Holisitic Optimization of Digital Marketing for Ecommerce

If you are spending less than 8% of your sales on advertising, you may be underspending! Digital Advertising is driven by Ecommerce. And perhaps a little by branding, which is financed by commerce  too. Global Ecommerce was over 4 trillion dollars in 2020 (statista). Comparatively speaking, digital advertising is a midget, at 330 billion. So, global digital advertising as a proportion of global ecommerce is 8%. There is your benchmark, but how should you spend your advertising budget?

Spending where it works

Wanamaker famously said that one half of advertising spend is wasted, the trouble being that you don’t know which half. Fortunately, we are now in the world of digital advertising where everything is measurable, right? If only it were that easy. As we have undercovered in the Digital Marketing Report, all marketing decisions are taken on the basis of partial data: incomplete, unreliable, unshared, adblocked, webproxied, wrongly attributed. All digital marketers know this, most advertisers too, the majority of end-users don’t. “When I enter information into a website, why should it be shared with all those other sites?” – well it isn’t. Apple’s current advertising is about removing all the other platforms’ partial data collection so that only Apple can monetize that data. Logical movement of troops in the what we call the Data Wars, but not motivated by Apple wanting to protect it’s users, in my opinion.

When marketers look at data from the big marketing platforms, there can be biais in the interfaces too. Did you know that Google analytics shows “sampled results” over a certain threshold of data volume: you see a simulation of what data trend is in your activity, not real data. Explain that to your CFO, will you? Newer concepts such as “data-driven attribution” and “modeled conversions” are pushing in the same direction of predicted data rather than real data.

And most platforms are excellent at pushing their collection of packaged data to marketers. The big platforms are marketing data to their clients, the marketers, using great packaging, promotional outreach, gamification.  Dear marketer, did you not know realize that it is you the target audience?

Digital media spend is biaised to promotion

The most reliable data, is found when a marketing operation is carried out exclusively on one platform, and when the path between product discovery and the final purchase is short and uncomplicated. The longer the path gets and the more complex the decision-taking, the less reliable the data tends to be.

Unsurprisingly therefore, Amazon is booming. It is concentrated on the final path to purchase. Also unsurprising, retargeting works really well. Both are close to the measurement point for your sales KPI. And a well-known observation from search marketers, “brand keywords convert”: first users search for category words and when they have found the brand they want to buy from, they search for the brand name. For this reasons, brand keywords are more often attributed the sale.

This challenge of “attribution” has a huge impact on the way budgets are engaged. The data is biased, and subsequently, so are budgets.

In many cases, the data doesn’t tell the story of what happened before the final conclusive action that made a user purchase. Whether this was other keywords that were searched for, or how the person you retarget was identified in the first place. If you really want to optimize your marketing investment, you must look at your entire marketing and communications operation holistically from end-to-end.

Understanding the user journey

Heard of the “funnel” for digital advertising? It was invented in 1898 so predates most digital marketing by a century. Kind of old and outdated, right? Or maybe it isn’t.

The reference concept behind the funnel is the AIDA model. It is a “hierarchy of effects” model in which users are described as moving through stages before buying a product. Awareness, Interest, Desire, Action. The funnel model is for digital marketers, what the “economic man” model is for economists.  The economic man model explains that people make rational purchase decisions and will be more likely to buy a cheaper product than a higher priced similar product.

The funnel model, explains how a user goes through various stages before coming to a decision to buy a product, including becoming aware of the products’ existence, understanding it’s characteristics and finally acting on an impulse to buy it.

Marketers instrumentalize the funnel model to create “awareness” around a product to target audiences, then provide them all the product information they need in order to appreciate and consider buying it. This drive through the funnel is designed to persuade and eventually incite users to buy the product. Here is a more detailed walk-through of digital marketing mechanisms and the stages of the user journey.

Opportunistic marketing

In the TV age, there were few but powerful marketing channels and few but powerful distribution systems. Optimization cycles were long. Study the market, build a creative concept, produce assets, run the campaign flight, stock up in distribution channels, analyse communication and sales results post-campaign. Marketing was a high budget, high risk and high returns business.

In the digital age, marketing channels are fragmented and fast. So are distribution channels. And user behaviour can be erratic too. It has become less risky but more confusing to be a marketer. You can trial and error, you can seize opportunities as they arise. If you are doing no marketing whatsoever, your first action can drive amazing results, and subsequent additional actions can have seemingly no effect. Worse, you can run a number of parallel marketing activities and find conflicting conclusions in the data sets.

What happens when you optimize holistically?

