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e-Commerce Advertising Got You Down?



Are you having a hard time getting your e-commerce conversion rates up? Prevailing thought says you should advertise! That may or may not be a great idea this holiday season. There are a number of key issues with basic advertising besides your hard-earned budget dollars being on, what is, very often, an intangible result.

I've been around e-Commerce long enough to know what it takes to win with your ad budgets. There are a number of potholes and detours on the road to success, but they can be overcome.


Number 1: Time & Attention. Issue #1 is quite simply, getting their attention! How do I draw in my consumers with a great creative, and what is it going to cost me? Smaller businesses often times can’t afford to pay a designer or creative agency big money for a great ad. Without a snazzy creative of some kind, you are going to have a hard time getting the viewer’s attention, let alone have them click-through to make a purchase.


Roadblock number 2? Getting the message right. Where Should you send them when they do click through? You can always send them to your homepage, but I wouldn't suggeset that. Homepage landings don't help shorten the buying funnel or reduce friction around conversion. Sending them to the homepage will absolutely increase your brand exposure and site traffic, so if that is your goal, then go for it. Keep in mind that those non-productive click-thrus cost you just the same as if they consumer bought something. So actually, having an effective ad cost will wind up costing you more even when they don’t buy. Sounds a bit like a scam? You can always address this problem by making sure those clicks wind up on a product detail page or custom landing page. You’ve at least removed a step or two from the purchase funnel by doing that.


Number 3: Sufficient Volume. Remember, you are still only getting a small fraction of the original viewing audience to click thru. Ever wonder why display ad click-thru rates are often talked about as "Search and Display"? It's because display ads by themselves generate VERY little click-thru. Percentages are almost always below 0.5% of the viewing audience will click-thru on a display ad. Said differently, 99.5% of people who get a glimpse of your ad will actually come to your website, only about 3.5% of which will actually purchase a product. That means for every 1,000 people viewing your advertisement, 1.75 people MIGHT purchase a product. Cost of that acquisition? Around $3 on average for the display ad CPM and another $2 for the two people who clicked through to your website.


At the cost of $2.50 per transaction, was it worth it? Ironically, the fee on Shopify is 2.9%. When we use this as a percentage of AOV, we need to have an AVERAGE Cart value of $86 for the advertising fee to equal what you are already paying Shopify - you get hit twice AND you need to have a higher AOV to make it worthwhile. Given that the industry e-commerce AOV is …..yes, you guessed it, $85 …… it almost seems like the advertisers and commerce platform providers know where to hit the merchant.

Make sure to spend some time thinking about what is important to your customer. What draws them in and helps them decide on what to buy? And when to buy? Is it price? Perhaps seeing descriptions? Maybe even just knowing you have the size they want, or if the product is in stock. Nothing can create greater frustration to a buyer than clicking on an Ad only find it out a product is out of stock! You'll still have to pay the publisher or agency for that CPC though. Give some thought to getting more product information out in front of the consumer. Relevant information that may allow them to make a buying decision BEFORE they reach your site. Pull on levers such as free shipping, price discounts, product availability. Perhaps even consider using your product catalog as the SOURCE of information in the creative so consumers get direct exposure to your products and product details without you ever paying for that CPC.

If you are like most online retailers, you are spending a chunk of your revenue on advertising. Perhaps as much as 20%. This holiday season, make SURE your ad budgets pay off with high quality click-thrus and audience visibility by using contextual commerce components in your advertising.


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