The Future of E-Commerce Marketing (And The Channel That Already Controls More than Half of All Retailer Clicks)

How can your online retail operation take advantage of one of the fastest-growing channels in e-commerce marketing to directly grow your profit margins and outpace the competition? Find out here. 

The Future of E-Commerce Marketing Already Controls More than Half of Retailer Clicks

If you’re in e-commerce - and especially e-commerce marketing - you’re already gearing up for the busy holiday season. Your comrades in brick-and-mortar may not be so lucky, considering the fact that traditional retail stores have been suffering from continuously dropping foot traffic in-store and projected closure of more than 8,000 stores this year. In contrast, e-commerce experienced growth of 15% in the past year, and experts expect the market to hit more than $630 billion by 2020.

So, maybe your e-commerce marketing ideas don't need to go much farther than “don’t have a physical store in a big, empty mall.” Great! It’s settled. Now, it’s just a matter of time before the money comes automatically rolling in, and we all retire as millionaires. Right? 

Or, maybe your e-commerce marketing strategy needs to be a little more in-depth.

So What’s the Next Big Thing in E-Commerce Marketing that Can Get You an Edge?

So, we know now that e-commerce is growing (and with it, your e-commerce marketing ideas and goals probably are, too). But there’s a channel in online retail that is experiencing a meteoric rise, far beyond the growth of the industry at large. We’re talking about a channel that drove more than half of all retail clicks - and has the proven power to convert a significant number of those clicks into purchases - even at brick-and-mortar locations.

The channel in question Google Shopping - which runs image-based ads on search engine result pages (SERP) known as Product Listing Ads (or PLAs). If you’ve run a quick search on Google for any kind of product in your area (such as “cheap laptop computers 94043” or “designer watch 10022”), you’ve probably seen them - they are image-based ads that show the product you were looking for, plus additional info on the retailers carrying them. They are also on a growth rampage - within Search as a channel, they drove more than 50% of all clicks for retailers and grew revenue by more than 50% last year. PLAs are so successful that every major player in e-commerce - and in digital - are either running similarly-formatted ads or are preparing to - this includes Amazon, Facebook, and eBay, among others.

Why Use Search for E-Commerce Marketing? It’s All About the Customers

We’ve established that e-commerce in general is doing well, and PLAs for Google Shopping are doing even better. But why consider Search? Isn’t that a limited channel with limited upside? Is it really relevant to your e-commerce marketing strategy?

Here’s the reason: the constant changes in the customer buying journey - a topic that has almost certainly affected your own e-commerce marketing ideas - and operations. Customers aren’t going through the usual pattern of awareness to consideration to purchase in a perfectly linear fashion. They’re jumping back and forth between different funnel stages. They’re no longer tethered to old-media channels of print, TV or outdoor - focusing much more on digital, particularly through mobile.

Yet as you know from your own e-commerce marketing research, and from what you’ve experienced anecdotally and seen in formal studies: Customers are now in control of their own journey. And they don’t take kindly to being interrupted by annoying, irrelevant messaging. 11% of global online shoppers use an ad blocker - up 30% from last year. And the most popular browser in the world, Google Chrome, will be introducing a built-in ad blocker in 2018. This means that now, more than ever, your painstakingly-crafted e-commerce messaging is at risk of being tuned out by increasingly savvy shoppers that want exactly what they’re looking for, at exactly the right time, in exactly the right channel.

This is where PLAs for Google Shopping come into play for your e-commerce marketing. Google Shopping, being a Search-based channel, is built on, driven on and works completely based on the actual intent of online shoppers. In fact, studies show that 80% of shoppers actually prefer Search ads customized to them - in this case, based on their ZIP code and location. Moreover, more than 75% of “near me” searchers on mobile visit a store in 24 hours, and more than a quarter of those go on to make a purchase. So while brick-and-mortar foot traffic may seem down overall, the shoppers that are heading to stores are more likely to be driven by intent to purchase.

What does the upcoming Google Chrome "ad filter" mean for e-commerce marketing?
What does the upcoming Chrome "ad filter" mean for e-commerce marketing?

