Let’s face the facts, marketing in the DTC and eCommerce space is difficult. Ads are getting more and more expensive. Customer acquisition costs are rising and the unit economics are not looking so good.
Simply put, managing all this can give even the most experienced marketers headaches. With so many choices, brands and companies fighting to get noticed, the question is:
What can I do in 2021 to grow my eCommerce business? Performance Marketing might just be the answer!
Nowadays we track and optimize everything from our steps and calorie intake to our sleep patterns and location. So it only makes sense that you are tracking and optimizing marketing results for your eCommerce business. Performance marketing will leverage tactics to understand the how, when, why, and where for all of your marketing efforts.
In this complete guide to performance marketing for eCommerce, you’ll learn all the steps you need to launch your own effective performance marketing strategy. If this is your first introduction to performance marketing, you are in for a treat!
Please reference our marketing glossary as often as you need.
You can skip ahead using any of the links below.
What is performance marketing?
What is performance marketing for eCommerce?
Step 1: Make sure your site is ready
Step 2: Set real goals and stick to them
Step 3: Define your target customer
Step 4: Define your value props
Step 5: Find the right channels for your target customer
Step 6: Find the right channels for your budget
Step 7: Write ad copy that converts
Step 8: Optimize
Ready to kick off performance marketing for your eCommerce business?
Performance Marketing Glossary
What is Performance Marketing?
To put it simply, performance marketing is digital advertising that can be clearly measured and evaluated in real-time. This means leveraging channels like Google Ads, Facebook, Instagram, and others to create trackable marketing that allows you to make effective decisions based on concrete data gathered from your actual market.
Performance marketing at its core is made of 2 parts: acquisition and optimization. Keep reading and we’ll tell you how to effectively use both.
What is Performance Marketing for eCommerce?
Performance marketing for eCommerce is using strategic digital advertising tactics to drive online sales. It is especially critical to use performance marketing strategies because the customer is already online. This means that the barrier to get them to click over to your site is greatly decreased.
You can then leverage the data to determine where and when your customers are hanging out online and how to effectively reach them. For example, if your eCommerce business sells basketballs and you know that your target customer is in their 20’s, lives in the US, is a frequent online shopper, and is part of a basketball league – you could set up Facebook ads to target them specifically. From this, you can determine other attributes shared by customers who purchase and then optimize your ads to get even closer to the people you know will convert to customers.
A DNVB (digitally native vertical brand) cannot go without this type of performance marketing because they sell online. Their customers are online, their brand is online, and their marketing should be as well. Just look at the most popular sites in the US based on a study done by Statista. The clear winners are Google and Facebook. If the majority of people in the US are on these sites, chances are your customers are too.
Most popular websites in the US as of Feb 2016
What makes performance marketing different than other types of marketing?
The ability to pay per action and only for results is what sets performance marketing apart from other more traditional advertising channels. You can take out an ad in a newspaper and assume that you will reach everyone in their audience, but you will never know for certain. Some companies have attempted to make up for the lack of measurement tools by including a unique coupon code in their ads. You may get close to knowing how many coupon codes were used, but you will never get the same finite data that you would from the calculated approach of performance marketing.
Knowing exactly where your marketing dollars are going and what ROAS (return on ad spend) they are driving is expected by most advertisers and it should be by you as well.
Our tried and true approach
Below you’ll learn the exact steps we take when we start mapping out a performance marketing strategy. Follow the steps as closely as you can and you will be able to create your very own effective performance marketing plan.
Step 1: Making Sure Your Site Is Ready
You can drive all the traffic in the world to your site, but if you don’t have a clear buy button how do you expect to make any sales? Before allocating your budget to the performance marketing tactics we’re about to share; spend some time cleaning up your site.
Is your checkout easy to navigate? Is every call to action clear and accessible? Also, consider what will happen post-purchase. Do you have an email drip campaign set up to follow up with email subscribers, cart-abandoners, or buyers?
Ensuring your site is prepared to handle all the conversions send to it is the first step in setting yourself up for performance marketing success.
Step 2: Set Real Goals and Stick To Them
Performance marketing for eCommerce is extremely methodical. The first step is to create a plan and to set clear goals. The most obvious goal is sales, but other types of goals include email sign-ups, LTV (life-time value), avg. session duration, clicks, or app downloads.
Often people will start their marketing strategy by creating Instagram posts or sponsoring email newsletters. Try not to be distracted by these types of things. While they can definitely be helpful, they are not performance marketing tactics that will drive measurable growth quickly.
Step 3: Define Your Target Customer
Who is most likely to complete the action you set out in your goals above? This doesn’t have to be just one person, define different target personas for people who you believe will convert. Staying with our basketball example, personas may include parents who have kids that play basketball, basketball enthusiasts, and even coaches or schools who represent basketball programs.
