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Retail Analytics and the Impact on Ecommerce Advertising: Part 2, Essential vs Non-Essential Insights and Recommendations

Megan Harbold, VP Global Strategic Consulting @ Kenshoo

7月  20, 2020

With the spike in online shopping right now, the potential opportunity for ecommerce advertising to drive impact on your holistic business growth is high. But, without the accessibility of necessary data and insights and the clear line of sight to how these become actionable in your advertising, your ability to capture this new influx of online demand could be constrained.

I shared an example of how retail analytics can make the difference in my last post of this series, Part 1, The Correlation Between Conversion Rate and Shipping Timelines. In that recent case study, Kenshoo helped a client to divert advertising dollars to only products with estimated shipping times under 7 days. The results were conclusive: conversion rates went from a 14% dip to an increase in 31% in the first week after this change.

This strategy was based on the hypothesis that sweeping changes by online marketplaces to inflate shipping dates on non-essential items during the pandemic to make room for essential items were negatively impacting advertising conversion rates. As shoppers clicked ecommerce ads and arrived at their desired product pages, the inflated shipping timelines seemed to push them away from purchasing. 

What helped us to unlock this solution was data—specifically, estimated shipping data trends that are not readily available to sellers. One of our ecommerce intelligence partners, DataWeave, was able to aggregate online product detail pages to monitor and track this data to enable the brand’s marketing team to shift budget allocation accordingly. 

Without this key dataset, conversion rates would have likely continued to decrease. This information helped us to turn a negative ROI program into a positive one during a critical time for businesses in which every investment dollar counts. It also clearly shows the value of retail analytics and the opportunity these data sets can have in ongoing advertising management—from strategy development, optimization, and measurement of impact on your total business.

In Part 2 of this series, we will look to provide important trend detail coming out of the COVID-19 pandemic and how one might be able to tactically apply optimization strategies on these types of scenarios to ensure you’re maximizing impact to your business in an automated, and on-going way. The Kenshoo team has learned a lot about the dynamics between essential and non-essential products over the last few months that could provide useful information to ecommerce advertisers.

essential

Insights learned about essential vs. non-essential products

At the beginning of the pandemic, consumers began stocking up on essential items, and those products soon went out-of-stock in physical stores. As demand on these items rapidly grew online, the cascading impact on marketplaces such as Amazon.com and Walmart.com forced these retailers to reconsider how they should best pivot their operations to handle the increased volume—and more importantly the need to get essential items to consumers quickly. 

One of the biggest changes these online marketplaces made was to prioritize shipping on essential products versus what they deemed to be non-essential items. As you saw from the case study in my last post, the connection of retail analytics has helped our team discover some important trends about how essential and non-essential categories are performing at this point in the pandemic, and most importantly, what you as an ecommerce advertiser can do about it. These examples are not only relevant now, but demonstrate that retail signals are critical data points for marketers. When leveraged properly within your Kenshoo platform, they enable proactive strategic agility to ensure you’re always maximizing advertising in a world that has been proven to continually change. 

The following are some other recent insights in this area that our team has discovered:

Essentials (Food & Beverage; Health & Beauty) 

Shipping times are still an issue. Longer fulfillment timelines and availability issues persist for essential items and it is unclear how long this will continue. We saw for example, that over a two-week period at the end of April, shipping times for the Food category improved by only 7% while those of Beauty & Cosmetics actually increased by 5%.

Higher ad prices. Advertising costs (CPCs) have increased by about 5-10% during the pandemic versus the 1% average increase for all commerce advertising (including non-essentials).

Consumer hoarding still exists. There has been a sustained volume from the initial ‘stock up’ craze that we saw at the start of the pandemic. Consumer hoarding started with high volumes of larger than average online shopping carts and magnified by an increase of incremental shoppers that were new to the online space. Today, we’re still seeing new shoppers being driven to online retailers as issues around the availability of essentials at physical retail still persists

Reduction in Brand Loyalty. Consumers are turning to new brands as they find their preferred brands out of stock, or otherwise invisible on the digital shelf. Health and personal care for example saw an average of only 72% of product availability according to Dataweave. A significant reduction compared to the benchmark of 95% product availability that brands strive for online.

Non-Essentials (Home & Housewares, Toys & Games, Computers & Electronics)

Shipping timelines are getting better. As the initial essentials hoarding has slowed down, we’ve seen a recent improvement in fulfillment for non-essentials. The computers and electronics category for example has seen a 21% improvement (close to a two-day reduction) driving conversion rate increases for brands that are able to remain in stock.

