Paid media advertising is one of the fastest, most reliable and easily achievable routes to get traffic to your E-Commerce website. E-commerce companies across the world are constantly playing with their spend, ROI and the customer life cycle whilst using one or more forms of paid media. We are living in a world of constant digital noise and clutter. To strengthen your customer’s relationship with your product, remember your customer about your brand and ensure a quick conversion, nothing beats paid media. Whether you have a multi-channel strategy or you are exclusively leveraging E-commerce, paid media can help you support various business goals; from improving your push for new customers to re-engaging forced dormant customers with offers on your touch-points, sales and supporting conversions at every stage of the funnel.

Perhaps even more importantly, a strong paid media strategy can help you create and drive presence for your online brand. With paid media, you can be anywhere, anytime (at least if you have a healthy budget!) But be warned, a sensibly budgeted cost-per-click program can result in severely outsized returns, enabling a record return on sales in a single quarter! With that being said, millions of E-Commerce brands are using paid media, competing for voice and traffic across thousands of key-term segments without incurring a significant burn rate. Customers use dozens of different search terms and browse thousands of competitor websites and shop independently for a product they love. Paid media allows you to win that business share, as well as ensure that you have customers who convert while active and restore latent customers, enabling them to convert.

Understanding Paid Media Advertising

Paid media advertising in its simplest terms is the purchasement of media space or time in order to reach a selected audience. This is done with the expectation that the use of that space will further the goals of the advertiser. Advertising is only one of the eight ways that promotional dollars can be spent. The other methods are public relations, sales promotion, personal selling, direct marketing, sponsorship, point of sale, and trade shows. Just as there is more than one method of promotion, there are also more than one type of advertising media. The media types are print – newspapers, magazines; broadcast – television and radio; outdoor – billboards; and transit – busses and subways. Each method and type has its strengths and weaknesses, both financial and for effectiveness. The effectiveness of advertising can vary in terms of impressionable reach, cost per impression, viewer involvement, audience clarity, and immediacy of communication.

Advertisers must learn how to balance their investment in all of the available methods and media types as they move through various stages of product and brand growth. For a new product introduction it is essential to gather maximum awareness at minimum cost. On the opposite end of the scale with a well-established product or brand you would consider the most cost-effective methods of changing or reinforcing the position that is held in the minds of the audience. Advertisers are always grappling with the challenge of how best to balance their various marketing communication efforts. How much money should be allocated to creating brand awareness vs. trial? How much of the budget should go towards promotional sales that may reduce margins? Should ads be created in-house or bought from outside agencies? How should the various advertising media be combined? Which media should be used for the best effectiveness?

The Growth of E-Commerce

Traditional brick-and-mortar businesses operating at small scales had only an area of a few thousands of square feet dedicated to sales. The emergence of e-commerce companies transformed this concept completely, adding zeros into the millions of square feet. Tech giants created online marketplaces that made traditional businesses realize the latent potential of selling online. Smaller scaled businesses also realized most people prefer to buy from them online rather than in-store. It lowered their overhead costs, but at the same time, broadened their reach far beyond their geographical boundaries, and started performing a massive scale of sales than anyone could have imagined. The COVID outbreak accelerated the entire process with restrictions imposed on industries increasing demand on e-commerce companies.

When we talk about e-commerce sales and expenses, we cannot ignore the number of sales going through marketplaces. Around 38% of e-commerce sales are happening on marketplaces. Around 32% of e-commerce sales are happening on branded websites, while the rest 30% happen on retailer websites. This is a clear indicator that business-to-consumer e-commerce sales are equally important on branded as well as marketplace websites. Moreover, business-to-business e-commerce sales are expected to expand a massive scale that is more than twice the size of the business-to-consumer market. Currently, businesses are focusing on a number of infrastructure strategies to scale their operations in this model and expand their customer base over websites and mobile apps attracting prospects from all over the world.

Benefits of Paid Media Advertising

When done strategically, paid media advertising offers long-term marketing benefits for e-commerce companies. Advertising in short bursts or long campaigns can help e-commerce companies in many ways.

Increased Visibility E-commerce companies bring a website or app to the online marketplace that consumers might not have access to otherwise. Unlike your local grocery store, people might not be walking past your e-commerce company just waiting to come inside and discover what you have to offer. They need help finding your company digitally. The way to do that? By buying ad space that targets them at the right moment in the right way. Whether they are searching or scrolling through social media feeds, their eye will be caught by your ad — a great introduction to your e-commerce company!

Targeted Reach With paid media, e-commerce companies can target and retarget specific demographics — down to age, gender, job title, and interests — based on consumer behavior and psychographics. And with the right paid media strategy, your advertising dollars will be spent efficiently and effectively, showing ads only to the people most likely to click on product links and make a purchase.

Immediate Results One of the best advantages of paid advertising is that it can produce results quickly. By choosing keywords that fit with your e-commerce company’s goals and products, and that have a low quality score — the lower the score, the less you’ll need to pay per click or impression — you can create ads that will be shown almost instantly. Consider pay-per-click advertising, which is driven largely by keywords. When people engage with your paid ads, they’ll go to your landing page, and if they like what they see and click the “buy” button, you’ll receive rewards quickly. As your website is shown more often in search results, its quality score will improve.

