E-commerce CMOs need new approach to ad effectiveness

E-commerce CMOs need new approach to ad effectiveness

Jason Brownlee, founder of consumer insight and audience research company, Colourtext discusses the relationship between e-commerce brands and broad reach media

Explaining product sales has always been hard to do. It requires extensive data sets and complex analytical skills like econometric modelling to unravel the effects of disparate market variables like TV advertising, price promotions and even the state of the weather.

But the Covid-accelerated growth of e-commerce may be pushing us further into a new situation, which I think is positive from an ad measurement point of view.

In the past, we had very little data to measure the impact of advertising on sales. But today, website traffic data gives us a cast-iron signal of brand discovery and purchase intent that’s directly affected by one thing a CMO can control, which is advertising.

Most e-commerce scale-ups live and die by their ability to generate website visits and CMOs understand how dependent sales growth is upon traffic growth.

The two variables are so intimately linked they are almost synonymous, but e-commerce CMOs understand the crucial distinction between the two that has to be maintained.

The role of advertising ends at the moment when a new visitor hits a website and enters the top of the customer acquisition funnel.

From that point on the website user journey begins and a whole new bunch of conversion variables come into play, such as price competition and UX design.

This means the priority for an e-commerce CMO when evaluating broad-reach advertising is to understand what drives traffic to their website, rather than what secures the final click.

With this in mind, I would argue it’s time for established broad-reach media brands to speak directly to e-commerce scale-ups and move the focus away from sales and onto website traffic.

That’s because web traffic is a key indicator metric for online retail and an invaluable new ad response signal in itself. We don’t have to unravel the complex spaghetti of variables that drive sales.

E-commerce brands usually enter the world of broad-reach media soon after they discover another £50k spent on Google AdWords isn’t moving the needle for them anymore in terms of upper funnel traffic growth.

To maintain sales growth, CMOs need more people going into the top of their funnel and performance marketing won’t deliver that.

That’s when broad reach media comes into the picture.

Sometimes CMOs go straight to TV or use radio first as a lower cost, low risk option.

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By this point in their growth cycle, brands will commit £70k-£100k per month on their first TV campaigns. This often dwarfs their performance marketing budget and can feel like a life-or-death decision – a poor sales run of six months could mean these brands are toast.

 In any event, buying TV or radio often proves to be a big culture shock.

These brands are digital natives that are used to having complete control over their online advertising. They can stop or start campaigns at will and get immediate data on what’s working and what’s not.

That doesn’t happen in classic broad reach media, where the lead times, creative costs, compliance and who knows what else are completely different.

E-commerce scale-ups want to measure something in the morning and optimise it after lunch, which means the way we evaluate broad reach advertising needs to change.

A lot of thinking around advertising evaluation and marketing analytics tends towards solutions that are expensive, hard to understand and slow to implement.

My personal experience as an e-commerce CMO, and the conversations I’ve had with other CMOs, suggests the market is primed ready for solutions that are agile, low risk and quick to deliver results.

When a TV or radio campaign hits the airwaves, e-commerce brands want to know what granular actions they can take *right now* to drive traffic growth. It’s all about better tactics and doing something today, not four weeks from now, that makes a difference.

Explaining sales is not the problem fast-growing e-commerce brands need us to answer.

Our task is to explain how broad reach media drives web traffic, either directly or via super-charging a brand’s organic SEO performance.

We can achieve this by aligning with how performance marketing culture works.

Advertising evaluation solutions aimed at the e-commerce market need to be agile, affordable and quick. They also need to focus on the web traffic acquisition metrics that CMOs care about and want to see improve when a TV or radio campaign is underway.

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