To all the Small, Mid-Sized E-commerce
Black Friday is one of the biggest events for all e-commerce companies. Every E-Commerce is crazy about Black Friday, and it’s like their Christmas before Christmas. At the same time, it is the busiest period of the whole year. Almost every e-commerce runs some sort of campaign & offers during this time. For instance, every shoe company is trying to attract the same shoe guy with different coupons, offers, and discounts. This extends to online ads as well. Every e-commerce company tries to reach as many people as possible for their product using online ad platforms like Facebook & Google Ads.
The Bidding War
If you have been on the advertised side of online ads, then you are familiar with the bid cap and bid strategy. This is omnipresent
in all online ad platforms. Even if you don't tweak those settings, they are always there. The campaign outcomes get affected by
this in one way or another.
To paint a picture, generally, these online ad platforms charge you based on the impressions (showing the ads to the audiences) and
to reach them. Imagine a person (code-named XYZ), that person has an online spending profile. For the most part, this is hidden
from everyone except the online ad platforms themselves. Based on their online spending over time, they have a corresponding score.
The higher the score they have, the higher the cost of reaching them and the higher the cost for each impression. The
end-users/consumers are obviously unaware of these. That is what makes it sound a little bit dystopian. The moral and ethical side
is very debatable and is a topic for another day and another article.
However dystopian it may sound, that is the reality we live in. Companies bid on online platforms to reach their potential
customer’s profiles. Unfortunately, this starts an invisible bidding war on these platforms. Larger corporations have the luxury
and the budget to spend extensively and reach potential customers winning the bidding war.
Enter Black Friday
As mentioned earlier, Black Friday is when larger corporations take it up a notch. Every company is trying to reach the same online
profile for their online ad campaigns, but there is a finite number of online profiles. Anyone with a basic economics understanding
can see the demand-supply dilemma here. During this period, larger corporations spend extensively to reach these online profiles
raising the bid cost.
This brings in a new level of difficulty for smaller and mid-sized companies. They do not have the luxury and the budget of these
larger corporations. As a result, small & mid-sized e-commerce companies may see the campaign cost during this Black Friday period
may rise. That is to be expected. What’s worse is, if you don’t spend more than usual, then your conversions take a hit and suffer.
And if you have been paying attention, then you will see that, no matter if your campaign gets conversions or not, these online
platforms will eat up your campaign budget regardless. This can be devastating for smaller to mid-sized e-commerce companies.
Do not misunderstand me; I am not here to dunk on online ad platforms and larger corporations. I am only trying to convey the sad
reality and the other side of Black Friday. At the end of the day, online ad platforms do help you with getting the word out about
your e-commerce brand and products. It is to be aware of certain situations so that you can protect & utilize your budget to the
fullest.
If You Can’t Outspend Them, Then Outsmart Them
The only way to tackle this is to make your target audience even more effective and precise. You can not spend more than those
larger corporations, but you can make your target audience selection even more and reach the most relevant audience for your
product. Consequently, you can reach the right person even with a smaller budget and keep your conversions in check.
In other words, you want the campaign to generate more sales but at a lower cost. The campaign conversion should be high, cost per
purchase should be low. As a result, Return on Ads Spending (ROAS) will be higher. however hard this might become during the Black
Friday period, it is kinda the only option.
To make that happen,
you have to target the right audience for your campaign so that the people you are reaching are right for your products.
As a result, the campaign will be able to convince them to purchase without showing the ad again and again (lower impressions).
As a result, with a smaller budget, you will be able to reach not a larger audience but the right audience, your cost for the
campaign will decrease, the cost per purchase of the campaign will decrease, the click-through rate will increase, and so will
the conversion rate.
When all of these come together, your return on ad spending will improve significantly. Mind you. This is something even the expert
performance marketer can not achieve that often. There is no one right way of achieving this. The key factor to improving your ROAS
is to target the right audience for your campaigns.
How NOT to Select the Right Target Audience?
Since we are on the topic of target audience selection, we have to address the types of most common remarketing audiences. For e-commerce & Shopify stores, the remarketing audiences are the ones who have engaged/interacted on the website with the brand and its product.
- Website Visitors: Who have visited your Shopify store/e-commerce website. Any e-commerce/Shopify store with decent traffic has a high website visitor number. Generally, what happens is it’s very hard to reach all your website visitors, and even if you can, it will require an extensive budget. Since some visitors are not relevant to your brand or products, it’s not worth spending the budget to show them the ads. Therefore, targeting all your website visitor is not worth it, is not viable in some cases, and usually generate a very low conversion rate.
- Product Viewers: Not all website visitors end up viewing a product on the website. Some might leave the homepage without viewing any product. Therefore, Product viewers are the visitors who have interacted with any product from the website. Even if they do view the product, a small fraction of them ends up purchasing something. Since the Product Viewer audience size is smaller than all your website visitors, sometimes this is more preferable. One, they are somewhat interested in your products; hence they viewed it. Two, you won’t need a monstrous budget to reach them. But, Still, they are not your right target audience and will generate a low conversion rate.
- Add-to-Cart: Just like product viewers, only a certain few will end up adding something to the cart. Since their number is very small, Facebook ads might not have enough to optimize the campaign and might get stuck in the learning-limited phase. Additionally, if the budget is kept high, then due to the smaller audience size, Facebook will keep showing the ad to the same person over and over until the budget is used up.
These are the most common remarketing audiences used by the e-commerce industry. Remember, just because someone visited your site does not mean that person is your right audience, they might have come by accident, or they did not find your product to their taste. In any case, just because that person is a website visitor does not mean you should retarget them. In fact, this might irritate a portion of the audience. You will be wasting your budget on the wrong audience.
How to Select the Right Target Audience?
Let me paint a picture for you. Every visitor has some behavior associated with the website visit. Some might look at certain types
of products, a certain number of products from certain categories, some might come back to the website after certain time
intervals, some might look at the comments, etc. Some of them will make a purchase, and some will not.
In other words, some behavior leads to a website purchase, and some do not.
What if you could target the website visitors who are more relevant to your brand & products?
As a result, target the visitors who are more likely to purchase something from the website. That would be great.
Additionally, try to reach the audience that has the highest interaction with your brand and products.
Larger corporations can spend tons and reach a broader audience, but a smarter way to do this is to reach the right audience if
needed, a smaller audience that is relevant to your product and brand. Don't let people tell you otherwise. Let us hope this Black
Friday; everything works out for your campaigns and your e-commerce.