Brand Awareness Even if they aren’t ready to make a purchase immediately, paid ads increase brand awareness among online consumers. Social media ads invite users to shop the latest products, and ads will lead them straight to your e-commerce company’s website. Retargeting ads can serve as gentle reminders, showing online shoppers the last items they added to their cart or browsed, encouraging them to come back and make a purchase.

Increased Visibility

Paid media advertising includes pay-per-click advertisements, display ads, social media ads, and affiliate marketing — and puts e-commerce companies at the top of their customers’ minds to drive click-throughs and conversions. Depending on the ad type, a paid media campaign can direct prospective customers to an e-commerce company’s website where they can make a purchase, or to other online platforms with purchasing capability. There are many benefits to paid media, and especially the investment.

Increasing visibility is an obvious reason to invest in paid media advertising. Because prospective customers are searching for specific keywords — either related to a problem they need to solve, a product they need to purchase, or a solution they require — paid advertisements will help that e-commerce company be seen. If someone is using a search engine to search for “best running shoes” and an e-commerce company has a paid advertisement that pops up, the ad is extremely visible. No matter the industry or type of product, it’s inevitable that e-commerce companies will be selling many of the same products as their competitors. However, being seen means having the opportunity to capture more visits and conversions; therefore, the likelihood of higher sales increases.

Targeted Reach

Paid Media Advertising enables targeting of specific audiences, allowing advertisers to reach potential customers at various stages of the buying journey via different strategies, such as targeting by interest, demographics, location, or remarketing to people who visited their websites. Keyword or interest targeting in their campaigns enables advertisers to reach users at different points in the buying cycle. For example, someone searching for “buy shoes online” is further along than someone searching for “running shoes,” but both are likely to respond positively to a shoe store’s search ads. Interest and demographic targeting are also available for display and social media advertising, so advertisers can create ads to reach people at different buying stages, and then target each ad accordingly. Advertisers running display ad campaigns can create arguments to entice close customers, and remarketing ads for viewing shoes on their website. Other ad campaigns can keep their product line front-and-center for interested customers, while still other ads can focus on the benefits of being at the top of the industry, such as having the largest selection or providing the best service. Advertisers who use social media ads can similarly create ads targeting users at different buying stages. By boosting reviews that mention customer support, an advertiser can reach more people. For websites with advanced retargeting strategies, remarketing ads can remind recent shoppers of deals, such as free shipping and a discount for completing their purchase.

Immediate Results

Immediate Results

While organic advertising is advantageous in many ways, it is a long-term strategy. A popular ad, like a post that has gone viral, will certainly get you more customers, but you may need to post a lot of online content before you achieve that after establishing your online store. It could take weeks or even months to show up on the first page of search engines–even if you optimize your content for SEO. This may make it difficult to attract customers if your company is new. While it takes time to maintain and grow your online store, paid online advertising is the best option if you want immediate results.

Paid media can provide immediate results because you don’t have to work at it for weeks or months. After setting up your ad, it will show up instantly. People will see the ad and may click on it and make a purchase. When potential customers see your ad, they will be aware of the product you have to offer. In addition, once you start advertising on online platforms, customers will know that you want to communicate with them and that your products are available. This is an excellent time for you to introduce your product, especially if you just opened an online store. By advertising on various platforms, you can accurately target the audience you want to attract to your online store. You can advertise based on targeted demographics, including age, gender, and social economic background, or based on specific things customers are interested in that are related to your product.

Brand Awareness

Brand awareness is a vital metric for the success of every e-commerce company. Creating awareness about a brand and its relative position in the market is a process that can take months and years, but paid media advertising can expedite this process. Digital media channels such as Facebook and Instagram facilitate both paid and organic brand awareness activities. When a brand decides to pay media channels to reach users and display its message prominently, companies can create a mass communication scenario that people are subject to on a regular basis. The publishers want to make sure that they never lose the interest of the users, so they design their content strategy to captivate their audience. An important element of it is to show regular and expected advertisements, as people tend to have an expectation to see well-balanced forms of both organic and paid media.

As a direct result of users continuously being updated and reminded of the brand’s presence in the market, the brand earns greater share of voice relative to the other competing brands that do not subscribe to a similar strategy. The increase of the share of voice due to the paid media advertising efforts directly impacts the share of search of the brand. This translates into elevating the importance of the brand by increasing the number of searches it receives. Paid media advertising is also capable of creating bookmark-like brand awareness that drives easy recognition and recall of the brand. The traffic a brand earns as a result of users recognizing it through paid media advertising also contributes to common view equity.

Types of Paid Media Advertising

Paid media advertising is an umbrella term that encompasses a variety of types of advertising that can drive traffic to an e-commerce site or increase sales for an e-commerce brand. Each type of paid media advertising has its own distinct features and nuances, allowing advertisers to explore and experiment with using one or multiple types, or even combining them together for a multichannel paid media advertising strategy. Below are some of the most popular types of paid advertising; there are many more available for businesses looking to increase their brand exposure.

Search Engine Marketing (SEM) Search engine marketing, or SEM, refers to the paid advertisements that show up in search engines when people search for specific keywords that relate to an advertiser’s brand, products, and services. Search ads are usually pay-per-click, meaning that advertisers bid on specific keywords that are relevant to their business and pay a fee every time someone clicks on one of their ads, leading them to their website. Advertisers can customize their search campaigns to ensure they reach the right audience at the right time by organizing their campaigns into ad groups, which group relevant keywords together in order to ensure ad relevance and keyword quality, manage the bids associated with each group of keywords, and have maximum control over the ad copy.

