Chapter 8
Paid Advertising for Ecommerce Businesses

You are here: Home The Ultimate Guide to Ecommerce Paid Advertising for Ecommerce Businesses

Chapter Summary

  • Understand your business inside out, with KPIs decided in advance
  • Make sure you’re tracking everything
  • Consider your product and audience when selecting your channels
  • ABT (Always Be Testing), making sure any data you base decisions on is statistically significant
  • Apply budget on a priority basis: be as granular as possible

Ecommerce PPC

Paid digital promotion is arguably one of the most quantifiable forms of digital marketing. Ecommerce and PPC go hand in hand, as you’re able to directly track your return on ad spend (ROAS) by attributing sales directly back to the advert you promoted.

Using tools such as a Google Analytics, you’ll be able to accurately measure the amount of revenue made from your advertising efforts, so for most ecommerce businesses, it’s a no-brainer. If your PPC efforts aren’t making you more money than they’re costing you, it’s not to say that PPC isn’t for you, simply that your strategy needs review.

Getting started

The first step to a successful paid media campaign – whether you’ve run one before or are brand new – is to get a ‘lay of the land’ in terms of where your customers are already converting. The best place to invest your paid media spend is in places that have already proven to generate revenue.

To do this, you can review data from platforms such as Google Analytics or your analytics provider of choice. Do bear in mind here that your choice of attribution model may inform your results here; if you’re only looking to ‘last click’, for example, you will only see the channels that generated the final click before sale, whereas you might also find it prudent to review first click and linear models to get a fuller understanding of the contribution of all channels.

If you’ve previously found a lot of your sales to come through Amazon, for example, this will be where you’ll focus your efforts to start your paid media campaign. Conversely, if you’ve had a lot of sales come through organic search, you might use paid advertising through Google Ads to improve visibility and capitalise on the converting nature of Google searchers for you.

All of this will be very bespoke to your own business, and may even be segmented by product as some products may gain more purchases via one channel than another. If you find that one particular product range sells really well through social media, it is logical to promote that range through paid social ads but not another range which typically sells better through affiliate links.

Know your numbers

In order to capitalise on the benefits of paid advertising, you’ll need to be very clear on your own numbers.

That means having a really solid grasp of where you’re making money and ensuring your paid media managers are aware of this, too.

Average order value

Review the average order value (AOV) across your business and across product ranges and even specific products. This will inform the choices you make about paid media spend and the way you judge success.

Costs and overheads

Even in a digital world, things like overheads, staffing, shipping and storage will all affect your net gains and it’s essential to calculate those things in order to craft and profitable PPC strategy.

Media spend

How much budget you have allocated to paid advertising will dictate the opportunities available to you (at least in the first instance). Of course, you may grow your budget based on positive returns, but it’s important to know what you have budgeted to start with so you can allocate accordingly.

Target CPA and ROAS

Based on the above, you will need to calculate your target cost per acquisition. This means understanding how much you’re willing to pay, as a maximum, to win that customer.

You can make this analysis as granular as is logical for you. If you have a manageable number of products, you might be able to do this on a product level, or as a larger business, you might need to stick to category level analysis. If you can manage this through a spreadsheet or your financial platform facilitates it, you should be able to feed your numbers in on a granular level to calculate your profitable CPA even to a seasonal, daily and even hourly level.

Essentially, the more detail you can obtain, the more specific you can be in your financial requirements of your PPC campaigns.

Customer lifetime value (CLV)

It might be prudent for those businesses that wish to encourage repeat custom to keep an eye on customer lifetime value too. This is where you recognise that a one time purchase by a customer might be profitable to an extent, but that their ongoing purchases will reap even greater rewards because the cost of retention is usually less than acquisition.

In this way, you might utilise customer information to set a higher acceptable CPA for audience members who either are or who mirror the attributes of customers with a high lifetime value.

Get your tracking right

There’s little point investing in paid advertising if you don’t have a solid method to track its impact on your business.

At the most basic level, you’ll want to have a platform like Google Analytics in place. This will collect data on people who visit your website and show you how many come through your paid channels, what they buy, how much they spend, and so on. Implement ecommerce tracking for more granular insights into product performance.

You’ll also need to make choices about attribution models. There are plenty resources out there on this topic, including this one from Google themselves. Be sure to identify and agree on the model(s) that make most sense for your business and be consistent in the way you report on this.

In most ecommerce business, there will be a stock management system and potentially a customer relationship management (CRM) tool in place. These platforms pick up where GA leaves off, in that they will tell you real time information about what products are selling and who’s buying them.

