Advertising For Ecommerce
Editor’s Note: This article was originally published on February 14, 2020.
Ecommerce store owners wear many hats.
You have to deal with website management, order fulfillment, inventory management, content creation, vendor management, hiring, and so much more.
Whether you’re in the early stages of launching a new brand or managing a successful ecommerce business with millions of dollars in revenue, new customer acquisition is always a focus, and one of the best ways to acquire new customers is through advertising. Read on to learn more about the different types of advertising you can explore and see how you can incorporate advertising with your owned marketing strategy
What is ecommerce advertising?
Ecommerce advertising is the act of placing paid content on an online or offline property. Online properties include a website, search engine, social media network, podcast, newsletters, or other interactive online property such as chat or instant messaging.
Offline properties include more traditional forms of advertising such as TV spots, radio commercials, out-of-home advertising (such as billboards), direct mail campaigns, and more.
These paid messages allow you to reach people who may or may not have heard of your business and products. The goals of advertising campaigns can include everything from growing brand awareness to getting a direct response such as a newsletter subscriber, app signup, or a sale.
You should always test, experiment, and iterate on the ad strategy your business adopts.
An advertising strategy or medium that works well for one ecommerce business may not work as effectively for another. It’s important to always be testing and measuring your return on investment (ROI) on each channel, both online and offline.
When starting out, it’s usually best to test one or two specific channels with a small budget. It’s always better to scale up a small budget on ads that are converting well, rather than start with a much larger budget and potentially waste a lot of money trying to figure out what works.
Types of online advertising for ecommerce
Before starting any type of advertising campaign, it’s important to first determine the goal for the campaign.
You may want to drive sales and revenue, improve brand recognition and awareness, drive website traffic, or acquire more email addresses for your mailing list. Each of these goals will have different KPIs (key performance indicators) associated with them.
For example, to grow brand awareness, you may want to measure the number of visits you get to your website from branded search, impressions and click-through-rate (CTR) on your ads, unique users to your website, and compare your brand name to competitor brand names on Google Trends. To track sales, on the other hand, you’d measure add-to-cart transactions, calls, signups, sales, repeat sales, customer acquisition cost (CAC), and lifetime value (LTV).
As you monitor these metrics, you’ll also need to be wary of the rising CAC attributed to paid channels. While they’re unquestionably effective when it comes to catching the eyes of consumers, you’ll need to consider how much to invest in these third-party platforms as your business grows and scales.
Below are the various types of online advertising channels, in order of low intent to high intent—or in other words, in order from customers passively browsing the web to customers who are seeking out a product.
Display ads are also referred to as banner ads and they’re among the earliest forms of web-based advertisements. They’ve gotten much more sophisticated over the years with ad networks like Google dynamically targeting people based on interest, demographics, location, and much more.
Going into display advertising with a “direct-response” mindset is a recipe for failure. Most ads get an extremely low 0.05 percent CTR, according to SmartInsights. This means that if 10,000 people see your ad, you can expect to get only about five clicks! And not all clicks result in a sale.
That being said, display ads can be very effective for growing brand awareness. For example, if you run an active lifestyle brand that sells workout gear, you may want to place ads on fitness-related blogs and websites and target people who have shown an interest in fitness-oriented topics. These people may see your ads on these sites, which could drive up direct and organic traffic. When it comes time for them to buy activewear, they’ll be more likely to remember your brand and search for it during their consideration.
Display ads are typically billed in cost-per-thousand impressions, or CPM, format. Additionally, this cost has risen significantly in the last few years. Depending on your ad placements and targeting strategy, CPMs can vary from as low as $0.30 to $10 or higher but tend to average in the $3-$5 range.
Unfortunately, a high CPM and low CTR means these costs are often unstainable for ecommerce businesses. Although many marketers still depend on display ads to increase brand awareness, businesses have strategically embraced a marketing strategy that relies upon their owned marketing channels—or the channels within a brand’s control such as your website, email, and mobile marketing—to gain more control over the customer experience, cut costs, and communicate more effectively with customers on their own terms.
For display ads, start with a small budget and continue to test and optimize to ensure your ads are reaching the right audiences.
Facebook and Instagram ads
People spend an average of two hours and 33 minutes per day on social media, according to teacher. Facebook is the most popular at an average of two hours and 24 minutes per day, while Instagram averages 53 minutes per day. Much of this usage is mobile as well.
In addition to being a destination where billions of people spend their time, social media networks provide a huge variety of ad formats and targeting options.
Facebook, for example, provides options to display image-based ads, video ads, lead ads (where you can capture the contacts information without them needing to leave Facebook, or even input any information), slideshow ads, dynamic product ads, and more. Because Instagram is owned by Facebook, you can also manage all of your Facebook and Instagram ads together in the Facebook Ads Manager interface.
Facebook also provides a multitude of targeting options including interest, location, connections, behaviors, and much more. Like with all advertising channels, you’ll want to start with a small budget and experiment to find the format and audience targeting settings that work for you.
