As we turn the page on the 2010s and jump into the next decade, companies will need to look ahead and prepare themselves for new trends and changes that will occur across the business landscape. This is particularly true of e-commerce brands, as the world continues down the path of digitization. If an online brand is going to succeed in the years ahead, they must be as agile and adaptable as they are innovative.
One way that e-commerce companies can put themselves in a great position to compete in the 2020 marketplace is by focusing on performance marketing. Simply defined, performance marketing is centered around the principle of paying publishers only when a specific action (a click, an online sale, etc.) is completed rather than an upfront charge or a rate based on impressions. Because of advancing technology, publishers are now able to track and measure nearly every action driven by campaigns, and provide attribution to the correct source. This allows brands to minimize risk, increase ROI, lower cost per acquisition and keep margins tight across the board, enabling them to accurately pinpoint which efforts are performing well and which are not.
Here are three reasons why e-commerce brands should double-down on performance marketing in 2020, and how to get started.
1. Increased Competition
One of the main reasons to rely on performance marketing rather than more traditional forms of advertising is a simple matter of increased competition throughout the online world.
According to eMarketer, 76% of companies plan to increase spending in e-commerce in the coming years. Statista also discovered that U.S. online retail sales of physical goods amounted to $501 billion in 2018, and are projected to surpass $740 billion by 2023. It’s clear where the market is headed, and the path ahead will lead to higher advertising costs for social media platforms, display ads, placement on search engines and more.
In order to stand out, your company will need to be laser-focused on its bottom line, and not be afraid to use seemingly aggressive campaigns to ensure online shoppers are becoming aware of your brand and eventually buying its products and services.
“Performance marketing should be leveraged by all companies. It allows you to tap into a massive amount of affiliates or media buyers which specialize in all traffic sources. This can help you identify which traffic sources are converting, what creatives are doing well, what the average cost per acquisition is, and allows you to use this data to double down on those traffic sources and aggressively scale,” says Gustavo Geraldes, Founder and CEO of Milkit, a marketing firm.
“Every company needs more leads, sales, and customers. Performance marketing allows you to not limit yourself to a digital marketing agency or an internal media buying team for customer acquisition. It allows you to leverage the knowledge of affiliates, which all have their unique skill sets, creative angles, problem solving tactics, and specialties with traffic sources and conversion rate optimization. They are not on salary, or retainer – they only get paid if they drive a conversion, and only profit if their conversion cost is lower than the conversion payout. Therefore, they will go above and beyond to try to lower their costs, in turn increase their profit margins,” adds Geraldes.
By utilizing well-targeted, persistent direct response campaigns on Snapchat, Facebook, Instagram, Google and more, companies can increase website traffic, email signups, and overall sales.
If you are going to succeed as an e-commerce brand in the coming years, you can’t be afraid to be aggressive – it’s one of the only ways to be memorable in the average consumer’s mind.
2. Constantly Changing Algorithms
From steadily declining Facebook reach, to increasing costs of Amazon ads, to decreasing organic reach on Instagram, one thing is certain in the ever-changing online marketing landscape: algorithms will never stay the same. That’s why it’s very risky for a brand to rely heavily on sales from any single platform that it doesn’t own (i.e. Instagram). Putting too many eggs into any particular basket can leave companies far too vulnerable to arbitrary changes by such platforms.
Sales and profit margins shouldn’t be dependent on Mark Zuckerberg not changing his mind on any given algorithm change. By investing in performance marketing rather than unpredictable or unmeasurable forms of advertising, companies can maintain a tight bottom line and avoid being susceptible to pending algorithm changes.
3. Too Many Options
With all of the new, innovative platforms available to online publishers today, it’s easy to get distracted and lose sight of your marketing objectives. From LinkedIn Live to Instagram Stories to YouTube pre-roll ads, many advertisers and agencies will try to sell you on content alone – falling in love with the novelty of these mediums rather than the results driven by them. Be mindful not to get caught up in this cycle. You have products and services to sell, and while it’s prudent to continually experiment with the latest and greatest features in order to get a head start on competitors, doing so too much can lead to diminishing returns.
Instead, set aside a respectable portion of your budget to new opportunities, while still investing a more sizable amount to proven tactics and techniques. It’s true that content is king, but only when it can be measured and used to generate results, either in the short term or long run. In 2020 and the years beyond it, there will continue to be a slew of product upgrades and platforms that hit the market, so be sure to stay focused and calculated with your marketing strategies.
How To Get Started With Performance Marketing
So, where do you start when it comes to performance marketing? The first thing is to only partner with trusted, reliable performance marketers, tools and agencies. Be certain they have a proven track record of driving tremendous results for their clients – get references, validate any results they claim to have achieved, and do your due diligence.
One platform that works particularly well for verifying the credibility of marketing agencies is Clutch. They evaluate businesses based on client reviews, past work, market presence, and specialization in a given service, and rank the company’s trustworthiness to help identify the best company to hire.
Next, be sure your campaigns are staying in-line and compliant with all FTC regulations and other laws to avoid any potential run-ins with authorities. Because the digital marketing space is full of new technology and techniques, it’s not uncommon for companies to break laws without even knowing it. Keep yourself safe by doing your homework before diving headfirst into performance marketing.
With the online marketplace growing increasingly cutthroat, and changing daily, it’s critical for e-commerce companies to stay nimble and calculated if they want to succeed.