Tools such as Google Data Studio facilitate the collaboration of these data sources to give you a good overview of what’s working from a paid marketing perspective. As a very minimum, you should be reviewing your Google Analytics, stock management and CRM to monitor the return on your advertising spend.

Channel selection

When considering the options for ecommerce PPC, you should consider the types of customer that you’re targeting, in relation to the product you’re offering.

If you sell a product that users will already be aware of, whether you’re a recognised brand or otherwise, usually inbound marketing such as Google AdWords, and Amazon will be your first port of call. Most merchants will fall into this category.

However, if you’re product is something new, or the market is dominated by powerful brands, stimulate interest in your product by using outbound advertising via social media (Facebook / Twitter etc) and display.

When considering the options, choose the option that’s most likely to give you the best return. See the chart below:

ChannelPriorityInbound/outbound
Google / Bing Shopping1Inbound
Google / Bing Search2Inbound
Remarketing3Inbound
Social Media Advertising4Outbound
Display Advertising5Outbound

Shopping Ads

In most cases, the channel that delivers the best return in Shopping Ads, either on Google Search or Bing Search.

Why? Because through Shopping Ads, people see the product, they see the price. If they still click, they’re highly likely to buy because they have all the information pertinent to that decision.

Google Ads work on search terms, not keywords. This means that Google will do its best to identify the appropriate products for the user’s query, regardless of whether they have used keyword relevant to that product, because the user might know what they want, but not the specific name of the product.

On the whole, Google does this well. However, it can make it feel more difficult for PPC managers because they can’t be as specific in their targeting as they might be on regular search campaigns.

Search Ads

Search Ads are the adverts that appear like organic results above the organic listings. Unlike Shopping Ads, they are based on keyword targeting rather than on fuller queries, so can be more specific in their targeting. However, because they lack the more ecommerce-focused elements like product images, pricing etc, they can be less effective in generating immediate conversions.

They’re not to be ruled out though; in a competitive industry, Shopping Ads can be expensive, whereas Search Ads might be more achievable on a lower spend.

Remarketing

Remarketing is a really valuable tool for ecommerce managers, especially those who sell products that require a little more thought and where conversion doesn’t typically happen in the first interaction.

Remarketing is driven by cookies, with users being identifiable by cookies and therefore reachable via a range of criteria that are set by the advertiser.

For example, a common application of remarketing is to apply a cookie to a user once they put a product in their basket and then to target them should they fail to complete their purchase by showing them the product(s) they didn’t complete on. Ever seen a product you quite liked the look of, not bought it and then been ‘followed around’ by it for days afterwards? That’s remarketing.

Remarketing criteria can be set at a product level for abandoned baskets, but might also be used to target customers with other products from the same range, or with repeats of the same product to encourage retention where the customer needs to buy the product again and again. For example, if you sell a product which needs replacing/refilling once a month, you might send remarketing messages to customers of that product each month as a reminder.

Amazon Marketing Services

If you’re already selling on Amazon, it’s a great opportunity to expand your reach. If not, it’s a great way to get instant traction on the platform.

With reviews dominating Amazon sales, you’ll benefit from the loop of more sales = more reviews = more sales. Just consider that you’ll have to pay the regular Amazon fees for any purchases, but with it being a relatively new and underused advertising platform average costs tend to be on the lower side.

Social media advertising

67% of the world’s online population use social media. This equates to 2.3 billion social media users worldwide (1.5 billion of these are on Facebook alone). A recent survey also suggests 75% of users have made a purchase because they saw something on a social media site. All this means advertisers simply can’t ignore social when it comes to ecommerce strategy.

Social media allows marketers to reach their target audience at every opportunity, as 85% of social media users access their online profiles via mobile devices. Marketers are given golden opportunities every single day to tap into the impulsive nature of shopping on mobile.

A few years ago, having well-scheduled Twitter content, carefully edited Instagram pics or, if you were lucky, a dedicated Community Manager was enough. But as the social media giants have become wise to the power of their user-data, organic reach for brands has declined. Today, if you want to get ahead in ecommerce, you must be prepared to pay to play.

The ‘big 5’ social media platforms all serve paid ads; Facebook, Twitter, Instagram (managed through the Facebook Advert Manager), LinkedIn and Pinterest.

Creating A Social Media Campaign Strategy

The very nature of the platform makes it an entirely outbound marketing method. When an advertiser creates a campaign on the AdWords platform and uses keywords to target their campaigns, ads will only be shown to user’s actively searching for the products. In the case of social media advertising, marketers are faced with having to persuade a user that they want/need a product they’ve likely never seen or heard of before.