Similarly to display ads, though, the rising cost of advertising on Facebook and Instagram is creating a glaring issue for marketers as they try to grow their ecommerce business. In fact, costs for these channels have gone up 90 percent year-after-year.
While social media advertising will likely be a necessity for brands to grow their lists and acquire new customers, you’ll have to be strategic about your spending and balance the costs by optimizing owned marketing channels. By integrating your own customer lists to create lookalike segments, you can become more precise with your social targeting and increase ROI of paid advertising.
If you’re running an established ecommerce brand with an existing customer list and a decent amount of web traffic, the best place to start is to build a custom audience and a lookalike audience.
A custom audience allows you to upload a list or target people on Facebook who have visited your website (via the Facebook tracking pixel). Because they’re already familiar with your business, you have a much higher chance of converting them than somebody who has never heard of you before. You can also segment these audiences based on whether or not they have purchased from you before, allowing you to further customize your messaging.
A lookalike audience, on the other hand, is an audience that’s dynamically generated based on Facebook’s algorithm. This is an extremely powerful way to reach new people who match the same audience characteristics as one of your custom audiences.
For example, let’s say you pull a list of 1,000 of your highest LTV customers. Facebook can run that list against their algorithm, determine what common qualities all of these people have in common, and then find new people who also meet those qualities who may not have heard of you before. This is much more effective than targeting based on demographics or behavior alone.
To get started with Social Ads, visit Facebook for Business.
Google Ads (formerly known as Google Adwords) is a great way to get in front of customers when they’re searching for products that your business offers. This ad format is also referred to as PPC (pay-per-click) or SEM (search engine marketing). Google popularized this PPC model in which you only pay when somebody clicks on an ad to visit your website. These are typically text ads that are shown at the top of search results, above the organic listings (unpaid search results).
When your ad shows, and who it shows to, is determined by a complex auction-based format, which incorporates a variety of factors, most of which are in your control. Google factors in the following when determining your ad placement:
This is arguably the most important factor and the one most within your control. The keyword that you choose to target is important because it’s what triggers your ad to show when somebody searches for that keyword (or a derivative of that keyword).
Google has three keyword match types: Broad, Phrase, and Exact.
- Broad match: This allows your ad to be shown when the keyword, or a variation/synonym/misspelling of that keyword, is present anywhere within the query.
- Broad match modifiers: These bridge the gap between broad match and phrase match. These are denoted using a + (plus) sign, which indicates that the keyword and any close variants need to be a part of the query. This will not factor in synonyms. For example, if your broad match keyword is “men’s pants” and your broad match modifier keyword is “+men’s +pants,” the search term “buy men’s pants” would trigger for both but phrase match wouldn’t because the word “buy” is in there. If the search term is “buy men’s trousers,” the broad match would pick up on “trousers” as a synonym of “pants” but a broad match modifier wouldn’t.
- Phrase match: This allows your ad to be shown only when the keywords are present in the query, in the order the user is searching. For example, if your keyword is “men’s socks,” your ad would not trigger for somebody searching for “buy socks for men”. It allows for close variants to be shown, but not synonyms. It would trigger, however, for somebody searching for “men’s socks for sale”.
- Exact match: This is the strictest match type and means your ad will only show if the user’s search query exactly matches the keyword you’re bidding on. This does not take any variations, misspellings, or synonyms into consideration. If somebody is searching for “buy men’s socks” and your keyword is an exact match “men’s socks,” the ad would not trigger (although this would trigger for a phrase match).
Generally, the broader your match type is, the faster you will go through your daily budget. Those with small budgets are generally advised to use exact or phrase match and adjust over time as needed. It’s also advised to regularly review your search query reports to determine which keywords and variants your ads are showing up for and to add in negative keywords for any keywords that are triggering your ads that shouldn’t be. For example, if you sell reading glasses online and one of your keywords is “glasses,” you may show up when somebody searches for “wine glasses.” In this case, you’d add “wine” as a negative keyword.
Quality score is a measure on a scale of 0-10 of how relevant your ad and landing page are to the user’s search query. Google wants to make sure that they’re providing the best results for a user’s query, regardless of whether the user clicks on an ad or an organic listing. Quality score factors in the keyword you’re bidding on, the relevance of the ad title and copy, your landing page URL, and the actual content of the landing page itself. For example, if you’re bidding on a keyword for “men’s activewear” and the landing page you’re sending people to is about dog food, your quality score will be very low. However, if your landing page is a collection of men’s gym shorts, shirts, shoes, and accessories, your quality score will be much higher.
Generally speaking, having a higher quality score can reduce your CPC as you won’t need to bid as much for the same ad rank. Occasionally, Google won’t show ads with a low quality-score at all since they want to provide an outstanding experience to their users.