Social Media Advertising Social media advertising refers to the paid advertisements that appear on social media platforms. Unlike search engine advertisements, social media advertisements are not necessarily about a user’s intentions at the time they are being shown; rather, the advertisements are shown to social media users based on their location, interests, and other factors. Advertisers can usually choose from one of several formats when creating paid advertisements on social media platforms, including image ads, video ads, collection ads, carousel ads, and more.

Search Engine Marketing (SEM)

Search engine marketing (SEM) is perhaps the most well-known type of paid digital media advertising. It allows online shoppers to quickly find a site and its offerings. SEM includes both the paid search results at the top of the results page and product listing ads with images and pricing. The most challenging part of SEM is keyword bids. Advertisers are charged when users click on their paid search results, which links to a relevant page of their site. The cost of that click is determined during a bidding process that occurs each time a user lands on that results page and in which multiple advertisers are bidding on the same keyword(s) or similar ones.

Advertisers not only must compete against others for the right to be in one of the limited SEM for a keyword but also are competing for the customer’s first click. Because there are several reasons to question both the quantity and quality of the first click, the wisdom of making it the primary target of SEM campaigns is questionable. First, only a small percentage of online shoppers convert on their first visit. Second, the traffic lost by not running ads with attention-grabbing messages on their landing page can appear to be a lost opportunity for a small cost. Third, many customers can be classified as search, which can also include competing sites. However, shoppers who buy from a competitor on their first visit most likely are not brand loyal.

Social Media Advertising

Social Ads are paid media services offered by social media networks in exchange for a fee. Many services allow users to pay to promote their posts. Paid social advertising has become a vital form of advertising for many e-commerce companies. Hundreds of billions of dollars a year are paid to social networks to use targeted advertising services, which have emerged as important players in direct-response advertising and, increasingly, in awareness advertising as well. There are many other paid social ad services as well, such as TikTok and Twitter ad services. More may appear on the horizon as e-commerce businesses seek to use digital media to expand their scope of business.

Paid social media advertising can be configured to meet a business perspective. Traditionally owned and paid media have been limited to a business itself, but social ad services allow a business to pay to use both owned and paid media belonging to the social ad services. These networks worry about excessive advertising on their platforms; like any responsive business, they want their services to maintain the goodwill of their user base. They are able to execute instruction sets upon the clicks of users in their network: tracking who is linked to whom in a wide social network, and what they say and do. When sophisticated data owners want to send specific messages to narrow audiences, social messaging exercises insights from proprietary information with the goal of achieving messages that achieve the significant marketing results that are the ad’s objective.

Display Advertising

Display advertising is perhaps the most recognized form of paid media advertising by e-commerce companies. Any picture or graphic you see on a website that is paid for and links back to a specific manufacturer or e-commerce company is display advertising. Display advertising can take the form of websites with ads on the side, interstitial video ads that link back to a certain product or service, or content recommendations at the bottom of an article. E-commerce companies can either hand-select specific websites they want their ads to appear on or use tools to automatically select sites they will advertise on based on specified interests and sites. Companies can then go into the dashboard and see how their ads are performing. But how do companies get the best out of their display advertising?

Let’s consider a practical example. Suppose Jane runs a women’s swimwear company. Over the last couple of years, she has seen healthy sales but realizes she does not receive a large new customer base directly through her website. After a bit of research, she realizes she has an email list of people who have purchased her swimwear in the past, and it is fairly large so she decides to take advantage of it. Jane hires a display advertising company, submits the designs she wants to use, and says she wants the ads to target women who have previously been emailed about her brand. The display ad company then goes ahead and puts the ads on websites where women who meet Jane’s advertising profile frequently visit. Jane’s ads are finally seen by potential customers who are most likely to be converted. This is retargeting at its purest form and is the most effective out of display advertising, as these potential customers have already been exposed to Jane’s swimwear at one point, making them likely to be interested in seeing her ads again.

Affiliate Marketing

Affiliate marketing is a kind of paid media advertising where e-commerce companies enter into a commercial agreement with publishers who agree to advertise the e-commerce merchant’s products for a small commission on any sales that the publisher helps generate. This type of paid media advertising has become very popular in the past decade, as it provides a tool for e-commerce companies to outsource their marketing efforts to others who have a high degree of expertise in marketing products. The great thing about affiliate advertising for the e-commerce company is that they only incur media advertising expenses when they actually make a sale. An e-commerce company needs to choose carefully the publishers they partner with to make sure that those publishers are a good fit for them.

While affiliate marketing commissions typically range from just under 1% to as high as 6% to 7%, larger publishers can command commissions of 20% or more of the sale price. There is the potential for the sharpest of those publishers to make a lot of money from affiliate advertisements for a small number of e-commerce companies. On the other hand, she probably makes several million dollars a year for e-commerce merchants, so they may be more than willing to pay her a higher-than-standard commission for the sales she drives to them. The same principle holds for leading travel video channels, which have made affiliate marketing with travel-related e-commerce companies and online travel agencies into a big business.

