Supercharge Promotional Campaigns with Retargeting

Posted by | Press releases
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  • October 29, 2019
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Promo periods can push significant boosts in e-commerce sales. Offering discounts is a key way to accelerate growth, and retargeting should be an important part of the strategy.

Among promo periods, Black Friday (November 29th, 2019) is a stand-out. Depending on the vertical and type of activities conducted within e-commerce, sales that day might grow as much as 5 times compared to a regular day at the beginning of the month. For markets in Europe and, North America and South America, it’s followed by Cyber Monday (December 2nd, 2019), so many marketers combine these two days in order to extend the sales period. For Asian markets, Single’s Day (11th November 2019) is another opportunity to boost sales – we see a similar increase on this day on Black Friday in Europe. Whereas in Eastern Europe, many marketers trigger discounts before Christmas and New Year when people buy gifts for their relatives.

Some verticals can benefit from the promo period much more than others. Based on RTB House’s experience, the highest uplift is observed in electronics and housing products; followed by fashion, fragrances, and multi-category retailers. It should be noted that there are some verticals, travel for example, that doesn’t react to typical promo periods. In the case of travel, the reason being that travel’s seasonality is not consistent with seasonality for material goods (e.g., few people decide to buy their next summer vacation in November).

Remarkably, growth doesn’t seem to be very consistent within verticals. For example, while many Czechian fashion e-commerce brands see average sales increases of 2X in November, the fastest growing players have managed to boost revenue by 3.5x or even higher. When we looked into the data more closely, it turned out that in most of these cases, there were massive discounts given by the marketers.

A very good example of such a campaign was shown by one of our clients working in the premium personal products sector. The client had a big anniversary and wanted to attract attention to the brand by having a massive sale with discounts throughout their various departments. They also decided not to focus on just Black Friday, but to extend the sales to the end of the month (last year Black Friday took place on the 23rd of November, so there was a week to benefit from increased sales). The results exceeded even bravest expectations of the marketing team. November sales increased by 40% year-to-year despite a stagnant market, and emptied out their warehouses.

Results delivered by retargeting were even more astonishing. Conversion value for the client increased by 234% in November, compared to market growth of “only” 66%. Sales on Black Friday were more than 10 times higher than on the last day before the promo started. Obviously, it came with a cost: In order to widely inform the users about promotions, the company was required to reduce the return on ad spend by around 25%. All in all, every seventh conversion during the promotion week was assisted by retargeting.

Retargeting strategies

This year we expect even higher impact of Black Friday on sales than last year, primarily for two reasons: First, the November 29th is very near the end of the month, so most people are likely to have salaries hitting their bank accounts. Second, since Black Friday is closer to the Christmas holidays, many customers likely use the promo day as an opportunity to buy gifts for loved ones.

Clients often ask how to think about the retargeting campaign during this period and how much it’s required to invest for optimal returns. Based upon our analysis of last year’s results, we came up with 3 different retargeting strategies:

Go with the flow. This strategy is the most common for marketers working on mature competitive markets. It helps to grow sales by keeping a stable return on investment. In this case, marketers usually give some discounts to their customers, but try to still keep margins stable because the impact of discounts is offset by increased volume. Although this retargeting strategy sounds really simple, daily flexibility on goal delivery (ROAS/COS/CPA) is required for proper execution. Please see the attachment to understand why.

Grow above the market.We recommend a more expansive strategy for those clients who’d like to increase their market share and get noticed by the market during the promo day. This strategy might be risky as it imposes a pressure on margin and supply chain. We often see cases where e-commerce management teams have to literally go to warehouses and help to prepare shipments. However, if positioned and executed properly, this remarketing strategy can be very rewarding for the marketer. Like the example before, it’s possible to grow as much as 2, even 3 times higher than the market. The most common question is how high the investment into retargeting should be. In order to answer it, we prepared benchmarks from last year’s promo periods to give an idea of earnings possibilities and what the investment should be to support such retargeting activity.

Acquire new customers. A promo day is also the best moment to acquire new customers. There are many users that could wait for months or even seasons before making the first purchase. Converting them for the first time during the promo day might be a very good way of obtaining future loyal customers as a consequence. Some marketers manage to increase the share of conversions by the new shoppers even by 30%. In order to achieve this, we recommend to run volume campaigns with higher range than normally. Retargeting is a very good tool to support this activity. In the case of big online shops user base is large and it’s possible to create different retargeting scenarios by impacting recent visitors or those who used to be in the e-shop longer time ago. If new customer acquisition is the priority, we recommend to dedicate up to 20% of retargeting budget for re-engagement.

Author
Volodymyr Opanasenko

Volodymyr Opanasenko

Head of Account Management Strategy