Navigating Business Through Disruption: Paid Media During COVID-19
The country has been under house arrest in one form or another for the past six weeks and I’m sure you can each attest to how this has personally affected every aspect of your life. This may include one’s education, hobbies, relationships, socialization, shopping, and entertainment just to name a few. Logically, brands have had to shift budgets, messaging, and promotions to adapt to the changing markets and emerging audience behaviors.
From both inside and outside our company, I hear thoughtful questions like, am I making the right decisions? Should I be running promotions at all? Should I measure a lead or a sale differently?When can I resume a more ‘normal’ approach?
In part four of the Navigating Your Business Through Disruption series, I will address the above, but first let us talk about channel highlights from our experiences with paid media performance over the past few weeks concerning search, social, and programmatic tactics.
I want to start with the good news, it is not all gloom and doom. We are still seeing opportunities emerge. So, here are the not-so-CliffsNotes:
Paid Search
Search represents the bottom of the funnel for many advertisers and arguably the most “drought-resistant” to decreased performance due to the nature of the channel (it reacts to users asking questions, and thus there is always a need) and the inferences we can make as a direct result of what we may already know about the user from previous interactions as well as current behavior.
E-commerce/B2C Paid Search Performance – impression volume, click volume, and conversion volumes are trending upwards for verticals in demand. CPC’s are holding steady and increasing in select verticals where we are seeing increased competition. This means the same budget may not take you quite as far as before and finding efficiencies will be key in order to recover any loss in traffic volume.
Verticals seeing positive performance include restaurants (those that can support takeout or delivery), home goods, sporting goods, apparel, some luxury items, online education, emergency medical services, banking, and financial firms.
Amazon Ads: Amazon search campaign performance has suffered in the near-term due to reduced availability of product inventory within Amazon’s warehouses. However, this also presents a unique opportunity for brands who can fulfill shipping themselves as opposed to having Amazon do it for them. But, many users have the innate instinct to check Amazon first and order second while many other brand sites sit in the dark corners of the web waiting to be referenced for product information only to lose the actual conversion to Amazon. Not to mention that some brands may be paying upwards of 15% in fees to Amazon for each sale they fail to convert on their very own website.
With Amazon fulfillment out of the current landscape for many brands, consumers are turning back to brand sites to make their purchases – which is ideal. If you are a brand in this scenario and you have inventory and can ship yourselves, you should 100% be running paid promotion to drive as many users to your site as possible, as long as you are seeing acceptable long term ROI. The users that convert now will only become more comfortable in the future and are more likely to become repeat buyers who come to you directly instead of Amazon. Provided you are doing everything you can to connect with the audience once they get to your site – ex: obtain email addresses in exchange for content, run contests, or make a sale! – your connected audience will lead to greater long term profits and improved audience communications (see Email/SMS, retargeting). As new product and sales become available in the future it will help drive users back to your website to convert even when Amazon warehouses become fully stocked again.
Paid Social
Social media promotion is often referred to as a top and mid-funnel audience tactic and in turn has often been the first channel where we have seen budgets reduced during the pandemic. That said performance data has not always confirmed such budget reductions are warranted as we have seen a surge of impression volume on popular platforms – Facebook/Instagram, Pinterest, TikTok – and in some cases CPM’s (Cost Per 1,000 Impressions) have simultaneously dropped by 20%-30% due to decreased competition. This trend presents a huge opportunity to gain additional audience reach and, in most cases, at a reduced cost while still recording solid performance in select verticals.
Restaurant/Quick-service: Facebook ads still have the capacity to ‘create the crave,’ but instead of driving to in-store activity we are seeing success driving to carry-out and delivery. If you can facilitate such requests now is a great time to take advantage of 20%-30% drops in CPM’s we have been recording on social media platforms.
E-commerce: CPM’s are down 20%-30% (depending on the vertical) while cost per click is relatively even. We have also seen increases in ROAS (return on ad spend), a symptom of consumers being unable to travel to a location and opting to purchase on manufacturers’ websites instead. This is an opportunity not only to increase audience reach at increasing cost efficiency but also to see near term ROI gains. This is an opportunity every brand with product and potential audience should be taking advantage of through data-driven testing – we have already seen evidence of a larger brand’s Facebook budgets recovering.
