In order to be successful in today’s online climate, you have to hone in on developing and owning your ecommerce brand. Because let’s be honest…how are you going to compete with every other third party seller on Amazon?
So whether it’s private label or your own design, you need your own products. And following closely behind having products is your brand advertising.
The ad scene is changing, and it’s changing quickly – which for ecommerce sellers is nothing new, right? Your realm requires constant adaptation.
So, it’s not news that the way you acquire customers and how much it costs to do that (AKA your customer acquisition cost) is critical.
Previously, several ecommerce sellers relied on Google, Facebook, Amazon, and other online platforms for customer acquisition. It’s shifting, though. It’s not as easy as clicking a button and setting up Google or Facebook advertising for ecommerce brands to be profitable.
Many online platforms are going through several privacy changes, jacking up the prices of ad spend. They’ve become unpredictable, which is not a good thing for securing the financial future of your ecommerce brand.
As ecommerce accountants working with many larger brands, we see ad spend impacting ecommerce businesses’ profitability and in some cases, pushing the business into the red.
Unfortunately, we don’t see ad spend going down any time soon.
The reality is, all ad platforms are continually tweaking their costs and algorithms to optimize their revenue. Sellers need to keep a close eye on 3 things: ad spend (real time or daily), Return On Advertising Spend (ROAS), and runaway ad spend on current ad campaigns.
Out of these three metrics, ROAS is the key metric to track here. There are some sellers who are successful with $0 ad spend, using email marketing and other organic approaches.
As these online platforms are under scrutiny, they’re going to continue to try to grow their revenue, meaning the ad rates will continue to climb. Unsurprising to sellers, that’s detrimental to ecommerce brands, where an advertising budget can’t afford to get too big, or else you throw off your whole business model.
To stay profitable, ecommerce sellers have to pivot from paying for clicks to developing a strategy for long-term organic traffic.
Check out this clip from our recent ecommerce panel discussion to learn more about:
- The current advertising climate and its effect on ecommerce sellers
- How customer acquisition (and its cost) is critical to building your ecommerce brand
- Current ad spend trends and runaway ad spend
- How recent privacy changes on online platforms are affecting ad spend for ecommerce brands
More Resources To Build Your Ecommerce Brand
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