OK...So, What Does Successful E-Commerce Marketing for Google Shopping Look Like?

Google Shopping is still a growing space with lots of opportunity for e-commerce marketing experts like yourself. However, we should warn you - and try not to be too shocked - it is a competitive arena. Many other digital retailers are busy making their fortunes in this highly lucrative channel, so to beat the competition, you need top-shelf technology that can outpace the other players by decoding and fully exploiting what is both the biggest challenge, and opportunity, in digital today: data.

As an e-commerce marketing leader, you already know your operations have practically unlimited data to track - product specifications for items in different colors, sizes, materials and so on, along with your ongoing sales records, current pricing and any promotional programs your team is running. But did you know that managing your e-commerce marketing campaigns down to a highly granular level - that is, tracking products at the individual stockkeeping unit (SKU) level - will drive stronger performance, widening your margins and fattening the bottom line? Given that your goal in e-commerce marketing is to drive the widest margins by selling more high-margin items while controlling the outflow of your advertising budget on lower-margin items that will eat into your overall profits, here’s how you win:

  • Get highly granular with your individual products, iteratively testing and identifying the highest-margin products every season.
  • Spend more e-commerce marketing budget on those high-margin SKUs - this gets them more digital traffic, which translates into higher click rates and higher sales - which leads to fatter margins overall.
  • Carefully control your e-commerce marketing budget on low-margin SKUs to ensure they eat up less of your valuable ad spend, and ultimately have less ability to thin out your profit margins 

OK...So How Do You Master Data to Unlock Fatter E-Commerce Margins Overall?

As we’ve discussed, e-commerce is leading brick-and-mortar; Google Shopping is leading e-commerce; and mastering granular data is the key to driving that powerful performance in Google Shopping. So far, so good?

So what’s needed to master the data challenge for Google Shopping? 3 must-have features that will empower your team to unlock those incremental gains and leave the competition behind for good:

  1. Get predictive with next-level data & machine learning:
    We’ve covered the importance of getting granular with all the e-commerce marketing data your team touches each day. The challenge is that there is so much data there that it’s impossible to parse all of it manually. What you need is a way to pull useful insights from all that information - a predictive advertising management platform, particularly one that uses data science to identify patterns from existing data and machine learning to predictively model future scenarios. Armed with this type of technology, your e-commerce team will start making better decisions based on cold, hard fact - not on intuition or guesswork.
     
  2. Truly unlimited reporting & analytics: 
    In order to tackle this enormous amount of data, you need the capability to store unlimited performance reports from your past, present and soon-to-be future campaigns - and unlimited speed and processing to quickly slice and dice those reports into something useful. This is how your e-commerce marketing team will be able to identify larger patterns - including the all-important seasonal trends - and how they will also be able to rapidly adapt to market changes and make necessary adjustments on those crucial days when it really counts. (To clarify, yes: we’re talking about Black Friday and Cyber Monday, along with Valentine’s Day, Mother’s Day and all the other big shopping days your team knows and dreads and/or loves.)
     
  3. The ability to customize to your business operations:
    Your e-commerce marketing team is different than any other e-commerce marketing team. You need to be able to customize your marketing operations to your own unique needs and goals, this quarter, next quarter and all next year. You’ll also start significantly pulling ahead of your competitors when you can optimize those e-commerce marketing campaigns for more than just basic efficiency. A truly evolved e-commerce marketing solution can use advanced algorithms that incorporate cost-of-goods-sold (COGS) into their calculations - which lets your team optimize their campaigns directly to profit margins, rather than an arbitrary efficiency goal.

  
Hopefully, you’re starting to see where we’re coming from with regards to how you can set up your e-commerce marketing operations to take advantage of one of the hottest new channels in online retail. There’s huge opportunity here for those who are ready.

About the Author

Andrew Park

Andrew Park is a content marketing manager at QuanticMind. A UC Berkeley graduate and lifelong Bay Area resident, Andrew has done tours of duty in editorial, PR and marketing, and now works with the QuanticMind team to communicate the importance of data science and machine learning in digital advertising.

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