Your max-bid is the most you want to pay for a click for a particular keyword. Test your max bids for different ad groups and campaigns to ensure that you’re getting a good balance of ad position, impressions, and clicks, while ensuring your budget is actually generating ROI. If you’re not getting impressions, it may be because your max-bid is too low and competitors are bidding higher to win ad position.
Since Google Ads works in a real-time auction format, competitor bids are very important. If all else is equal (such as quality score, match type, etc.), and your max bid for a keyword is $3 and you have several competitors with a max bid of $4, your ad will likely not show until the competitors’ daily budgets are depleted. On the flip side, if your max-bid is $4 and your competitor bids are $3.50, you will only be paying $3.51 per click since you only pay a penny more than the next highest bidder.
Review your Auction Insights report to see who you’re competing against and what your percentage of impression share is. An impression is determined by calculating the total number of impressions your ad got for a particular keyword search divided by the total number of impressions for that search. A low impression share could indicate you’re targeting too broadly, have too low of a budget, have a low-quality score, or have another issue that is preventing your ads from showing.
This is based on Google’s historical analysis of how that keyword performs over time in relation to the ad copy and landing page experience you’re offering. Ads with a low expected CTR may not show as often as ads with a higher expected CTR.
Google paid search ads are so powerful because the intent is much higher than somebody who is passively browsing a website or social media feed. For example, using the activewear example from earlier, if somebody is searching for “buy men’s gym shorts,” it’s clear what they’re looking for. This is a great example of a high-intent keyword to bid on.
A good ecommerce Paid Search strategy should always go hand-in-hand with an ecommerce SEO strategy as the two can complement and inform each other. For example, there may be a keyword that your website is struggling to rank for organically but could be bought as an ad.
After monitoring this keyword performance for a few months, you may realize that it’s not converting very well, so you may not want to focus much SEO effort into getting that same keyword on page one. On the other hand, you may have some ad keywords that are doing extremely well, which would make sense to invest some time and effort into getting that keyword to rank organically.
Google product ads / Google Shopping campaigns
Google product ads are similar to standard Google Ads in that they both display when a user is searching for certain keywords and you only pay when they click. But Google product ads are more visual since they aren’t limited to just text. They’re a great way for an ecommerce store to display inventory to users when they’re searching for something particular on Google. The best part about these Google shopping campaign ads is that you can integrate your actual inventory with them so it can include a picture of the product, title, price, reviews, and much more.
Many ecommerce platforms like BigCommerce and Shopify offer apps and integrations to easily send your product feed data over to Google automatically, which can save you time and will automatically disable ads if a product is out of stock.
You’re driving brand awareness with your display ads and social ads and growing traffic and making sales with your Google Text and Shopping ads, so what’s next? Retargeting is one of the best ways to maximize the traffic that you’re getting. After all, you’re already paying for some of the traffic that’s coming to your site and not everyone is converting. Why wouldn’t you want to stay top of mind as they go through their buying process? Retargeting is proven to help influence people to come back to your site either by clicking on the ad itself or by going there directly or through a search.
There are many different services and ad networks that provide retargeting but Google and Facebook are the most common.
Retargeting works by placing a tracking pixel on your site, which allows you to display ads to shoppers who have visited your websites or social networks. Both Google and Facebook have their own tracking pixels that you can install on your site to retarget users who visit and then leave. They also provide retargeting options and the ability to create different ads for different audiences.
For example, you may want to retarget people who have visited your site and looked at three or more pages but haven’t converted. You could also retarget people who added a product to their cart but didn’t checkout. Lastly, you could retarget people who purchased to show them complementary items that they may also enjoy.
The most important piece of retargeting (and really, any successful advertising strategy) is to make the ads as relevant as possible. Don’t try a one size fits all approach when it comes to retargeting because you’ll end up wasting a significant amount of your budget.
There are many types of ecommerce advertising strategies and networks you can take advantage of—this isn’t an exhaustive list. Continue to test and experiment with different messaging, targeting options, networks, and budgets to find the optimal strategy for your business. Start with a small budget and scale up from there, tracking the cost of CAC and LTV of each advertising channel to understand what ones are most effective and invest in those.
Additionally, remember that ecommerce advertising doesn’t exist in a vacuum. You’ll want to find a healthy balance between utilizing paid channels and owned marketing channels that provide you more control over the customer experience. As your business continues to grow, so will the costs of customer acquisition on paid channels.
When you’re paying for site traffic, the downside is that once you stop paying, the traffic dries up, which is why you should always be trying to grow your email and SMS lists. Even if somebody doesn’t purchase, there are other conversion opportunities such as an area for them to signup for your email list or receive special offers and product updates. Additionally, by capturing this information you can create a retention strategy to nurture the relationship with your customers, which will increase the likelihood that they’ll buy from you in the future.
By leveraging owned marketing channels such as your website, email list, SMS list, and mobile marketing and incorporating them in your advertising strategy, you can continue to build relationships with your customers and prospects over time at a fraction of the cost.
Interested in more ways to acquire customers and grow your lists? See how SEO for ecommerce can help.