A decline in CPC and advertising impressions. Unlike essential items that are experiencing spikes in ad costs, CPC pricing for non-essential items is very low right now. We’re also seeing a drop in ad impressions which indicates many advertisers on non-essentials have yet to come back to pre-COVID levels of spend—leaving a lot of impression share opportunity on the table!

Consumers moving on. With the initial shock of the pandemic over, shoppers are starting to open up their pocketbooks beyond just the essentials. Similar to essential categories, these non-essentials categories should expect swift increases in volume and potential cost impact over the coming weeks.

Seven advertising recommendations based on essential/non-essential insights

With both demand and prices on essential items up, ecommerce advertisers need to get very strategic on how and where they place their budgets. The opportunity is high and we have some recommendations on how marketers can reduce risk and place safe bets to drive advertising performance:

Recommendation #1 – Allocate budget to low-risk availability products. Products that might go out-of-stock or have long estimated shipping times will waste your ad budget as consumers will click but not be able to buy. Focus your budget on products within your portfolio that you think will be least affected by fulfillment issues. 

Recommendation #2 – Bypass high ad costs to maximize your budget. Ecommerce advertisers can avoid the inflated CPCs by targeting lower-cost placements rather than the premium placements at the top of the search results. This is especially important if you’re seeing increased private label presence in your category. For example, you can target high volume competitors and pay for product page placement to capitalize on their high-cost click and still boost your own impression share.

Recommendation #3 – Target competitor products. Find your rivals’ best selling/high visitation product pages and promote your comparable items. Let them pay the premium ad costs while you benefit by being on those pages. Tracking competitor product availability and estimated shipping times may also help guide you in this area.

Recommendation #4 – Monitor the buy box. Although this is important throughout the year, with so much increased usage of online buying, there’s more opportunity for consumers looking to “buy now” regardless if they are essential items they need or non-essential items they want and can’t yet get at stores. Watch them daily and make sure you don’t go out of stock when you are winning those buy boxes. 

Recommendation #5 – Drive off-site traffic. Use cross-channel campaigns, such as paid search and social advertising, to reach consumers when they aren’t visiting online marketplaces. Both Google and Facebook now allow you to drive ad clicks directly to stores, so use them wisely—especially for hard-to-find essential items that you have available.

Recommendation #6 – Test and learn…quickly. Use whatever insights you have to rapidly try things out. One of the best benefits of digital marketing has over offline marketing is that you can test something today and see the results tomorrow. Encourage your team to try things and see if they work or not. If they do, go with a bigger test. Right now, every advertiser is in uncharted waters, so it’s important for every org to build out their own best practices to adapt. 

Recommendation #7 – Leverage automation. Marketers should review every feature in their ecommerce advertising platforms and use whatever tools they can to win right now. For example, in Kenshoo Ecommerce, you can use automation to change bids on products when they begin to slip top positions. You can also set up a variety of alerts to let your team know when something goes out of stock or worse, becomes delisted by a marketplace. 

Data and insights are key beyond COVID-19

I hope that you can use some of these insights to better manage your ecommerce advertising programs around essential and non-essential items at this time.

However, my biggest takeaway from advertising during this pandemic is that marketers need to be better prepared for when the next big market fluctuation occurs. Of course, COVID-19 is a dramatic example, but there are always moving parts underlining every market. Seasonality, competitor budget spikes, world news, and other dynamics are a constant occurrence that will impact your ecommerce advertising performance. 

Use automation & technology and always be collecting data & insights to power your programs. You must be prepared and proactive for the next big change. Being ill-equipped and reactive aren’t part of a recipe for success. 

How intelligent is your online retail analytics practice?

Reach out today to schedule a free, brief demo of Kenshoo Ecommerce to see all of the innovative features and powerful data and insights it has to offer.

In addition, get a demo of DataWeave’s AI-powered Ecommerce Intelligence platform that offers unique insights for digital shelf optimization and brand protection.

