Navigating the Rough Waters: 4 Tips for Digital Marketing Success in a Challenging Economy
It is clear from IMRG ecommerce industry data that a lot of sectors and brands are finding it a tough trading environment.
Some have called this a Covid hangover: trying to hit aggressive targets set against the momentum of a strong few years, whilst grappling with tough economic headwinds and evolving consumer behaviour.
So we thought we’d share 4 simple steps we’ve used recently with a client to maximise their ecommerce performance with great success.
1. Assess to what extent the economy is impacting your performance
In the current climate, the first step in understanding a decline in digital marketing performance can often be to assess the impact of the economy. This analysis is also usually important to provide more context for your current performance to internal stakeholders.
The UK population has faced significant economic pressure in recent years, primarily due to increasing inflation, which has certainly caused us as consumers to reconsider our spending habits. It’s tempting to attribute all declines in ecommerce performance to a struggling economy, but it is crucial to delve deeper.
We use an econometrics methodology we call Dynamic Marketing Mix Modelling, or DMMM, which helps our clients identify the growth drivers for their business, including the impact of economic factors. DMMM gives you a holistic “apples for apples” comparison across drivers including digital and non-digital media, and pricing and promotion. At the following link you can learn more about dynamic marketing mix modelling.
For brands that do not have DMMM set up, you can still take steps to turn your hunch into a data-informed strategy. In that case we suggest following a process of elimination, combined with educated assumptions, to determine the impact market conditions is having on your slow performance.
Start with your key metrics and work back from there. For example, is the issue:
- Traffic? Check your marketing channel and campaign mix, messaging, spend, demand indicators, and competitor activity.
- AOV? Check your product mix and promotional plan.
- CVR? Check your audience targeting and messaging, product mix, and promo and pricing plans.
2. Keep testing and lean into success
In challenging times, it’s critical to identify not just what the issue is, but also what is working and double down on it.
If you already know what that is, great. If not, A/B testing is a powerful tool for ecommerce focussed businesses. By running controlled experiments, you can determine which marketing strategies or campaigns resonate most with your audience.
Start with a hypothesis that you think is likely to be true. For example, if you’ve identified poor economic conditions as a key factor to your decrease in revenue, you might assume messaging about savings and cost effectiveness will resonate the most – but we always advocate testing.
Collect data and analyse the results to identify what is driving engagement and conversions. Once you’ve identified winning strategies, allocate more of your budget and resources to these higher-performing campaigns. That will improve at least your efficiency if not effectiveness, even if it is from a lower base than you originally forecast.
3. Allocate budget for experimentation
While it’s essential to focus on what’s working from your existing campaigns, it may also be time to innovate. Allowing room for experimentation in your budget means you can pivot to new audiences, platforms, or media owners that you may not have considered before. In a rapidly changing digital landscape, these can be game-changers for your business.
Even if you have previously been sceptical, now may be the time to reassess.
Allocate a portion of your budget to test new marketing channels, platforms, and audience segments. Experimentation can help you discover untapped markets or innovative ways to engage with your existing audience. Keep a close eye on the results and be prepared to adapt quickly based on the data you gather.
4. Maximise other strategic ecommerce levers
If you ask a digital marketing agency to help with your diagnostic, it is likely most of the time they’ll be focussing the discussion and their recommendations around your digital marketing. To state the obvious to anyone client-side, whilst digital marketing is a cornerstone of ecommerce success, other strategic areas can be equally significant in the growth of your business. They allow your digital marketing to work harder by either reducing your CPA, or by making room for a higher CPA on the basis of improving the value of every customer.
Specifically, focus on your CVR, AOV, and LTV. If these wider ecommerce metrics aren’t within your remit, schedule a time to speak to the relevant colleagues for a cross-functional planning session.
By increasing your CVR, AOV, and LTV, you can extract more value from your digital marketing and approve the effectiveness of both your website and marketing channels.
You can learn more about how our team at Entropy can support your ecommerce functions from ecommerce training, tech stack procurement, and strategic business consultancy.
In summary, ecommerce focussed brands may be facing tough times, but there are strategies to weather the storm. To determine the root cause of digital marketing performance decline, carefully evaluate economic factors and other variables affecting your business. A/B testing is your ally in identifying winning strategies, while budget allocation for experimentation allows you to explore new opportunities. Finally, don’t forget the other pillars of ecommerce, such as CVR, AOV, and LTV, which can help you thrive even in challenging economic conditions.
In the face of adversity, adaptability and strategic thinking will set your ecommerce business apart and position it for long-term success in the ever-evolving digital landscape.