Measuring the Effectiveness of Paid Media

Measuring the Effectiveness of Paid Media

As e-commerce continues to grow and evolve, marketing methods keep changing to meet the demands of the marketplace. Paid Media Advertising is in many ways the most effective form of marketing currently, but not every type of Paid Advertising works for each brand. Because of this, it is key to be aware of your options for Paid Media Advertising and to keep on top of your analytics.

The Internet is the busiest marketplace in the world, so with the right marketing spend and approach, your e-commerce company can see an exponentially higher return. A significant portion of revenue of U.S. businesses selling on marketplaces comes from traffic generated by marketing outside those marketplaces. The most effective e-commerce tactics use Paid Media Advertising to drive sales.

But how to determine what works? Measuring the effectiveness of these types of advertising can be difficult. What you should be looking for are Key Performance Indicators (KPIs). Many companies monitor dozens (if not hundreds) of KPIs a day, but determining the key ones for your business is a step that needs to be taken before diving in.

In general, the best practice is to run Paid Ads as part of a multi-channel strategy, and a specific goal that relates to your target audience set for those Ads. It’s often said, “don’t throw good money after bad,” and the same applies for utilizing Paid Media Advertising. Defining a measurable goal before creating any type of advertisement will help determine if your Ads are effective, and keep your strategy fluid as time goes on.

Key Performance Indicators (KPIs)

Key Performance Indicators (KPIs)

Business analysts have established various ways to measure the effectiveness of paid media advertising. The most popular is obtaining a tangible, demonstrable return on investment (ROI). This means that for every dollar spent on paid media, a specific dollar return is generated. When e-commerce companies calculate their ROI, they need to keep in mind that it may take days or weeks for consumers to take action after seeing their ads. In this case, it is helpful to track even more measurable keys, such as the number of clicks coming from a PPC campaign, the length of time consumers spend on the entrance page, the subsequent pages the consumers visit, or the value of the merchandise in their shopping cart.

Tracking these KPIs will help an e-commerce company accurately determine who responded to the paid media advertisement, allowing the company to track sales conversions. The results of such tracking may show how many of these advertisements resulted in actual purchases, how many products were purchased, or the dollar value of total purchases. By carefully tracking the data associated, an e-commerce company can identify its most profitable consumers so that it can refine its target audience and make its campaigns more effective.

Calculating ROI can be a challenge for e-commerce companies. For example, how do you assign credit for a sale that happens days or weeks after a potential consumer has been exposed to an ad? Did the consumer come back and purchase after getting an email reminder from the e-commerce company? Did it matter that the consumer was already familiar with the brand?

Return on Investment (ROI)

Return on Investment (ROI)

Measuring the effectiveness of paid media advertising is an essential step in determining how to allocate your marketing budget. Whenever you spend money on advertising, you expect to get something back. But how do you know whether your paid media advertising is more effective for your company than other marketing activities? The measure most business owners rely on is return on investment (ROI). This is a measurement of how much money you’ve made as a direct result of your advertising initiative, divided by how much you spent on the advertising. As with other key performance indicators, it is most useful to compare your return on investment for different advertising initiatives to see which is performing best (or worst).

For instance, imagine you estimate the revenue generated from your paid media advertising over the year is $100,000 and your total spend is $25,000. Although this is a substantial revenue return on a $25,000 investment, your ROI is only 4 and is probably pretty low compared to other marketing activities. If you were to take the revenue number as a direct result of your sales and use this calculation, you would see a much higher ROI number. Would you rather be spending your money on paid media advertising, or sending your sales team on trade missions? If your answer is the trade missions and $50,000, it might be best to tell your sales team to pack their bags. A better way of calculating your ROI for paid media advertising would be to take the total revenue from sales generated with the advertising campaign and subtract the ad spend. You would then divide this number by the ad spend. For example, if you spend $50,000 on a campaign, and sales attributed to the campaign are $150,000, your calculation would look like this: ($150,000-$50,000)/$50,000 = 2. This time, your ROI would be 2, meaning you would generate $2 for every $1 you spend on advertising.

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is the cost associated with acquiring a new customer. In other words, it is the total cost of sales and marketing associated with acquiring a new customer divided by the number of new customers acquired over a specified time period. CAC is of paramount importance to e-commerce companies, as it is one of the major factors that impacts the overall profitability of the company. If a company spends too much to acquire a customer, it will have a tough time operating profitably.

As the digital marketing landscape gives companies plenty of options to target customers, the CAC varies dramatically depending on the paid channel that you are using, your targeting tactics, and the product or service that you are offering. For example, retargeting ads work by tracking website visitors via cookies and following them around the web with display ads, targeting only those who have previously shown interest in the company. The CAC associated with using retargeting ads is usually below other digital advertising channels simply as it is much more targeted and serves the ads to people who are much more likely to convert. As CAC is a critical metric for the success of e-commerce companies, it should be tracked frequently and replaced with more expensive channels or marketing strategies if the CAC begins to increase. Companies focused on growth track based on a period analysis of new user growth trends and spend and CAC ratio, while those focused more on efficiency generally track based on contribution margin and historical analysis to determine what kind of sustainable sales growth they can afford to have.

Improving CAC does not always mean reducing spend – sometimes it’s better to spend more to acquire customers that have a higher business value. Happy customers spend more – around 30% more in the first year and 60% more over their 3rd year with the business.

Challenges in Paid Media Advertising

Challenges in Paid Media Advertising

Paid media has its limitations. Below are some challenges in paid media that can cause strain for e-commerce companies.

