eCommerce and Paid Acquisition

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Exploring paid acquisition if you are an eCommerce company in the early days can really suck. It can even suck when you are a bit past the early days. You are probably bad at it, that means that you aren’t getting a lot of conversions, which means your data is sparse, and even worse, it seems like it isn’t really working.

I was doing some consulting to a company in the space that was getting absolutely nowhere. The CEO looked at the data and said, “maybe we should shut it down and go back to focusing on the blog”. Unfortunately, content marketing is not a scalable growth engine for ecommerce. If you are selling a product, you have to figure out how to make paid acquisition successful. It is literally the only way to scalably build the business. If you focus on blogging, then what will you do when you double revenue? Blog twice as much? Most ecommerce is not viral – your K factor won’t be high enough because the product isn’t free. For virality to work, every referral has to result in a new customer. That just isn’t going to happen with ecommerce. Long tail SEO and SEM? The keywords that you want to rank for have tons of ads showing above the organic listings – that is the very nature of ecommerce marketing. If you haven’t figured out paid acquisition channels, you are losing because other ecommerce companies are figuring them out.

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What’s the best strategy in a situation like this? Man, I don’t know.¬†People talk about testing when you are being lean, but¬†what keywords do you buy on Google? Do you buy a lot of a few keywords to get data or do you sample a few of many in the hopes that you stumble on something that performs so amazing that the results show up instantly. Well, I know that is insane. So you have to go all in. The first step of going all in is pretty easy. You buy some retargeting ads and custom audiences of your customer list on Facebook. Those will perform pretty well assuming that your model supports repeat customers. But that isn’t creating new customers, which is really the point.

Of course, Lean Startup principles help here. We are picking keywords based on performance data we are getting from SEO data. That should help us pick a winner. Here, one thing that is easily missed is to simply look at volume of traffic. You should probably compare that to the overall viability of the keyword. If you are getting a lot of share in a low volume term, that could be a power term for you.

Starting with a low bid and being aggressive about keeping it low is important also. Google will hassle you all the time that you should be increasing budget and you have a lot of overhead, but if you are spending your entire budget, then you should be cutting price. The goal is to not spend a lot of money while getting test data in the face of high costs with little hope of recovery. Why would you bid a lot or increase budget?

This is where the essence of entrepreneurship lies. There comes a point where the data is sparse and making the right decision determines the success or failure of the business. This is what makes an entrepreneur great.

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