Programmatic Media Buying
Programmatic media buying involves real-time ad bidding on banners, native content, and video advertising across a vast ad network designed to reach and influence users at the right moment in the buyer’s journey. Programmatic campaigns can be top, middle, and bottom funnel targeted depending on the audience and campaign strategy being employed.
Holistically we have tracked a significant increase in programmatic ad inventory buying. This is a result of large brands moving their traditional and OOH (out-of-home) media budgets to digital as more eyes have turned to digital and streaming service platforms versus billboards and broadcast television (this has been impacted by the cancellation of live broadcasts of sporting events). As competition has increased, we have seen general increases in CPM’s depending on the tactic, market, and vertical.
Despite programmatic CPM’s increasing in some scenarios, in-home programmatic tactics are simultaneously presenting significant performance opportunities due to the accuracy of geographic device targeting and the increased impression volumes being driven by so many consumers working from home.
Here is one example that demonstrates AGF tactical performance (AGF = addressable-geographic fencing, aka targeting a specific list of addresses or geographic region and the devices typically located within):
- 97% increase in new users to site by changing targeting to AGF from traditional keyword/contextual targeting (budget consistent for both targeting tactics)
- 125% increase in revenue after pivoting to AGF
- 62% increase in CTR% after pivoting to AGF
When done correctly, programmatic media is very effective at driving new audiences to your site as well as retargeting past users with relevant content in efforts to encourage them to return to the sales funnel.
As you can see, we have seen opportunities across the major paid media channel platform…but what about you specifically, there in the second row?
Let’s answer the second question, am I making the right decisions?
I would respond with a few questions of my own – and I am assuming each of you aren’t currently affected by any sort of supply chain issues that may limit product/service availability:
- Are you measuring your site performance WoW, by day and by hour?
- Are you measuring your site performance by channel as well as holistically - total investment vs total output?
- Are you studying how direct AND assisted conversions are flowing from channel to channel and from device to device?
- What is an acceptable gross ROI target?
For those of you who answered ‘no’ to any of those questions, I would recommend that you dig deeper before making any decisions and here are a few examples why.
- For some brands we have seen audience conversion performance change week to week, for example from negative gains to positive gains YoY depending on which week we are studying. Week 2 in March was challenging for all vs Week 4 in March we generally saw upticks in performance). Imagine if the decision to discontinue promotions had been made pre-emptively in week 2, we would have lost out on so much opportunity.
- We have consistently seen channels take on new efficiencies due to reduced CPM’s feeding us more traffic than usual from the same budget.
- Device behavior has changed and in scenarios we are tracking more interaction on mobile than before - perhaps a symptom of feeling less self-conscious about clicking through a shopping ad at home during business hours when before you may have specifically avoided the interaction while co-workers observed.
- Day of week and time of day engagement has changed significantly now that many users are at home and trying to work and multi-task at the same time. Some of the engagement we had previously seen from 11am-2pm is now shifted to the 4pm-7pm time frame; if your paid media budgets typically ran out previous to 4pm you may not have even had time to see this change and made the necessary adjustments to focus your promotions.
The conclusion is this, if you aren’t measuring and studying how each channel is assisting and directly helping your site convert on a weekly basis, you run the risk of cutting off a channel that was actually helping you during this time.
Should I be running promotions at all?
This question is relatively simple within the context of a brand’s website performance. If you are still seeing lead volume and or revenue volume, and at an acceptable cost per acquisition or ROI, don’t stop what you’re doing. In fact, you should be maximizing your investment until the gap between investment and acceptable ROI is met, then look at Lifetime-Value ROI and see if you can’t push it further.
Also try and analyze in the ways mentioned above and find as many efficiencies as possible. Your business is unique, your audience data is unique – use the data-story to communicate internally how your audience is engaging and how investment is paying off.
Should I measure a lead or sale differently?