Ad Fatigue User’s overall fatigue with the ads is growing. The hope of advertising is that it informs potential consumers and reminds them of the brand’s presence. However, a general sense of disconnection exists nowadays-a disconnect between advertisers and the potential consumers they think they want to target. They may think targeting younger consumers with fun, cool ads that cross their feeds, pushing them to various platforms with rosy pictures generating FOMO will easily convert them into buyers. But these consumers are served these ads fifty-six times a week. Not only are they denying these ads by subconsciously scrolling past, but many are blocking the advertisers, and others are complaining about these ads on social media. Yes, users are doing what the advertisers want: they are viewing and getting in the brands’ heads, but they are not engaging. Advertisers are not able to connect meaningfully through vision to compel their latent buyers to take action, drive engagement, and convert.

Increasing Competition To get consumers’ attention and engagement, advertisers are in intense competition with one another. They are using every trick in the book to hijack them from other advertisers in the same niche. A few weeks before Christmas, one of the world’s top athletes posted a picture on social media of himself and his children on vacation wearing particular brand leggings. Immediately following this post, it was impossible not to find this brand’s ads on other social media platforms. Its ads dominated various platforms. Advertisers are battling to get consumers’ attention in various ways. Suppose more and more companies are competing for engagement with email blasts and newsletters, digital advertising. In that case, the competition for clicks gets stiffer, and the increased cost and outlay impact the budget.

Ad Fatigue

One of the most significant drawbacks of spending money on paid media is the possibility of ad fatigue, and it may be even more common in e-commerce than in brand campaigns. E-commerce companies often target a narrower set of audiences with their media, and the messages are usually very specific. When campaigns drive the same audiences to the same offers for extended periods, this can create a situation where a target audience sees the same ad far too often, resulting in little or no engagement with it. Ultimately, there is little economic benefit in using paid media to drive clicks and traffic to a sale offer that virtually every member of the target audience is already aware of. The click-through rate will eventually stall or plummet, and there may be few new customers to acquisition-level offers, so additional media spend may look less and less effective. Unfortunately, e-commerce campaigns often have a narrow time frame for achieving success. They are usually limited to the sales period, possibly with a week or two before if a teaser campaign is used, and almost always very focused on a response or action. If there are too few customers left to reach in a given media channel, why keep paying for their disinterest?

The best strategy is to build some flight dates into the paid media calendar, separating “like” promotions with timing incentives that give an audience a reason to take notice again. It’s not uncommon for brands to go to great lengths to introduce fresh creative messages into the campaign, but freshness of offers continues to be important as well. When the same offer is shown repeatedly, it’s not uncommon for target audiences to change the way they consume all ads.

Increasing Competition

Compared to the P.V. these are limited e-commerce, so many try settings at the same time. For example, more than 5 million advertisers utilize Facebook Ads. Spending on social media ads in the U.S. shot up 5 percent year-over-year to $12.77 billion. But here is a more interesting number. Total digital ad spending worldwide will reach nearly $880 billion in 2022, or $473 per person on earth. Reports indicate more than 250 thousand brand advertisers on its platform! And that number is quickly approaching 300 thousand. All of this points to fierce competition and the simple fact of digital advertising today is that it isn’t cheap anymore.

This increased competition raises costs, reduces reach, hurts conversion rates, and makes it more difficult to separate yourself from the pack. Tactics that may have previously worked – a top-of-the-line ad and solid audience targeting – are far less effective due to the sheer number of advertisers online. With costs increasing, small- and mid-sized brands are finding it more difficult to profit on paid media, and the companies that are seeing success allocate tons of cash towards advertising or rely on a live and viral DTC business model. This puts a strain on e-commerce platforms as brands that previously flourished with low-cost, sustainable paid ads begin to shut their doors.

Budget Constraints

One of the main reasons why e-commerce companies do not always achieve their goals by using paid media is their lack of budget, or more specifically, that the budget is not big enough for the returns needed. Some merchants complain that their ads do not produce any sales (or not enough) because they are not willing to invest adequately. Without sufficient budget for paid ads, it is not possible to have enough traffic to get meaningful results, as they will often just be inconclusive.

So, how much budget should businesses allocate for paid media? Given the fact that small merchants often sell low ticket items, it is not reasonable to expect them to make returns or profits from ads in the first few days. What they should do is give ads some time without pulling them or changing them each day, in order to average out the initial data. They should also consider the expected profitability during testing. If profitability during full rollout is expected to be negative, and the brand does not have sufficient budget to accept a loss during rollout, a better alternative might be trying paid media for less costly campaigns, or choosing a different channel.

There is also the little detail of depending on pixels, tags and other backend solutions to help tracking conversions – these are subject to errors and may be misreported or inaccurate. Brands should also permit enough time for building momentum during the initial phase once ads go live. In this case as well, it is important to be extra careful before making decisions, as there are different things that could eventually lead to wrong conclusions.

Best Practices for E-Commerce Companies

While developing a paid media strategy can be challenging, there are best practices that e-commerce companies can follow to allow them to maximize efficiencies and improve results. These include defining their target audience, creating compelling content for advertising, and utilizing data to analyze performance and drive optimization.

