The $2.8 trillion global e-commerce is forecasted to reach nearly $4.9 trillion by 2021. While that should mean more revenue available for aspiring brands, e-commerce giants risk spoiling the party. Take Amazon, which currently holds over 49 percent of the U.S. e-commerce market, as well as global players like Jingdong, Alibaba, Walmart and others.
With shoppers becoming less loyal to brands, and the vast majority of online stores unable to compete with the price, selection and convenience of businesses with evolved logistics infrastructure, we could (and likely will) see more market share seized by these corporations.
This urgency to raise brand awareness, attract more customers and turn them into repeat buyers often pushes e-commerce stores to become too reliant on particular marketing strategies. This can be especially true with paid acquisition tactics.
But does that mean stores should stay away from paid strategies completely? Let’s discuss.
Should E-Commerce Stores Used Paid Acquisition?
Short answer? Yes! Full answer? It depends. Digital marketing’s wide range of strategies is both a blessing and a curse. It’s hard to find the right marketing channels that bring a return on investment without spending a lot of time and money trying different strategies. Because generally speaking, the potential of any marketing channel depends on the e-commerce store testing it out. Paid acquisition tactics are no different.
What exactly do I mean by paid acquisition?
Paid acquisition involves a company paying when their ads are clicked or when they earn a conversion through a premeditated means. The intentional means could be an SEM ad, a social media post or video, a banner ad on a website, a programmatic ad on a mobile phone — even an affiliate link on a blog that’s relevant to your niche.
The Case for Paid Acquisition Strategies
An overarching case for paid acquisition is that every brand has a sweet spot in a particular marketing channel, but it’s difficult, if not impossible, to find the winning equation right away. After all, something as juicy as a sustainable paid acquisition channel should be found only through calculated, ongoing experimentation and testing. Otherwise, a lot more e-commerce stores would succeed with less effort.
Paid acquisition strategies do earn conversions for minimal time spent, However, getting traffic and/or conversions shouldn’t be enough to satisfy e-commerce stores. Any paid marketing channel needs to be scalable in both cost and performance, and ideally, give businesses quality leads that can turn into regular customers. If not, the channel isn’t worth focusing on or allocating substantial budget toward.
The problem is, some paid strategies work enough to get brands dependent on the source of conversions while shrinking margins in the process. A prime example of this is search engine marketing (SEM). Consider how a small online store that sells furniture on an e-commerce platform like Shopify would navigate the waters. Bidding on SEM ads over time will likely lower the furniture store’s cost-per-acquisition gradually (CPA), but an independent e-commerce store’s budget can’t compete with a large retailer like Wayfair, for example.
However, a compelling paid ad on Instagram or Facebook could garner engagement at a modest cost. Likewise, building an affiliate program or leveraging an existing network is usually cost-effective and speaks to every stage of the buyer journey.
Why Brands Should Focus on Organic Acquisition Strategies Instead
The beauty of organic acquisition strategies isn’t that they’re free. Technically, every acquisition strategy is paid. Optimizing your site to rank well in search engines requires a person (or team) with expertise. The same is true for email marketing, social media management and content marketing. These initiatives are also made easier through the use of different software and tools, all of which typically cost money.
The real hallmark of organic strategies is that they continue to work long after the initial investment. They’re evergreen business drivers. Just don’t assume these strategies are more straightforward to pull off. SEO is an ongoing, nuanced process, but if you can outrank your competition, you’ll benefit from increased brand awareness and traffic on a daily basis. Likewise, creating engaging content on your blog, forming syndication partnerships with strategic brands and placing guest posts on well-trafficked sites will yield regular dividends that paid marketing could never produce without a bloated budget.
There’s also the fact that consumer trust is dwindling across the board. Research from Hubspot found that 69 percent of consumers do not trust advertisements, and 71 percent do not trust sponsored ads on social networks. Conversely, 81 percent trust friends and family over advice from a business. After friends and family, consumers usually seek online reviews, comparison guides and ‘best of’ lists to inform their buying decisions.
A final note before you gameplan how much of your budget to allocate toward paid acquisition methods: consider if what you’re doing is helping both in the short-term and long-term. If you’re burning energy and money only to have the performance of your paid campaign capped at a specific dollar amount, it’s worth taking a step back and prioritizing initiatives that’ll position your business for success down the road without sinking your marketing budget short term.