Merchandising essentially is answering the question of what products should we show to which customers. Merchandisers should show the right products to the right customers at the right time and drive maximum CTRs and conversions on various pages and slots on the website. Broadly, for any e-commerce website, there are customers coming and searching (showing high intent), customers browsing on the home page, customers going to the menu bar and customers scrolling down the homepage/ browsing recently viewed items (shows high intention as they scroll down).
A customer cohort is a customer segment that marketing/analytical teams would like to look at to develop new merchandising and customer navigation strategies to drive faster conversions. The ideal merchandising would be to change the website dynamically basis how the consumer is thinking, with an end goal of converting the customer in the most minimal and fastest way. However, it is easier said than done because of the complexity of the incoming traffic. Top e-commerce platforms have massive daily incoming traffic with each buyer having a different mindset and on top of that, the merchandiser has to wrangle massive SKU quantities, best-sellers, represent various categories, constant product, and pricing changes, and frequent promotions. E-commerce merchandising can make or break the sale for the day and there is no going back once the day is gone!
Various goals for merchandising:
- Meet the traffic goals for all categories and for the platform within budgets
- Meet the goals for new customers, repeat customers, and customer attrition. To meet the goals of customer acquisition, conversion, and retention for all categories.
- Meet the goals to increase up-sell and cross-sell other categories by shaping navigation, experience and showing the right product.
- Manage new launches and new categories within budgets and within own platform marketing assets
- Innovate new merchandising spaces, navigation experiences, test various slots across SKUs, categories to understand conversion and CTR impacts and come to conclusions on merchandising strategies for various categories to benefit overall goals.
Below are some of the customer cohort (segment) cuts that are commonly used. Depending on the goal of our analysis and hypothesis, we can slice and dice the consumer data to bring out the relevant customer segment of data and study them or target them with specific A/B testing of merchandising slots or merchandising specific products.
How much of the homepage should have personalized content and how much of the homepage should have broadcasted content? In which slots, should we merchandize broadcasted content and personalized content?
Usually what we see in most top e-commerce websites across the world is that the high GMV categories such as electronics and large appliances dominate the top slot and then the remaining categories are merchandised in the lower slots. Personalized content usually is lower down the homepage with an expectation that viewers who want to see personalized content have a high intention and will scroll down. The below image shows the US website http://www.amazon.com displaying personal recommendations almost 6 scrolls below on its homepage (check the scroll bar on the right side).
Let us evaluate the various options we have to merchandise the homepage.
- Have the front gateway banner (left and right scrolling) for current top deals, category promotions, etc.
- Post the gateway banner, start with category-wise blocks and use one block for recently viewed as it is important for engagement (image of amazon.com below)
- Another top e-commerce platform in India, Flipkart, uses the top deals block for its homepage.
- category blocks with intermediate blocks of new launches, featured brands, and other themes.
How would we merchandise for a customer who searched for a product on the search bar and came back to the homepage and started browsing deals of the day without continuing the search?
E-commerce companies use a new merchandising block called “Continue Your Search (CYS)” and display the products. Some of the companies also show the recent search as a default passive text in the search bar, reminding the user of the search.
On what touchpoints to touch the consumer who has viewed a product and has continued the purchase? What are the usual customer touchpoints available for targeting an e-commerce customer? What touchpoints to use for retargeting? And how big is retargeting for e-commerce?
The key ad formats used across e-commerce touchpoints are display ads, search ads, video, and email. There is a huge chain of touchpoints today with the consumer literally being a moving target. Each touchpoint comes with various advantages such as making the product information clear, timing relevant, facilitating decision-making by consulting friends&family, etc.
Additionally, Retargeting is an absolute must strategy in e-commerce. Roughly about 20% of the marketing spends go into re-targeting for e-commerce, indicating how important re-targeting is as a strategy for e-commerce.
- One can configure retargeting easily in Google AdWords by adding the remarketing tag on your website and then configuring the ad campaigns in AdWords.
Retargeting falls into various categories such as search retargeting (people searching for certain products or keywords), site retargeting, Facebook retargeting, CRM retargeting and email retargeting. These solutions are offered by most top advertiser networks such as Google, Facebook, AdRoll, Chango, Perfect Audience (good for small businesses), Vantage, etc.
Typically, companies use dynamic product retargeting, website visitor retargeting, abandoned cart retargeting, top customer retargeting, and ready customer retargeting.
- Dynamic Product Retargeting – typically shown to potential customers who have viewed but not purchased yet. Typically, these ads have a picture, price description, and link.
