are forced to cut costs on all fronts, it is important for marketing managers to explain the value of their budget and the impact. Additionally, it is wise to do a thorough analysis of your advertising, either using the views from internal experts or using external consultants.
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