The goal here is to set defined personas. It would be ideal to use your current customer base to create these personas but the more information you have from the start the better. If you don’t, conduct research and do the best you can. The best part about performance marketing is that you can continuously optimize.
Step 4: Define Your Value Propositions
Why should someone buy basketballs from you specifically? How are your basketballs going to improve their lives? It’s really important to get this message across to customers. Don’t just tell your customers that your product is the best, let them know how it is going to solve a problem and improve their lives in some way.
A basketball is great, but a basketball that inspires your teenage son to hang out with his dad on a Friday night is better. List some of these defined value props and save them. You can use them as inspiration for your advertisements later.
Step 5: Find The Right Channels For Your Target Customer
Look back at the customer personas you created earlier. Do you have a persona that spends their time on Snapchat? Are you trying to reach a professional crowd who scrolls through LinkedIn? The most important part of performance marketing is meeting your audience where they already are! Think about this and research what kind of people are hanging out on each channel, then you can choose the ones that align with your ideal audience.
To determine what channels you want to start with, think about your product holistically. Assess your goals and pair personas with channels that make sense. Most people use Google and a lot of people are also on both Facebook and Instagram. These are some of the better channels to start with – not only are they the most popular, but they are able to drive conversions at the lowest CPC (cost per click) when compared to other channels.
Keep your goals and target audience in mind when choosing the right channels. Are you trying to drive sales but your eCommerce business is fairly new? Facebook and Instagram are designed to encourage discovery which means that these channels might be a good fit. Google, on the other hand, might be better for people searching for something specific. If your customers don’t know you exist yet and you sell a product that is widely available, this could be a tougher channel for you. However, if you sell a product that people search for, and your brand is new – you might find success with Google.
Each channel has its own positives and negatives, and you will need to determine which ones are right for your business. Some of the most popular performance marketing channels are Google Ads, Google Shopping, Facebook, Instagram, YouTube, Pinterest, LinkedIn, Snapchat, Reddit, and Twitter.
Here is a list of other channels that may suit your business:
|Channel||Who should consider testing this channel|
|Google Search Ads||Most businesses, eCommerce DTC brands|
|Google Shopping Ads||Most eCommerce companies selling a physical product|
|Instagram Ads||Most eCommerce companies|
|Facebook Ads||Most eCommerce companies|
|Referrals||All eCommerce companies|
|Ad Networks like Taboola or Outbrain||Most eCommerce companies|
|Pinterest Ads||eCommerce companies targeting women aged 20-45|
|Snapchat Ads||eCommerce companies targeting people under the age of 30|
|YouTube Ads||eCommerce companies selling physical products that are highly visual or would benefit from tutorials. Examples of this would be beauty, home goods or even building supplies|
|Bing Ads||Companies targeting a slightly older and wealthier crowd who are frequently women|
|LinkedIn Ads||B2B companies, recruiters, SaaS companies with big budgets. LinkedIn tends to be one of the most expensive channels on a CAC basis|
|Twitter Ads||Unless you have a specific reason for testing twitter, most eCommerce businesses should avoid testing it|
|Reddit Ads||This channel is designed for and attracts an extremely anti-ad crowd, so while you may read otherwise elsewhere we don’t recommend testing Reddit ads unless you have a very specific reason.|
|Affiliate Programs||Most eCommerce businesses|
|Search Engine Optimization (SEO)||All eCommerce businesses|
Step 6: Find The Right Channels For Your Budget
Not every customer is on every platform, and not every company has the required budget to excel on every channel. Determining the right channels for your business and allocating your budget effectively will be essential.
Start with your average customer acquisition cost or CAC. Once you determine how much it costs before a customer pays you, you have a better understanding of your budget. If you don’t know how to calculate this, check it out in our glossary. Not all channels cost the same and you will want to start with the lowest hanging fruit (lowest costing channel with the highest rate of conversions).
Step 7: Write Ad Copy That Converts
You don’t need to be Shakespeare to write ad copy that converts to sales. Take a look at this ad copy created by Zendesk:
They have a defined value prop and easy call to action. A customer’s mindset once reading ad copy such as this may be: “Do I want my customers to be more engaged, more satisfied, and more likely to buy what I’m selling? Yes! Does this mean I should try Zendesk chat? Maybe!”
Zendesk is also leveraging neuro-marketing through the arrangement of their colors and fonts. If you’re interested in learning more about this, watch our video Neuro-Marketing: Hacking Into Consumers Minds.
