Market strategy
Download PDFPaid search vs paid social
O’Donnell says that “If you separate digital marketing spend into paid search and paid social it is clear that paid search is an essential part of e-commerce trading whereas paid social is more of a discretionary spend.
“As the study shows, paid search spend levels temporarily dropped in March (see chart below) but from the end of March onwards spend levels were gradually increased. Current Google Ads spending is now more than 30% greater than the comparison period of 2019, reflecting increased online purchasing behaviour across the UK. Paid social spend resumed from late June and is currently more than 15% greater than the comparison period.
“Many e-commerce businesses struggle to get paid social working well due to complexity and the creative design that is needed. However, increased consumption of social media by consumers during lockdown has presented the opportunity to acquire new customers at a lower cost.”
Click, buy, repeat
Comparing the behaviour of new customers acquired during lockdown by the e-commerce businesses with those customers that they gained in 2019 also reveals an interesting increase in repeat order rates.
The higher repeat order rates amongst recently acquired shoppers show signs of them now becoming higher value customers than those acquired in 2019, and hence points to a sustained period of growth for e-commerce businesses post-lockdown.
Fran Quilty, CEO of Conjura, said: “Some speculators are worried that increases in revenue amongst e-commerce businesses are temporary and more reflective of a lack of options. However, we are seeing recent cohort repurchasing rates that are stronger than before and indicative of high value long term customers”.
Methodology
The research examined the financial performance of 21 e-commerce businesses with a turnover ranging from £5m to £250m. For well-established businesses the study compared metrics on a year-on-year basis, while for newer businesses it compared month-on-month financial information.
The research included an analysis of e-commerce and subscription businesses across the pets, fashion (men’s and womenswear) and beauty industries. The research excluded businesses that have performed particularly strongly during the pandemic, in sectors such as food delivery and online pharmacy. It also excluded any companies that have subsequently gone out of business due to COVID-19, in sectors such as travel, hospitality and formal fashion.