It’s crucial to identify what group will provide the best returns on paid advertising. Each audience or persona created by the campaign will take a different path based on that user person’s interests, buying behaviors, and preferences. Digital marketing is not a one-size-fits-all strategy. It’s important to identify those user personas and create content targeting that specific audience. From the audiences you select, providing your agency with any first-party or third-party audience data you have is necessary so that we can create a custom audience. Knowing who your audience is allows us to target effectively on a wide range of platforms.

Once your e-commerce company identifies its desired target audience, the next step is to create captivating ad content. E-commerce brands should take advantage of various ad placements available on platforms and produce optimized content for each placement. Creating a captivating ad experience increases conversion potential. Think about the user experience once they click on your ad. Are you sending a user to their homepage or the advertised product page? Which devices are being used to make these purchases? These factors can directly affect your conversion rates.

Lastly, another best practice: ensure you analyze performance and utilize data to drive optimization. The cliché “If you cannot measure it, you cannot manage it” rings true with digital ads. Paid media advertising is an iterative process. Depending on the type of audience (cold, warm, or retargeting), depending on the ad creative, and depending on the product (special offer, new release, evergreen), the time to conversion will vary.

Defining Target Audiences

Paid media advertising can be an extremely powerful vehicle for e-commerce companies looking to acquire new customers quickly and effectively. In a paid media space where advertisers are vying for shoppers’ attention at various touchpoints along the customer journey, it’s critical that e-commerce companies run campaigns that are finely tuned to reach the specific customer cohorts that are likely to take action. The first step in this process is defining target audiences, and in this section, we’ll go over best practices for creating those target customer segments that will drive results. Your campaigns can’t be all things to all people, so you need to take the time to build a well-researched portfolio of target segments that represent the various types of consumers you’re trying to reach. For e-commerce brands, a one-size-fits-all approach rarely works. By developing targeted customer segments that correspond to the different personas you’re trying to reach, you can craft messages that are tailored to each audience’s particular characteristics. Additionally, you can then show your ads at times and places that are likely to lead to conversions rather than ad fatigue or annoyance. Focus on fashion-forward younger consumers? Build a customer group that is concentrated in the 18-34 age bracket. Trying to appeal to price-sensitive families with children? Create a segment that has a median income level lower than the rest of your customers. To build your list of target segments, start by analyzing your existing customers, looking for clues that indicate which types of customers are likely to convert with your products. Use deep-dive analyses that take into account such factors as demographics, purchase habits, brand affinities, and seasonality. Then apply your learnings to other customer data sets, such as your site visitor data and any tries you have of engagement data from social media. While social engagement doesn’t always yield bigger audiences, it can be a good data point to consolidate what you already know. By building a targeted audience strategy, you’ll not only decrease your media purchase costs but also elevate the overall worth of your campaigns.

Creating Compelling Ad Content

Paid media advertising allows e-commerce companies an advertising advantage to effectively market and endorse their products and services across the internet with digital ads. The ease of creating and launching ads across paid media channels is just the first step in successfully conducting paid media strategies. As is true for all advertising channels, e-commerce companies need to develop engaging ad content that appeals directly to its audiences. The content found in the ad is the most important consideration. After all, it is the advertisement itself that audiences respond to — it’s what they click on and what directs them to the e-commerce company website. Therefore, every business must consider a number of important elements when designing advertising content. Textual elements must fit the audience and platform. Product promotions, including sales and specials, should be clearly advertised either in the text or visuals to encourage clicks that lead to additional conversions. Engagement-worthy images must surround the message. Testing the ad for effectiveness and optimally utilizing it for maximum durability and function is essential. E-commerce businesses must pay close attention to their overall brand image and identity when creating ad content for paid media channels. The images used and the ad copy printed should adhere to the business’s established identity standards across all ads. Discrepancies between the ad and the e-commerce website may lead to confusion and ultimately distrust among potential customers. Again, A/B testing of varied ads allows for exact measurement of ad success in delivering visitors to the website – the first and most important step in converting click-throughs into sales and successfully generating revenue with paid media.

Utilizing Data Analytics

To find the right mix of ad strategies, e-commerce companies should conduct an A/B test, where two versions of an ad (with one key variable changed) are tested to see which version is more effective at attracting viewers. A/B testing can be used for more than just ad content optimization; different audience segments can be tested, different ad placements, times of days, etc. Advertisers can then analyze this data to guide future ad choices.

Analytics are imperative for any marketing campaign. E-commerce has the added challenge that purchasing generally takes place on a website, company apps, etc., digital environments for which user data collection and analysis are well established.

Competitor analysis focuses on similar companies and their paid advertising efforts to understand options for improvement in your own efforts. It can yield insights into industry trends, branding, type of content or promotions that attract users, frequency of updates, new/existing customers, etc. Once your existing clientele base is tracked and data about them gathered, it becomes easier to note where promotions might be lacking and/or ineffective.

Customer life cycle tracking allows marketers to optimize ad efforts based on where the customer is in their purchasing process. It answers questions such as, Is the client a potential lead or first-time purchaser? An abandoned cart and return visit? A loyal repeat purchaser? A non-active client? An analysis of where the customer is in the lifecycle allows for more effective targeting of the ad message, promoting repeat purchases or luring back disinterested customers to drive more sales.

Case Studies of Successful E-Commerce Campaigns

No e-commerce marketing strategy is complete without Paid Media Advertising. In this section, we take a look at three real-world case studies of successful e-commerce campaigns, all of which illustrate the importance of running ads online.