Because of this opportunistic marketing behaviour, the bigger picture is often lost of sight. Applying a funnel view of marketing activities can help identify bottle necks or explain why performance diminishes over time. The key to holistic optimization is to keep an eye on your total investment and your total outcome. It doesn’t have to be 8%, it really depends on what is profitable for your business. It also depends on your goals: if you want to win more marketshare, you should probably spend more than your competitors. If you have a strong brand, perhaps you can get away with spending less to maintain your market share.

With your eyes fixed on that overall performance, you can now look into individual channels and opportunities. It is quite common to see advertisers spend a lot of their budget at the bottom of the funnel, because it is measurable and gives the illusion of high performance. But in some cases, bottom of funnel budgets are cannibalising what we call “organic” performance. You put an ad up and it drove the sales, but the user was going to buy the product anyway. And sometimes you can end up bidding up your own marketing in other channels or perhaps your distributors’ marketing costs for selling your products.

If you think this may be the case in your marketing set-up, try moving some of your budget up the funnel. Reach your target audiences on facebook, target category keywords in search and promote your brand on Amazon. This can stimulate overall performance and allow you to generate better results holistically.

Don’t trust channel-specific performance

One of my favourite films is Minority Report. It depicits a society where truth is established in a closed room where three extraordinary beings can see what will happen in the future. Except, sometimes they don’t agree, and one of them will disagree to generate a minority report.

This can be compared to marketing reports emanating from one marketing channel. All the data isn’t there, but the truth that emerges seems compelling, whereas in reality it is incomplete and sometimes even false.

Everything is measurable in digital marketing, except for all the incomplete data, the biaised data, and the fact that advertising platforms are marketing their product to the advertiser without disclosing their minority reports.

Only a holistic view of all marketing activities can help you learn what balance of media spend and channels works for your brand, so check with your CFO before signing off on the next advertising opportunity you are presented with, and take a chance on channels that make sens from a funnel perspective. They may be more inclined to drives results in the long run.

Driving external traffic into Amazon can be a great paid search strategy in 2021 because the conversion rate is so high, but getting there can feel a bit like sailing through the Bermuda triangle. The compass goes berserk.

Apple’s is also messing with our digital compasses with the IOS 14.6 update, killing off cookies. Have you seen the latest Apple advertising campaign about privacy? It is a fun illustration of the privacy challenge. It is clear to everyone that Apple rids us of all that annoying tracking. “Why don’t you mind your own business?”. The AppleID used everywhere to personalize services in the Apple cloud, clearly isn’t tracking anything, is it?

In reality, the battle over cookies is just another battle in the “data wars” between the large American data-driven platforms who represent such a large part of our connected lives. I always have a laugh when I hear conspiracy theories like “they know everything about us“. Sure they do, Apple knows where you are, Facebook knows what you like, Google knows what you are looking for and Amazon knows what you buy. But they just don’t sit and have tea together and discuss how they can control you. They don’t communicate or share any data. At all. That’s why the compass is off.

Walled Gardens

One of the best metaphors for describing this data impermeability is the “Walled Gardens” metaphor. Each of the platforms is raising walls around its users to prevent them from leaving and to avoid any of their data to escape. Apple is just raising a cookie wall in the current battle.

When you have a website, you can install Google Analytics for free. This gives Google all the data from your website. When you set up a Facebook page, it belongs to Facebook who will give you some nice inroads into the data. It is pretty hard though to actually figure out who is in your Facebook audience. That is not where any privacy issue lies. If you want to actually communicate with your community, you pay Facebook through advertising. And you certainly can’t track any user behaviour when someone came from outside of Facebook.

“People! Can you just stay in one garden at a time, so we can count, please!?”

Why drive to Amazon?

Unfortunately, these end-users that marketers are trying to understand are unruly. They like to surf, to browse and to zap, much to the dismay of the platforms they were just on. One click, one touch, one slider and they are gone. Away to another channel. Did you notice that when you publish a post with a link to your website on Facebook or LinkedIn, it rarely performs as well as if you publish a similar post without the link?

“Please have your audience stay on our platform so we can monetize.”

Pay for the click via advertising and the barriers is gone.

Let’s imagine for a moment that you are an online merchant, and that you can choose only one channel to send your users to. Which one will it be? Your app, your site, your profile page on a social network?

No, you want them to be on your product detail page on Amazon, with your seller account in the “buy box” ready for a one-click sale. Simply because that is the best selling page on the internet for your product.

Amazon is a strong component of any ecommerce strategy. It is one of the main forces of ecommerce worldwide, and the marketplace is growing at a pace of 40% per year. Amazon Advertising is growing at an even higher pace suggesting the advertising spend is actually driving value to advertisers.