You should continue measuring the same key metrics – lead volume, revenue volume, cost per acquisition, return on investment, etc. – but you need to make sure you are A) measuring holistic paid media investment vs only siloed channel reporting, and B) evaluate your customer value attribution model - it may be time to re-evaluate how deep into the consumer relationship you allow value to be measured.
A) As an example, let’s propose an imaginary sales funnel that consists of a paid social (awareness campaign) and paid search campaign (brand and non-brand search, retargeting) and the costs and revenue associated with each.
Our social media channel and search cost per click averages $1 and $2 respectively. Although the last click prior to a sale occurring is often the click that receives full credit, let us also consider that a single user is also interacting with each channel/campaign separately. One interaction is with the introduction to the brand (social media) and one is with a specific answer to a subsequent question (search campaign).
There are two main ways to look at channel measurement here: individually vs holistically, with the former showing you potentially an incomplete picture of your sales funnel. In this scenario let’s consider a sale is worth on average $25.
When measuring direct revenue within each channel any $1 social media clicks not resulting in immediate same website visit sales would appear to have netted $0 in ROI. Conversely the $2 search click would appear to have earned the $25 in revenue all by itself along with a healthy $12.50 ROI. Even though in reality it really took you a $1 interaction on social media AND a $2 interaction on search in order to earn that $25 sale you wouldn’t be able to measure it through direct revenue measurement alone.
In the direct channel revenue model, if pressed to make budget modifications, you would likely stop the social media budget and only continue with the search budget, only to potentially lose out on the audience the social channel spend was providing.
In a holistic measurement scenario, the ROI would be calculated more accurately as a $3 investment (social + search click costs) yielding a $25 sale and a $8.33 in gross return for every $1 invested.
Measuring holistically and including assisted revenue in your analysis will lead to the big picture and help inform what your next move should be.
B) If you are seeing acceptable ROI from a user’s first order, we recommend maximizing every marketing channel that is contributing to those consumers finding their way to your site.
If you are seeing unacceptable ROI from that first order consider including known lifetime-value metrics (ex: a new user typically purchases my product four times a year at an average order value of $41 for a total value of $164 per year) as a new threshold.
During these uncertain times it is best to shorten that value window to 6-12 months in order to remain conservative. When the market stabilizes, we would recommend a 12-24 month window depending on your industry.
With these new metrics in hand, it may allow you to spend closer to a 1:1 ROI goal when measuring the initial sale while still netting you a 2:1+ ROI over the next 6-12 months when the repeat sales roll in.
When can I resume back to a ‘normal’ approach?
We have learned there is rarely a normalized approach when it comes to digital marketing. Each day presents unique challenges. This is a result of an ever-changing technological landscape – what we can and can’t do is always changing for better or for worse. This includes an ever-changing audience. What they want, when they expect it, and how they choose to consume will always be in flux.
Not to say COVID-19 is in any way a direct comparison for a search algorithm update or yet another social audience segment being taken away but the lesson here is, we need to rely on data to inform us how the audience will continue to engage in order to best guide our content and promotion strategies.
Summary
Here is what we see - social impressions, ad network impressions, video impressions, search impressions - there are significantly more eyes on this ad inventory than there were six weeks ago and in some scenarios at less expense than normal and producing greater results than typical benchmarks (see conversions, revenue, and ROI). Email, SMS and the connected audience volume to whom you digitally speak is more valuable than ever. If your promotional campaigns, landing/product pages, and corresponding email campaigns have yet to be fully optimized (ex: Is your Email channel contributing at least 5-10% of your holistic revenue volume?), you have an opportunity to improve.
What’s next – no business, no audience, and certainly no website is created 100% equal to another. If you have a product or service to sell and you have the means to market, look at your own channel data and listen to what it’s telling you. If your audience is still engaging, if your leads are still coming in at an acceptable cost per acquisition, if your revenue is still accruing and if your return is acceptable, continue to grow your audience through quality content creation and promotion.
Stay vigilant and let data-driven insights guide you and you may not only find yourself maintaining through this difficult time, you will be in a much better position to grow and compete once this is all over.
#InThisTogether