Let’s get down to it.

Case Study 1: Company A Company A is a well-known dog treat company that specializes in making “better for your dog” snacks. Back in 2014, while Company A was competing in the ultra-competitive, zero-sum world of dog treats, the company was not just selling their incredible products but also educating dog owners about dog health.

Understanding their perfect act, Company A promoted educational content for pet owners to its ideal audience on social media. Simultaneously, they promoted their delicious products to customers who were already in the sales funnel, enticing potential customers with ads showcasing their unique flavors.

The Results Company A spent $350,000 in ad spend over the span of just a few months. Paid Media Advertising helped them achieve multi-million dollar revenues in four years, despite facing fierce competition from both other dog treat brands and e-commerce giants. By focused targeting, A/B testing, and a dedicated strategy, Company A began positioning themselves, and their brand became synonymous with dog happiness.

Case Study 2: Company B Company B found huge success with digital marketing by focusing on branded keywords, retail promotions, and social programs. They had realized their growth goal but through less-than-efficient spending in digital marketing and weren’t investing in performance marketing in alignment with their sales goals.

Company B began recording 10% organic traffic by optimizing their homepage without incurring costs. They adjusted their ad spending, which reduced their spends and shifted those expenditures towards another platform, and their conversion rates shot up by 40% and revenues by 200%. By shifting paid search dollars, their margin looked better because their conversion rate was higher on the new platform.

Case Study 1: Company A

In March 2000, Company A was your typical wood products manufacturer. They offered a somewhat confusing variety of wood products on their site, where most of them were listed without prices. They received few sales remove from the marketplace; as a result, Company A had trouble attracting sellers. Company A’s site was hard to navigate; only a few pages had any links (and some too many). It wasn’t an optimized storefront.

In June 2000, Company A used the combination of a pay-per-click program and a multi-phase paid advertising program to boost traffic to 50,000 visitors and 2,000 sales per week. By July 2001, it was obvious the idea worked. Traffic exploded to over 80,000 visitors and matching that number of sales. By July 2004, when the program achieved its maximum maturity, Company A was generating sales in excess of $1 million weekly. Pretty good for a business that was founded in a garage just six years earlier.

Case Study 2: Company B

Company B is a beauty and cosmetics business that offers popular online subscription services. This company was constantly looking for cheap marketing strategies to boost customer acquisition. The problem is, they were getting so many new subscribers each month that they were sending most of their inventory to new customers and barely getting anything back from existing customers. After receiving some advice from team members, the company agreed to try a few ads. The obvious target? Women in their early twenties. They did some research to determine the keywords that users in this demographic tend to search for when looking for beauty or make-up tutorials. Before long, the ladies had found a niche market for themselves, and by creating their own internet buzz, they didn’t need industry placements consuming their precious budgets anymore. They wanted something more avant-garde that would attract attention. The company has since grown into a multi-disciplinary line, but continue to hold true to their mission, dedicated to help girls everywhere look and feel amazing in minutes flat. Today, the beauty brand is sold internationally and has over two million subscribers who receive over a kit each month.

Both Company A and B saw customer base growth thanks to social media and media content. Without spending much money on advertising, they were able to tap into an audience that could use their services. They set themselves apart with customer-first initiatives and it reflects in their positions in the market. Both companies have their challenges, but have just been able to push through, thanks to the fact that they are a small team with a passion that has translated into something that has been able to capture the attention of consumers. They work hard and they have a strong product, and both focus on helping their audience.

Case Study 3: Company C

Company C was instrumental in helping organize a particular event. As the event drew nearer, the company engaged in promotion through paid media advertising in the form of magazine advertisements that included the event details. Two weeks prior to the event date, the company launched a six-day trade show where visitors physically visited the trade show booth.

Compared to other e-commerce companies involved in the event, our company’s physical booth attracted more foot traffic. Our advertising investment paid off because we spent $20,000 in the magazine but ended up with nearly five times the initial amount (a gross return of $100,000). By selling larger quantities to consumers at the event itself, the revenues greatly exceeded the initial investment.

Paid media advertising is valuable for e-commerce companies. However, careful planning and implementation are required to achieve the best results. Planners need to consider the choice of advertising vehicle that will have the biggest impact, leading to actual purchase transactions online or at specific physical locations. Additionally, they need to know the acceptable cost for the target segment and how to communicate with target consumers at the right time, place, and manner. When companies and brands achieve a reasonable level of visibility and market awareness, consumers will behave favorably before making the purchase decision.

Future Trends in Paid Media Advertising

In 1999, there were 260 million people and 150 million websites in the US. This translates to 1.73 people for every website online. In 2020, there are 331 million people and upward of 1.8 billion websites around the globe. This translates to 1,081 people for every website online. All of this adds up to a rather cluttered ad scene, which only makes it harder for marketers to get their customers’ attention. To cope with this, brands are adopting new strategies to move away from ad fatigue and get customers to engage with their ads again. Here are four trends in paid media that you can expect to see in the near future. AI enables automation to make ad optimization easier. Artificial intelligence used to be in the realm of science fiction. Now, we see it in every facet of our lives, from virtual assistants on our smartphones to the tools we leverage at work to streamline our processes. Paid media is no different. Search engines and social media platforms have made automation more widespread in digital advertising via features like automated bidding and audience targeting.

