Digital advertising is getting harder and harder.
The last few months have lifted the curtain as many e-commerce businesses, so dependent on the crack of paid social networks, have seen their results plummet, unable to maintain momentum or even just hold steady. While economic conditions undoubtedly played a role, the speed with which so many fortunes changed speaks to a fundamental problem with their strategy.
I’ve been exposed to the inner workings of many e-commerce businesses, and what separates the good ones from the great ones is strategy.
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Many businesses have been able to thrive despite poor processes – upload the low-quality or heavily optimized creative products to Facebook or Google, set a purchase conversion goal, then let the machine find customers who are ready to buy. This sloppy approach has been eroded to the point of being unreliable and for the most part no longer works.
Among the dozens of ad accounts I’ve checked this year, there’s been a collective heel digging; what has worked for the past two years should still work now, even in light of hard evidence that those days are over. I still see an unwavering commitment to using purchase goals exclusively, mixing cold and warm audiences, and using the same creative for both (among other things) every day.
When asked why, the reason I usually get is, “This is how you optimize for the algorithm.”
In the same way that over the last 10 years Google has made SEO more human-centric and less game-like as an algorithm, I think that shift is coming for the programmatic ad space and that’s a good thing.
The advertising space has placed too much emphasis on optimizing algorithms; tricky tactics like quickly duplicating ads or increasing budgets, which give you a short-term advantage but put you back where you were before. I even admit that these tactics can generate promising numbers – impressions are up, as is reach, ads are working so the problem must be elsewhere – but it’s all just window dressing.
As an e-commerce practitioner, I am often challenged to want to use other objectives than a purchase conversion.
The argument that you should only ever use purchase goals is based on the theory that your ads will only show to people who are likely to buy, reducing waste. This is shortsighted and ignores the fact that you still need to reach people who may not even know they want your product yet so that you are in their consideration set when they are ready to buy. In other words, increase brand awareness.
The first is optimization, the second is strategy.
Growth is another example. How are you growing your business? The surefire way to grow your business is to acquire new customers. Yet, if you’re optimizing advertising for your ROAS return on ad spend (you can read my thoughts on attribution here), you’ll naturally end up limiting your attention to potential customers who are already somewhere in your funnel (i. i.e. who already have a certain propensity to buy). While this may work in the short term, in the long term your number of new customers will eventually slow down, putting your business in stasis.
Now ask this question in a different way. Instead of, ‘how are you growing your business? »you should ask, ‘how do we continue to acquire new customers? ». While ROAS may be something you monitor, the most important number you look at each week is your new customers and customer acquisition cost.
Optimization versus strategy.
Does your ad have a strategy to attract and engage humans, or are you optimizing for a machine?
This article was first published by Ecom Nation.