By now, we’ve all heard about the rapid growth of online shopping during the Covid-19 pandemic. While this has undoubtedly been a positive thing for retailers, it has also resulted in some unintended consequences. The Australian digital advertising industry grew by a record 24.2 per cent in FY21 to reach $11.4 billion, the strongest year-on-year increase since 2016. But the problem is that the amount of inventory available on digital platforms isn’t increasing at the same rate as deman
demand. With more and more retailers jumping on the e-commerce bandwagon, digital platforms have been able to lift their prices without consequence. Facebook newsfeed ads, Google Search ads, and sponsored Instagram ads are all priced based on bidding among competitors for impressions among specific groups of shoppers. So the cost of these solutions can increase indefinitely – as long as retailers are willing to pay. On top of all this, it is becoming more difficult to reach customers using the same methods, thanks to increasingly strict data privacy restrictions. Facebook has already warned that Apple’s new limitations could reduce its revenue from ads by 50 per cent. So what’s the solution? In order to beat the rising cost of short-term digital marketing, retailers must focus more on long-term growth strategies. Review your customer journey The best way to lower customer acquisition costs is to diversify your acquisition methods to avoid competing exclusively in digital marketing. This isn’t to say you should completely pull your investment in things like social media ads and SEO, but that you should temper them with a focus on more memorable, organic forms of customer acquisition and marketing to lower your overall costs. Consider which channels are still pulling their weight, and which are no longer providing the best bang for their buck. You might be surprised to learn that email remains one of the most effective forms of digital marketing, and shouldn’t be overlooked. Also look at the big picture, and think about those areas where there is potential to influence brand awareness and overall reputation. Whilst it’s attractive to focus on digital marketing due to its measurability, that doesn’t mean it’s the only place that customers are interacting with your brand. Consider a physical customer experience Despite the growth in e-commerce, physical spaces remain one of the best ways to build brand recognition and long-term loyalty. With many landlords now offering flexible leases and more temporary arrangements, the opportunities for crafting unique and memorable in-person experiences are greater than ever. Bricks-and-mortar stores allow for more tactile brand experiences, and concept stores are on the rise with opportunities to delight as well as sell. While there are inbuilt costs, when done right, retail stores can acquire shoppers for a lower cost than digital. Seamless integration of brand, design and technology is the key to delivering the best customer experience. By thinking creatively about your physical brand experience, integrating technology beyond marketing and designing a one-of-a-kind environment, a physical environment can attract not only your loyal fans but those just walking by. Remember: bricks-and-mortar retail isn’t just a conversion channel, it’s an acquisition channel. Use design thinking to be creative and innovative Design thinking is a process of defining a challenge, coming up with ideas, prototyping those ideas and testing them out. It’s a highly popular concept used by some of the world’s most successful companies, such as Nike, Apple, Google and Samsung. Using design thinking can help brands think outside the box to attract customers over the long term. It can help retailers relearn how to ‘play’ with ideas, and ultimately create better customer experiences that tackle real customer needs. The most successful retailers are the ones that consider their customer in every single element of the design process and have the patience to listen and implement feedback – even if it takes them down an unexpected path. Finally, remember to be patient. If you’re spending all your time focussing purely on what you can immediately measure, you can easily get distracted from the big picture. If you want long-term results, you’ll have to implement long-term strategies.