For an equal amount of visitors, an Amazon page typically converts much higher than a website. Perhaps twice as high. The service is fast and reliable, it is providing you with all the information you could possibly ask for, and it is backed by the promise of the lowest price and the fastest delivery. Ever. Amazon is obsessed with customer experience, so things will most likely work out quite well when a user purchases there. Hence a higher propensity to buy. A higher conversion rate.

Are you trying to kill my Shopify ecommerce?

“Do you wanna just kill the ecommerce business I am running on Shopify, or what? Amazon converts really well but I have a much higher margin on my direct ecommerce.”

Let’s do some calculations. Let’s say your ecommerce generates 10k in sales per month, your Amazon account generates 25k. You are spending 3k on paid search for 6k sales. Why would anybody send that profitable traffic into Amazon where margin is lower due to fees? If the Amazon channel converts at a rate which is double that of one’s website, those 3k could generate 12k of sales. Even at a 20% increase in costs – 15% referral fee and then some – your money is better invested in a higher converting channel. And a 100% higher conversion rate is not at all uncommon.

In this scenario, your sales increase by at least 6k and your costs by maximum 2,4k. A net benefit of 3.6k which is likely to increase further due to the organic boost which is likely to happen on Amazon. The higher the sales velocity, the higher you rank in Amazon search results and the more additional sales you generate. The net win could be 5-6k due to the shift to an Drive-to-Amazon strategy.

Downside of driving traffic to Amazon

Many years ago I remember having a client who only sold on Amazon. Running search and social media campaigns for the client was really frustrating because there was no data feedback. We could only control and optimize the click-through-rate for our campaigns and were dependent on the client to feedback on the effectiveness of a full campaign. As a real-time marketer, having a client sign off budget without proof of conversion was a new experience. We had no control on where we were sending the traffic, but as the client asked for more, the bottom line must have worked out for them.

It is common practice for advertising platforms to rely on conversion pixels. These are composed of a few lines of code which are placed on the pages where your advertising traffic is sent. If you send traffic from Facebook to a Shopify site, you will insert pixels which track key events such as a purchase. This communication feedback, allows the advertising platform to collect data on which ad created an event and at what time. And in turn, it allows the marketer or an algorithm to optimize the advertising campaign towards the desired actions. Amazon, of course, does not allow an advertiser to insert a pixel into it’s site. Neither does Facebook, Instagram or any other online platform for that matter.

On Amazon, a part of the solution to this problem is to use a tool called Amazon Attribution which allows you to tag external traffic when it arrives in the platform. The tool is still in beta and clearly in it’s infancy, difficult to set up and is fairly true to the “last-click” attribution model Amazon mostly uses. If a visitor comes from Google or Facebook into Amazon and click on an ad inside the platform before buying a product, the original source of the traffic will not be counted. If it does attribute it to the external traffic, however, you will be able to know from which ad group or keyword the conversion originated and thereby refine your campaigns.

There are obviously some more reasons for not driving traffic to Amazon: you pay referral fees (although it was actually you just referring that sale), you won’t get your clients email address and thus cannot address them directly for recurring sales. Additionally, you actually risk referring your prospects to competitors inside Amazon if they change their mind after the click. So, perhaps this is not a long-term strategy as you are simply increasing your platform dependency.

How to set up a drive-to-Amazon campaign

If you are used to running Google Ads campaigns, there is nothing new in the setup required for an Amazon campaign, but there is some preparation to do in your Amazon Seller account in order to detect the impact of your campaign. Going through the steps below should put you in a good place.

1. Prepare the set-up on the Amazon side

On the Amazon side, you should open a free Amazon Attribution account for tracking purposes. In order to qualify you must have brand registry. You should also make sure that you have access to the brand analytics report which can provide valuable overall insights for your Amazon account. If you are using a tools such as Helium10 you can track keyword rankings. Any keyword tracker will do, but make sure you have one activated. Also find a sales rank tracker such as Keepa which will allow you to estimate indirect effects of your campaign.

2. Keyword definitions

Now extract keywords from your Amazon Sponsored Product Ads and compare with your existing Google search keywords if you have any. We are assuming you are already using Amazon Sponsored Ads for your account. If not, start there rather than driving external traffic to your products! On the Google Ads side, spend some time charting Amazon’s own activity in your keyword territory by using the Auction Insights reports in Google Ads. Steer clear of keywords Amazon is already bidding on. No reason to bid them up.