- Website Visitor Retargeting – Visitors to your website bounce off from different stages in the sales funnel (home page, PLP, PDP, Cart, etc.), and there are solutions to engage with this audience while they are spending their time somewhere else.
- Abandoned Cart Retargeting – Shoppers worldwide abandon carts at the last moment in e-commerce. These customers when spending their time on Facebook or Instagram will start seeing the ads of the products they’ve clicked on recently.
- Old Customer Retargeting/Top Customer Targeting – Customers who have made a purchase long back and haven’t come back or customers who are engaging and buying with high frequency. Solutions are available to retarget these customers.
Which touchpoints and devices to target?
Regarding which touchpoints and ad formats to be used to e-commerce audience, a lot of it depends on what customer segments are we targeting. Generally today, an online shopper spends 4.5 hours on the smartphone, indicating that these bunch of customers are high-intent and high-value prospects. It is seen that consumer behavior and intent is different on mobiles and desktop for various categories. If the category is a high value such as Home Appliances, one will see high intent audience researching on both platforms and in fact using a desktop to understand the product better (from larger images) and doing research spending more time. Akamai’s research shows that:
- 57% of mobile shoppers search for products weekly vs. only 34% on desktop
- 35% of mobile shoppers make 1 purchase a week vs. only 15% on desktop
- 52% of mobile shoppers use their phones to compare prices vs. 32% on desktop
Therefore, basis category, targeting on both mobiles and desktops or only on mobiles becomes relevant for the specific audience.
How is Intent factored into ad strategy and touch-point strategy?
Generic product queries indicate low brand familiarity of a user at the start of the consumer journey. As the queries get more specific and brand-led, the consumer shows signs of transition through the consumer funnel. This means that while the former should be targeted with ads containing generalized value propositions presented in a shock-and-awe eye-catching manner, the latter can be successfully converted with detailed and engaging ads.
Talking of ads on both platforms, research reveals that both banner ads and video ads generate different impact on mobile and desktop. According to a MetrixLab whitepaper, mobile banners generate higher message recall and ad recognition amongst users since the share of the device screen occupied by mobile banners is more, leading to lesser clutter. Desktop banner ads, on the other hand, have a better brand recall, likeability, credibility, purchase intent, brand interest, and comprehension due to bigger and better visual impact.
On mobile devices, video ad format is definitely a deal clincher. According to InMobi data, mobile video ads boast of 4X higher CTR over banner ads and 1.2X higher CTR over native ads. Since video ads on mobile tend to occupy the entire screen, they are more engaging for the audience. This means better breakthrough, message and brand recall, and ad recognition on hand-held devices. However, consumers respond more positively to desktop video ads in terms of likeability.
Conclusively, on the basis of behavior, the basic approach for E-Commerce ad strategies can be defined as:
- More engaging and interactive ad campaigns on mobile to improve brand recall
- More stand-out and awe-inspiring ad campaigns on the desktop to improve breakthrough
Where does it leave marketers and brands, then?
For starters, they need to figure out whether to prioritize advertising on one medium or opt for a more balanced omnichannel approach, based on the shoppers they are targeting. According to Criteo, more than 51% of India’s online shoppers now use two or more devices to shop online. And this number is only going to go through the roof. Cross-channel interaction with E-Commerce sites and ads is, therefore, the new reality, and your ad strategy needs to have the best of both worlds.
A mobile-first strategy, which essentially means designing ads for smaller screens and then adapting them progressively for desktops, works well because it is essentially a content-first strategy. Limitations to screen size and low attention spans on mobile means content in mobile ads are brand-centric, direct, engaging, and equipped with the most crucial information. Once all this has been figured out, marketers find modifying these ads for desktops with a different message relevant to audiences on larger screens. In a country like India which is experiencing a tidal wave of high mobile adoption, especially in lower-tiered cities, a mobile-centric strategy is vital. The other advantage that mobile ads deliver is geolocation and the fact that user behavior on mobiles mirrors their preferences, immediate and long-term.
The best e-commerce ad strategy is to reach out to the relevant customer at the relevant time on the relevant device with the relevant ad. How?
- Map out your audience and target groups with first and third-party deterministic data using various tools
- Create highly targeted, mobile-first ads to generate awareness and engagement
- Optimize the ads for desktops and larger screens that leverage the effect generated by mobile ads
- Retarget desktop ads to an audience that engaged with mobile ads and generate sales.
Mobile and desktop E-Commerce ads are, evidently, two key pieces of the same marketing puzzle. And it is user-intent and behavioral data that ultimately reveal how the two pieces fit together. Put them all together, and you’ll have yourself a decisive marketing and merchandising strategy for your brand/product.
Hope this is useful, thank you!