Furthermore, through advances in natural language processing, organizations can also create compelling ad copies or blog posts within seconds. By the looks of it, AI is bound to be a mainstay in current and future marketing strategies. People are serious about their data privacy. Big data is big business, but recent tightening around data privacy policies has forced marketers to rethink their approach to creating personalized advertising experiences. Major companies have followed suit. New tracking and data policies have been implemented that will change the future of online data collection and targeting. The return of contextual targeting and cookieless advertising isn’t a negative development at all; it’ll enable businesses to create marketing experiences that don’t compromise users’ data privacy. Marketers will begin to lean towards contextual targeting again, whereby ads are served that are contextually relevant to the page rather than based on the online behavior of users.

Artificial Intelligence and Automation

Advertising on paid media allows e-commerce and other businesses to track their growth. With tools that produce resources necessary for advertising campaigns on platforms, they can monitor return on investment, making it easier to determine how worthwhile campaigns are.

Technology is needed today more than ever because it enables companies to access automation and artificial intelligence. Artificial intelligence tracking software allows for exhaustive reviews over the consumers that interacted with various aspects of a business, whether visiting the website or social media without making a purchase. This software organizes users by behaviors and includes tracking features to understand how the consumer went through the purchase funnel. This information is essential for effective retargeting, making paid media, in conjunction with automation tools and artificial intelligence, the best market entry for online businesses.

There are also paid media tools that are user-friendly and require minimal effort. Templates have made managing social networks and paid advertising today easier for e-commerce and companies. Any person can generalize accounts, scheduling posts for every week and month. Having this pre-planned thanks to templates allows you to save time for what really matters: growing sales! These templates can also be considered for advertising, as they allow for organized accounts that can be updated at each step of a launch.

Personalization and Customization

Today’s consumers expect personalized experiences at every touchpoint in the customer journey, from pre-purchase discovery to post-purchase follow-up. With more data than ever before, advertisers have the ability to inform their marketing strategies with a wealth of behavioral data gleaned from their customers’ web traffic and social media profiles. Together with demographic and psychographic information, audiences can be targeted with the highest degree of specificity, resulting in better quality leads and increased conversions. Paid media advertising platforms offer brands multiple ways to create personalized messages that resonate with their lead’s interests and pain points. From search terms entered in ads to relevant articles and product pages displayed on social media, paid media advertising copy and creatives can be customized with extreme precision. Retargeting advertisements can serve strategically timed reminders to consumers who browsed products but didn’t convert, while lookalike audiences on social media can help brands expand their reach and discover new potential customers who are highly likely to convert. Automated ad placements on display networks and advertising retargeting are powered by machine learning algorithms that run constantly in the background, making them an invaluable resource for e-commerce companies. All that’s left for marketers to do is craft appealing messaging and creatives, and let the ad drivers take over. When executed correctly, paid media advertising can feel less like outbound marketing and prompt users to visit a website to learn more about a brand, product, or service on their own volition.

Emerging Platforms

As the future of e-commerce drives the gradual disappearance of many stores, such as e-commerce brands, finding ways to stand out in a social media landscape cluttered with advertisements becomes increasingly essential. The e-commerce sector signed a deal to help small businesses with paid advertising. TikTok is the most recent platform to jump into e-commerce advertising. Other platforms already offer paid advertising opportunities for brands. Social dabblers may be taken aback by the stalled growth in organic content when it comes to e-commerce businesses: The truth is that your cute cat posters are competing with fashion week à la digital for attention on Instagram feeds. If you want clicks and handpicked silk scarves, you’ll need to pay for it.

In 2021, it was projected that U.S. advertisers would spend more on digital than on traditional media for the first time ever, with 43.3 percent of the total coming from digital and the rest going to radio, television, newspapers and out-of-home advertising. Social media ad revenue was projected to approach $60 billion, 14.7 percent of the total, thanks in part to the holiday advertising surge for retail brands focused on driving online sales. While one platform dominates, with a 79 percent share of U.S. social media ad spending and a revenue of $31.2 billion — up 31 percent from the previous year — another is right behind it with $11 billion, a 200 percent increase from the previous year. Ads on one platform are likely to win over younger consumers, particularly Gen Z, and brands that want to speak to them. Of course, as any digital marketer can tell you, you must pay to play to keep a social following active.

Conclusion

In summary, paid media advertising is fundamental for e-commerce companies seeking to grow their online presence and drive sales. Through the right media mix, creative messaging, and engaging audience segments, businesses can drive immediate revenue in a highly measurable way. Among the other media used to reach customers, paid media stands out for being the only marketing channel where companies are able to reach customers until the end of the buying funnel, converting interest into sales.

Paid media advertising is not without its struggles. Competition on search, social, and e-commerce channels continues to grow, creating challenges related both to budget allocation and fluctuation of advertising costs. In the case of e-commerce, it can be difficult to gauge whether investments into paid media are paying off in terms of conversions and website traffic. Thankfully, there are tools and tactics available that can help brands drive maximum ROI from their paid media advertising investments. By taking advantage of emerging paid media opportunities, investing in measurement solutions, and combining paid media with a wider marketing strategy that includes email and retention tactics, e-commerce brands can work towards maximizing the efficiency of their paid media investments and driving profitable revenue growth.