3. Specific Google Ads set up

Now set up specific ad groups and keywords for your Drive-to-Amazon campaign. Once they are ready to deliver you will be able to pause the old campaign without ruining its history in case you need to reactivate at some point. The Drive-to-Amazon will be void of any conversion data and can’t be managed with automated bid strategies targeting conversion.

4. Campaign destination within Amazon

Within Amazon, you have various options for sending traffic. For product names and any brand-related terms you should send the traffic directly to product detail pages. For category terms, the brand store can be a better destination. There is also an option to create specific landing pages for your campaign. This could improve your measurability.

5. Measuring and evaluating

Welcome to the Bermuda triangle. Every time you change campaign parameters you need to wait for a while before you can see a consistent pattern of anything. Steer you campaign on the basis of click-through rate at least for a week and check your auction insights for overlap with Amazon every day. After a week (or longer if you have a long sales process), the main metrics to look at are total advertising cost of sales and sales growth. Amazon Attribution won’t show you the full scale of impact you generate. You may see lower attributed sales than expected but higher overall sales. Take the evolution of search rank positions into account to see if you are generating more organic sales.

How about we do that Kessel run in 12 parsecs?

The Millenium Falcon in Star Wars is the fastest ship in the Galaxy, right? But when Han Solo does the run to Kessel in 12 parsecs, it isn’t about speed, it was about taking a short-cut through the deadly fog surrounding the planet. Yeah, love Star Wars.

Driving traffic to Amazon is a short-cut to conversion, and thinking about the strategy holistically, there are many cases in which this is better for the end-user although you generate less margin. If it is right for the user, it must be good strategy.

For merchants building their e-commerce site, it must be terribly frustrating to adopt, and for marketers it can be a challenging path. You will need to prepare your campaign in detail, use manual optimization and find the right direction by monitoring a variety of indicators all the while not trusting everything the data tells you.

And finally, the Drive-to-Amazon is contrary to the overall objective of many marketers in 2021, namely that of building more and higher quality first party data. Nevertheless, the Drive-to-Amazon strategy can be a real kickstarter giving momentum to both you e-commerce and your Amazon activity. It is deeply rooted in an approach of enhancing your best performing channel and your best performing assets, it has the capability of multiplying your sales and at the same time giving users a better experience and provide learnings in the process. We are down to the essence of what Amazon provides: a shaky ride for marketers capable of generating outstanding short term results! You should try it!

I wonder if people today know the film Matrix better than Plato’s allegory of the cave. They illustrate the same concept of a superficial reality projected onto us, from which only the fearless can escape. This is the image that we used to illustrate the state of digital marketing in 2020. Digital marketers staring at a wall onto which digital marketing providers are projecting images of end-users. Those images are not nearly as perfect as in our illustration. They are expressed as data sets, as interest categories, as intent.

For how long will we be calling it digital marketing, I wonder? We could already rebaptise it to Data marketing, for that is all it is about. Using data, to direct and optimize a campaigns executed by algorithms onto digital media. A few months back, Google removed more of the transparency in their data. They are of course far behind Facebook in that game: “No tracking allowed, here is the data you need”.

It made me think about the troubled waters data marketers are navigating in. We know that a lot of the digital activity that goes on behind the scenes is automated bot traffic. We know that we cannot track users from one marketing channel to the other, unless we are inside one of the big media players’s universe. We know that some users have installed ad blockers, that some are using incognito browsing windows, and in the future, third-party cookies will completely disappear. It is a wonder data marketers have any insight into the data at all.

Thinking like Plato and Neo: Does the data really provide insights? 

Nothing like a little philosophical step back to look at the bigger picture. The big worrying characteristic of the big marketing providers is that they are dictating the rules of the game, while they are providing the data on the basis of which you make decisions. By definition, the arbitrage is carried out by algorithms, not engineers fiddling with your data. This provides us with no guarantee whatsoever, that the data is free of bias. A very simple example from my days running a digital media agency: Google Analytics (the abiter) by default attributes conversions to paid search (the commercial offering) more favourably than organic (free) traffic.

Digital marketers are not dealing with raw data most of the time. It is interpreted data, and the interpretation has commercial intent. This is why the most important direction for digital marketers in these challenging times is to build proprietary data. If the entire user journey takes place within Amazon, or within the Google universe, or withing Facebook, you should be aware that you are not seeing raw data, but interpreted data. Building proprietary data means getting users to your own website, it means capturing tangible user data like email addresses, phone numbers and names, rather than relying on retargeting lists and intent audiences.

Read the full article on PPC Hero here:  https://www.ppchero.com/digital-marketing-in-a-vuca-world-is-it-time-to-emerge-from-platos-cave/

I will be presenting a case study from BDBL MEDIA and also moderate several sessions:
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