Making the Most of Digital Marketing Channels for e-Commerce
Digital marketing is the lifeblood of e-commerce. Understanding how that blood flows is important if you want to run a successful business. Understanding the value of various channels is key to properly reading their metrics as well as determining their ROI. Improper expectations can result in not only diminished performance but also improper allocation of resources, namely manpower and money, every bit of which needs to be properly directed in order to drive profitability
As a whole, social is a channel for which the expectations tend to exceed the reality. While social media is a terrific means of generating brand awareness there is a prevalent and misguided correlation between social media presence and direct sales. According to a Practical eCommerce article, one study found that among roughly 800 retailers, social media conversion hovered around 1%.
One reason social media’s value is misunderstood is the lack of understanding of studies that tout the financial value of social media likes and followers—namely, one recent study that measured the value of a Facebook like at $174. Many interpreted this as a value presented in direct sales when in fact a number of factors and values contributed to that number, the least of which was direct conversion.
Paid media is a very wide ranging term encompassing video and banner advertising on media sites like Youtube and BuzzFeed along with other paid sponsorships including pod and videocasting. Like social media, the value of paid media almost entirely lies with brand awareness. While more expensive than social media marketing, there is much more overall control including reach, frequency and overall budgeting.
Keep in mind that while still beneficial, consumers' view of paid media is in decline with only 25% of consumers finding “the images portrayed in advertising [reflect] reality” (though the number for millennials was much higher). Because of this it’s probably best to be careful of promises and statements made in paid media to avoid further damaging that trust.
Similar to paid media, affiliate marketing relies mostly on publishers: media sites and apps that are typically aligned with a particular industry (food, fashion, tech, etc.). Unlike paid media, where money is allocated to reach and frequency, affiliated marketing is paid through sales commision (typically around 5%). While conversion rates are fairly low, payouts based on sales directly attributable to affiliates makes it relatively low cost while gaining the added benefit of brand awareness, which, in this method costs you nothing.
Affiliate brokers like Commission Junction and LinkShare make it very easy for affiliate marketers to apply to advertise for you. Brokers also take care of sale attribution and allow for businesses to set the parameters for who qualifies to market your brand. Parameters can include medium along with brand alignment and audience size.
When it comes to immediate and direct conversion and sales, search marketing, both organic and paid, directly touches customers at the bottom of the sales funnel. Organic search traffic usually costs little to nothing for e-commerce outside of optimizing for keywords and tags, and conversion rates are better than those of social media (on average 1-2%). On the other hand, paid search results carry a far steeper price tag (generated conversions rarely cover the initial investment), but it does bring value in acquiring assets like email subscribers.
Don’t underestimate the power of search as a whole and Google in particular. Search remains the biggest contributor of sales for retail generating 40-45% of all online retail orders, making visibility in search a crucial element to your digital marketing efforts.
Largely a means of re-engagement, email is proven to be the best means of extending customer lifetime value beyond the first purchase. The ROI of email marketing is one of the highest overall, delivering the best conversion rates among all marketing channels (around 3%). Not only email results in direct sales, but more importantly it is key to your customer engagement: the number of customers actively coming to shop to your site/app. In fact, the effectiveness of email marketing has skyrocketed over the last few years.
With email marketing sitting mid to lower sales funnel, email does a great job of pushing sales forward. It’s typically the second largest contributor of online retail sales among all marketing channels after search. Unfortunately, because of its ease of use, email marketing has been historically abused with volume and frequency instead of efficiency. Increasing volume and frequency often results in short-term sales gains but in the long run may lead to customer churn. Just like displaying merchandise in a store window gets the customers in the door of a physical store, the key to effective email marketing is the merchandise you feature inside of the emails. Unlike physical stores, online retailers have the luxury of Jetlore’s platform to personalize and swap dynamically merchandise for each consumer in real-time as they open emails. This allows online retailers to increase engagement among their customer audience (to up to 75%) and significantly lift sales generated by email without increasing email frequency.
Image courtesy C&EN