Expert: How social is impacting ecommerce
Kristina: Ecommerce ad spending is about 5x higher YoY (Jan 2018 vs Jan 2019). What is driving this growth?
Wes MacLaggan, SVP of Marketing, Marin Software: Retailers and marketers are always looking for ways to deliver relevant and personalized messages to consumers, and with increasingly complex and nuanced customer journeys, it’s becoming more important to understand which ad formats are designed to reach audiences at each point of that purchase journey. Shoppable ads appeal to consumers because they offer a fast and convenient way to purchase, moving users from the consideration phase to conversion, and we’re seeing marketers leveraging the format more and more as a result. Of course, this puts Amazon’s advertising business in a strong position–but the other publishing giants, Google and Facebook, clearly want to compete for a piece of that e-commerce pie.
Kristina: How are social’s new shoppable posts impacting ecommerce ad spending?
Wes: It’s a bit early to tell what ad spend is looking like for some of the newer shoppable posts and shopping ad formats on social channels, but we do know that ecommerce ad spend has been climbing steadily over the past year, and it’s not slowing down. In ourÂ Q1 2019 Benchmark Report, we saw about 39% of search budgets being allocated to shopping ads (i.e. Google Shopping Ads), a lift from the last two quarters. We get asked a lot about whether advertisers are shifting budget from search or social to e-commerce channels and that hasn’t been the case for our customers–the ad spend pot just appears to be getting bigger. The main driver of this additional budget is shopper marketing, which focuses on the customer at the point of purchase. Last minute advertising at the moment of purchase has traditionally proven be very effective — this could be free samples, lighting, ambience, cart ads, checkout offers, etc. There is huge spend here, only a small portion of which is digital (~15%), so we believe some of this budget will be making its way to Amazon ads.
Kristina: How are consumers reacting to Pinterest and Instagram’s new shoppable posts?
Wes: Again, it’s early days to tell what exactly brands are experiencing with shoppable posts, butÂ ecommerce spend is clearly on the riseÂ for both consumers and brands. Last year was the year of Amazon; it turned the duopoly into a triopoly and officially became the third largest digital advertising platform in the U.S. behind Facebook and Google. Since then, others (like Walmart) have followed suit to try to capitalize ecommerce as a channel. In addition to that trend, consumers are increasingly latching on to image-based ads on social channels.Â Facebook reported in their Q1 2019 earnings that Instagram StoriesÂ was the main contributor to the uptick in ad impressions overall. When we look at these two trends together, we can predict shoppable posts will take off noticeably this year and we look forward to tracking over time.
Kristina: How do you see Google’s shoppable images fitting in to ecommerce ads? –
Wes: Shopping Ads are proving to be an effective ad format that’s popular with users, and our data indicates that advertisers are seeing success with it. Now, Google is taking it another step further with shoppable images; consumers have the option to buy at yet another point along their purchase journey. I think we’re going to start seeing advertisers using these ad formats for that reason, but there will continue to be a learning curve as brands and agencies try to understand exactly who is in charge of these formats now that lines are blurring – determining whether the search or ecommerce teams, for example, own these campaigns will be a hurdle brands will need to jump. We see many customers asking Marin for help in managing inventory feeds and testing compelling creative for shoppable ads, so they can drive lift across their ecommerce campaigns.
Kristina: What trends are you watching in ecommerce advertising right now? –
Wes: Today’s digital ad space is growing, and ecommerce advertising has become a big part of that growth. We’ve seen Facebook, Amazon and Google rise to the top and now, we’re seeing new players emerging, like Pinterest and even Walmart. The triopoly has officially set the tone for ecommerce, helping to establish the channel as a key element to digital advertising. The trend is showing no signs of stopping and it’s leading to the blending of search, social and ecommerce strategies. Amazon has essentially become a massive search engine, Google is seeing success with their Shopping Ads and Facebook, namely through Instagram, is becoming a major ecommerce player. These blurred lines will force marketers to connect the dots across channels and obtain a holistic view of the customer journey or risk losing out to competition. The “big three” publishers have no incentive to share data or credit for conversions among each other, and that’s where independent, third party providers like Marin can have a significant impact.
Kristina: How can retailers/brands build better shoppable image ads/what are key elements of a solid shoppable ad? Â Â
Wes: One of the most important things to remember when planning your shopping ad strategy is the value of your own data, whether that’s your CRM, product sales, or inventory data. Retailers can optimize their campaigns by leveraging both first- and third-party data to be aggressive when they expect the best returns, and to pull back on products that aren’t performing as well. Ultimately, the success of shopping ads will boil down to search data across all channels. A consumer is rarely visiting a single platform over the course of their entire purchase journey, so advertisers would be missing a huge opportunity to not capitalize on cross-channel data to convert the sale.