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Tags: Amazon, Create, Data, Ecommerce, Measure, Optimize, Plan, Retail, Target, Walmart, xPAx

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Cookie Name TDCPM
Cookie Expiry 1 year
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Host(s) .google.com
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Cookie Expiry 6 months 2 days
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Cookie Name MUID,MUIDB
Cookie Expiry 1 year 3 weeks 4 days 1 second
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Purpose Cookie from Double Click (Google) which helps us to analyze and optimize our advertising campaigns.
Host(s) doubleclick.net
Cookie Name IDE
Cookie Expiry 1 year 3 weeks 4 days
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Provider Facebook Ireland Limited
Purpose Cookie by Facebook used for website analytics, ad targeting, and ad measurement.
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Cookie Name _fbp,act,c_user,datr,fr,tr,m_pixel_ration,pl,presence,sb,spin,wd,xs
Cookie Expiry Session / 1 Year
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Provider Trendemon
Purpose Track surfing habits and provides Banners and tailored content
Privacy Policy https://trendemon.com/privacy.html?v=2018
Host(s) .kenshoo.com
Cookie Name trd_vid_l, trd_vid_2003
Cookie Expiry 1 year 22 seconds
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Provider Trendemon
Purpose Track surfing habits and provides Banners and tailored content
Privacy Policy https://trendemon.com/privacy.html?v=2018
Host(s) .kenshoo.com
Cookie Name trd_vuid_l
Cookie Expiry 1 year 22 seconds
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Host(s) .kenshoo.com
Cookie Name trd_sid
Cookie Expiry 30 minutes
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Cookie Expiry 1 year
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Cookie Name trd_ma_cookie
Cookie Expiry 12 hours
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Host(s) trackingapi.trendemon.com
Cookie Name trd_gvid, trd_gavid_2003
Cookie Expiry 7979 years 6 months 2 weeks 1 day 22 hours 48 minutes 21 seconds
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Provider Trendemon
Purpose Track surfing habits and provides Banners and tailored content
Privacy Policy https://trendemon.com/privacy.html?v=2018
Host(s) .kenshoo.com
Cookie Name trd_first_visit
Cookie Expiry 1 year
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Purpose Track surfing habits and provides Banners and tailored content
Privacy Policy https://trendemon.com/privacy.html?v=2018
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Cookie Name trd_exitintentclient
Cookie Expiry 1 year
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Purpose Track surfing habits and provides Banners and tailored content
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Cookie Name trd_cid
Cookie Expiry 1 year 25 seconds
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Host(s) kenshoo.com
Cookie Name s-9da4
Cookie Expiry 15 minutes 25 seconds
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Host(s) kenshoo.com
Cookie Name kenshoo_tapad_id_sync
Cookie Expiry 1 day
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Host(s) kenshoo.com
Cookie Name kenshoo_id_match
Cookie Expiry 1 week
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Host(s) .xg4ken.com
Cookie Name kenshoo_id
Cookie Expiry 1 year
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Host(s) kenshoo.com
Cookie Name d-a8e6
Cookie Expiry 1 year 25 seconds
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Provider google.com
Cookie Name pagead/1p-user-list
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Host(s) google.com
Cookie Name ads/ga-audiences
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Host(s) .pardot.com, kenshoo.com, www2.kenshoo.com
Cookie Name visitor_id#-hash
Cookie Expiry 10 years
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Host(s) trackingapi.trendemon.com
Cookie Name api/events/pageview
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Host(s) trackingapi.trendemon.com
Cookie Name api/events/uplift
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Privacy Policy https://trendemon.com/privacy.html?v=2018
Host(s) kenshoo.com
Cookie Name trd_ctahistory
Cookie Expiry Persistent
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Provider Google Tag Manager
Host(s) kenshoo.com
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Cookie Expiry Persistent
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Cookie Expiry Persistent
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Provider Owner of this website
Purpose Enables the website to make variations of their landing-page. This is used to minimize bounce-rates, which means that fewer users leave the page immediately.
Host(s) kenshoo.com
Cookie Name ub-emb-id
Cookie Expiry Persistent
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Provider adsrvr.org Pixel
Purpose Presents the user with relevant content and advertisement. The service is provided by third-party advertisement hubs, which facilitate real-time bidding for advertisers.
Host(s) adsrvr.org
Cookie Name track/cmf/generic
Cookie Expiry Session
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Provider Twitter
Purpose This domain is owned by Twitter. The main business activity is: Social Networking Services. Where twitter acts as a third party host, it collects data through a range of plug-ins and integrations, that is primarily used for tracking and targeting.
Host(s) twitter.com
Cookie Name personalization_id
Cookie Expiry 730 days

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