This considered, it’s important to keep a marketing funnel strategy in mind. This strategy can be applied to just one social media platform, or run simultaneously across a number of platforms.

The 4-Step Social Media Conversion Funnel

It’s useful to visualise your campaigns in terms of a marketing funnel:

Awareness > Interest > Action > Loyalty

Awareness Stage

Who? Use what you know about your products and existing customers to build audiences with demographic and interest targeting (why not split test different targeting to see which one delivers the best engagement?). Or use a lookalike audience of your existing customers, to help you reach new ones.

What? Video is a powerful tool for these top of funnel users. Reach is high and it’s much cheaper. A video view can cost less than £0.01! Alternatively, create a content piece telling customers who you are and why they should love your brand.

Interest Stage

Who? Website visitors (collected via your Facebook or Twitter pixel), video viewers and those who engaged with your adverts (shared, retweeted, clicked, liked, etc) during your initial campaign.

What? These users now know who you are, so target them with product carousels and clickable adverts with a more overt call to action.

Action Stage

Who? Cart abandoners or those who spent a significant amount of time on your site without converting. These categories are created simply by adding filters and more granular targeting to the audience collected by your Facebook or Twitter pixel.

What? Create a special offer, offer free delivery or use dynamic remarketing (where users see ads for the exact products they browsed) to lure these users back to your website and all the way to the checkout.

Loyalty Stage

Who? Existing customers You now have useable data about these customers and what products they’re interested in, enabling you to create granular Custom Audiences by uploading their email addresses and/or phone numbers.

What? Upsell and cross-sell. Do they need an accessory for what they recently bought, or do you have similar products they might be interested in? If you have a list of loyal and returning customers, why not build an advert especially for them with a special offer to say thank you, or ask them to leave you a review?

Measuring Success on Social Media

Having a pixel with conversion tracking set up (for all the social media platforms you plan to advertise on) is essential for measuring campaign success. When a user clicks on your ad they’re unlikely to buy there and then, meaning Google Analytics can’t always be relied on to track those sales that originated with a social campaign, meaning as an advertiser you’re unable to get a true measure of success.

Having the relevant pixels and tracking enabled means that if the user clicks on your social media campaign to browse, but then goes directly to your website to buy a week later, that purchase can still be attributed to your campaigns. Plus, as long as the user is logged in to the same social media profile, these conversions can also be tracked across multiple devices.

What Is ‘Social Shopping’?

Social shopping is a relatively new social-media-come-ecommerce phenomenon, in which social media is used to mimic the real-life interactions that take place in-store. Social Shopping arrived as part of the Web 2.0 movement and all started with the end users; posting pics of their latest purchase on Instagram, sharing links to their Wish Lists on Facebook and even creating YouTube ‘haul’ and ‘unboxing’ videos.

There are a number of types of social shopping, from discount sites like GroupOn and Livingsocial (the online equivalent of your local wholesaler), to peer-to-peer marketplace sites like Polyvore and Facebook Marketplace (think bring-and-buy sales).

Despite Social Shopping starting with the user, ecommerce retailers are now getting in on the act. Marketers looking to get ahead of the trend are already uploading their product feeds to social-first ecommerce platforms and actively encouraging customers to share their most recent purchases and reviews. Using automated feeds, adding ‘Share’ icons to product pages or simply asking customers to leave you a review post-purchase makes Social Shopping much more accessible than you may think.

But with Social Shopping set to be one of the biggest trends in both social media and ecommerce in 2017, it’s set to get a lot more exciting. Chatbots are set to revolutionise Social Shopping, using automated chat to provide customer service support, take payments and process orders without users needing to leave their Facebook window. Facebook has recently announced it now supports MasterCard, Visa and American Express payments.

Retailers who can be ahead of the Social Shopping curve are the one’s who will win sales over competitors relying on their website alone.

Always be testing

While organic marketing can still, in many ways, be considered more an art than a science, paid marketing is the opposite, where creativity and artistic tactics will help but scientific approaches are essential in garnering the greatest returns. In essence, you should always be testing what works and what doesn’t, and adapting accordingly.

Have a hypothesis for every change that you make within your campaigns. Noting that you’re not getting as much visibility for a campaign as you’d like, you might hypothesise that a greater budget will help. But unless you test this, you can’t prove it – so set your hypothesis and the metrics you will assess the outcome. Visibility might actually be affected more by a lack of relevance in your ads, so simply ‘adding more budget’ isn’t always the best approach.

Never assume, either. Make sure your tests are statistically significant and be ready to utilise platforms like Campaign Drafts and Experiments in Google Ads to help.

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