The most important thing to keep in mind when writing ad copy is defining how your customers will benefit. Don’t go on bragging about every single product feature. Potential customers want to know why they should care. As an example, it’s great that your new clothing line has a jacket with 10 pockets, but why should consumers care? In your ad copy, translate how this feature will create value for your audience. Write concise copy that provides the ultimate solution for customers.
An exercise that can help is to write all of the potential problems a customer might have if they shopped at a competitor and what effects this would cause. Try to write out as many as you can.
For example, if someone was shopping at a competing basketball eCommerce site, our list would look like this:
|If shopping at competitor X, the basketball quality is poor.||Basketball won’t last as long, causing them to replace it often and costing them more money.||Our basketballs are designed to last up to 5 years. Less money spent, more baskets made.|
|If shopping at competitor X, ship times are very long.||Basketball won’t make it in time to play this weekend causing them to miss out on quality family time.||Overnight shipping available so that when your kid finally has time for you, you won’t miss your chance to show him what’s up.|
Step 8: Optimize and Improve
Your campaigns are launched, congrats! Now is when you take a good look at the data. Are the results meeting the goals and expectations you set at the beginning? Probably not. It is very unlikely that every part of your strategy will be successful. This is when performance marketing kicks into full gear. Through performance marketing tactics you can optimize and start to improve your results.
Determine which channels are performing the best, the worst, and understand why. Are doing things on certain channels that you could leverage in others? Take a look at your budget. Are you spending your budget appropriately? In some cases, you have done everything to improve and optimize a specific ad or campaign but it still fails to do well. In this case, leverage what works and continue to push channels that are effective. Shut down what doesn’t work, but make sure to learn from those failures so you can bring these learnings forward for any other strategy you may create in the future.
Another optimization strategy that often gets overlooked, is managing the days and times in which your ads are being served, or your ad schedule. In both Facebook and Google Ads, you can review what time and day your ads are converting the most. If you’re running your ads 24/7, you may be wasting your budget on clicks that have lower intent. Take a look at the times and days that work best, and then optimize to ensure your ads will show when you need them to.
As mentioned earlier, performance marketing in 2021 is all about measuring, learning, and optimizing.
Ready to kick off performance marketing for your eCommerce business?
You’ve made it to the end of this guide and now you’re ready to implement performance marketing tactics for your eCommerce business! I’m sure you realize the importance of performance marketing and how vital it is for your business. Old traditional marketing tactics simply won’t get you the results you want in 2021.
However, we understand that getting traction and implementing a performance marketing strategy is not easy. Perhaps your best course of action in the beginning is partnering with a great agency that can deliver immediate results for you. So if you are a small to medium-sized business generating at least $3M in annual revenue, consider reaching out to our team for a possible partnership.
Performance Marketing Glossary
The following are the top acronyms, definitions, and formulas you will need to know to run a successful performance marketing campaign for your eCommerce business.
CAC (customer acquisition cost) – This is the overall cost for you to get a new customer. This can be calculated by dividing the total amount spent on acquiring customers by the number of customers you acquired with that spend.
Example: If you spent $5000 acquiring new customers and from that you got 500 new customers, your CAC would be $10.
Channel – A specific platform you can reach customers.
Conversion – When a customer takes the desired action. A conversion can be a sale, email sign up, button click, etc.
CPC (cost-per-click) – The amount you pay for a click on your ad.
CTA (call to action) – A button or link that tells your customer where to take action on your site.
Customer Persona – A hypothesis of your customer; where they consume content, who they are, and ultimately how they are most likely to take action with your service or product.
eCommerce – electronic + commerce; refers to transactions conducted via the internet.
DNVB (digitally native vertical brand) – A brand born online, which sells and ships its own product.
Drip Campaign – A flow of emails set to deliver to a subscriber after they take a specific action on the site. For eCommerce, this may be after email sign-up, abandoned cart, or purchase.
DTC (direct to consumer) – A direct to consumer company manufactures and sells its own product without the need for a middleman. This is also known as a vertical retailer.
Impression – When your ad has the potential to be seen in front of a user. This is the least expensive action as it often doesn’t lead to a conversion but is often used to promote brand awareness.
LTV (lifetime value) – Can be the estimated profit, revenue, or value a business will achieve throughout the entire relationship with a customer.
Performance Marketing – Any type of marketing that has clear and measurable data such as sales, email sign-ups, pdf downloads, etc.
PPC (pay-per-click) – This is an ad model where you pay only when your ad is clicked on.
ROAS (return on ad spend) – Your return on investment, so to speak.
Example: If you spend $1000 on an ad and it converts to $6000 in sales – you have a 6x ROAS! ($6000/$1000 x 100= 600%)
Value Propositions – The value that is promised as a result of taking an action.