How to make the case for bringing back (or growing) the e-commerce ad budget.
We're back with another story of a powerhouse client in the consumer electronics category who utilized Stackline's e-commerce data and analytics to better understand the impacts of their advertising on Amazon.
Amazon's advertising business continues to accelerate each year, with brands spending more money on more placements across search, display, and video. Meanwhile, categories are becoming increasingly competitive, which has some brands wondering if the ad investment is still providing a strong ROI.
A large consumer electronics brand with a long history of advertising on Amazon recently decided to test the impact of reducing their paid advertising spend. While Amazon is a critical channel for this brand, they chose to test one category of their business and reduce paid ad spend by more than 50% over a four-week period. This included pausing a variety of search campaigns and reducing budgets across remaining campaigns.
Leveraging Stackline's traffic and conversion data (which gives brands definitive insight into how many shoppers are clicking through to their products, from which ads and organic placements, with what sales and revenue results), the company identified the following outcomes from a four-week reduction in ad spend:
· Ad sales declined at a faster rate than ad spend, down 70%
· Return on Ad Spend declined 22%
· Organic Traffic declined 7% as shoppers were clicking less on unpaid product placements
· Units sold declined 20% due to reduced overall traffic
· Retail sales declined 18%
By decreasing ad spend, this brand saw a direct correlation to a decline in overall sales. Furthermore, they saw a 5% decline in market share while their top two competitors grew market share by 14% and 21%, respectively, during the same time period. With Stackline's data, they were able to unlock powerful insights to understand the direct impacts reduced ad spend had on their business. Based on these learnings, the brand chose to reignite their always-on advertising and accelerate growth-driving marketing investments.