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How to Optimize Ecommerce Campaigns with Blended ROAS

Digital advertising has been booming in recent years. At the same time, we’re seeing stricter data protection laws and the rise of first-party data.

With this, comes the need for sharper metrics to measure your advertising success. One of the go-to metrics most of us relied on for several years was Return on Ad Spend (ROAS), a key indicator of how well our ads are performing.

But as online advertising became more complex, so did the campaigns. You’re mostly no longer limited to one channel or ad type. Instead, your advertising efforts likely span multiple platforms and formats.

As a result, we need a more comprehensive way to measure overall marketing performance. This is where Blended ROAS comes in.

What is Blended ROAS?

Blended ROAS is a metric that calculates the overall effectiveness of your marketing by measuring the ratio of total revenue (from all sources, not just paid ads) to total ad spend.

Unlike traditional ROAS, which only looks at platform-specific return, blended ROAS considers your entire revenue stream—whether it’s from organic traffic, repeat customers, or email marketing.

Here’s how it’s calculated:

Blended ROAS = (Total Revenue / Total Ad Spend) * 100

Why is Blended ROAS important?

As data protection laws get stricter, we’re losing more precise data in individual advertising channels. And much of the data we have is now modeled and not fully clear.

These changes mean that the ROAS we’ve relied on for each channel is not reliable. So it’s harder to see exactly what impact each advertising investment has on our bottom line.

A blended ROAS approach combines all expenses and revenues across channels, providing a more realistic view of the overall impact of your marketing efforts.

There are several reasons why Blended ROAS is important, especially in today’s multi-channel marketing environment:

1. It gives you a holistic view of your marketing performance.

With so many digital channels driving revenue, relying on individual platform ROAS doesn’t tell you the full story. Blended ROAS gives you a more complete view of your advertising effectiveness and lets you evaluate our marketing strategy in its overall context.

2. It helps you make better-informed budget allocation decisions.

By understanding your overall return, you can make better-informed decisions about where to allocate your budget. For instance, if a channel has a low individual ROAS but contributes significantly to your overall revenue, you may still want to continue investing in it.

3. It factors in the long-term value of repeat customers.

A lower ROAS on a particular campaign may still be valuable if that campaign is bringing in repeat customers. Blended ROAS helps account for this, as it measures how all touchpoints contribute to your long-term success.

How to work with Blended ROAS?

Step 1: Gather data for all your channels.

Start by tracking total revenue and total ad spend regularly. Then, review and gather data for all your marketing channels, both expenses and revenue.

Step 2: Calculate your Blended ROAS regularly.

Calculate your total blended ROAS by comparing total expenses with total revenue from your backend.

Monthly or weekly calculations will give you a good sense of how your blended ROAS fluctuates and when adjustments are needed.

Make sure you include all revenue sources in your calculations. This includes organic traffic, social media, email marketing, and any other channel that contributes to your overall sales.

Step 3: Adjust Blended ROAS based on Customer Lifetime Value (CLV).

Blended ROAS becomes even more valuable when combined with Customer Lifetime Value. If you’re acquiring customers at a lower upfront profit but they stick around and make multiple purchases, your blended ROAS will help justify those initial costs.

Step 4: Adjust your strategy based on this data.

Use Blended ROAS to regularly adjust your marketing strategy and budget allocation. It helps you make sure to invest where it provides the most return in terms of overall business growth.

When you’re looking to scale, Blended ROAS can help you determine whether or not you’re ready to increase ad spend. If your blended ROAS remains healthy, it indicates that your overall marketing efforts are effective and can handle increased investment.

Read more: Andrew Lolk, Founder & CEO of SavvyRevenue discussed in detail how you can work with Blended ROAS in this article.

But, Blended ROAS is not a magic bullet that works for every advertiser.

There are challenges with Blended ROAS too.

1. Accurate tracking across all channels is essential.

To calculate Blended ROAS effectively, you need accurate tracking for every channel and ad type in your campaign. This can be challenging, especially when you’re using different tracking systems for various platforms.

2. Blended ROAS can be tricky to compare between campaigns.

Comparing Blended ROAS across campaigns isn’t always straightforward, as the performance of channels and ad types can vary based on campaign goals and target audiences.

3. It may overlook long-term advertising impacts.

Blended ROAS only measures revenue generated during the campaign period, which means it might miss the long-term effects of your ads on customer behavior and brand awareness.

However, despite these challenges, the advantages of Blended ROAS far outweigh its limitations—especially if you’re using a robust attribution and ad automation platform. These tools can simplify tracking by centralizing data from multiple channels, giving you the ability to make real-time, informed decisions.

Implement Blended ROAS in your marketing strategy

Marketers have grown accustomed to an abundance of data that tells us exactly which ads perform best and how many purchases each one generates. But it’s important to remember that advertising existed long before this level of granular data was available.

In short, this transition is just a return to basics and not one to be feared.

While it’s important to look at platform metrics, focusing solely on them limits your ability to see the full impact of your advertising efforts.

At the end of the day, the key questions remain: What are your revenues? What are your expenses? And how is your marketing spend contributing to the bigger picture?

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5 Ways to Reduce Ecommerce Fulfillment Costs Without Sacrificing Quality

Having a cost-effective business can help aid your PPC campaign efforts. How? By saving money in different aspects of your business, you can set aside the additional funds to go towards your campaigns.

Businesses will consider cutting production costs or thinking about the quality of their products. But, fulfillment is normally the one thing that often gets overlooked.

An ideal fulfillment partner will help your business save money. Reducing fulfillment costs allows you to allocate funds to your PPC campaign. For fulfillment, there are different aspects that can be cost-efficient for your business.

In this article, we discuss how to reduce fulfillment costs without sacrificing quality or customer experience.

1. Inventory Accuracy

Inventory accuracy is what you would think it means. It refers to inventory inaccuracies between your physical inventory and what is in your records. For most businesses that work through a 3PL provider, it would refer to the inconsistencies you might have with the inventory management software and what is actually in stock, whether it’s in the warehouse or in your store.

By keeping an accurate count of your inventory, you can reduce unneeded costs. How? First, you can reduce the number of purchases from your supplier. For example, you might see that you’re low on a best-selling item, so your instinct is to submit another order to your supplier. But, what if your inventory numbers actually were off? This could result in additional spending that was ultimately not needed.

Second, you can potentially reduce labor costs. By working with an inventory management system or a fulfillment provider that already has one, you can accurately keep track of your order and not spend hours manually counting all your items. Allowing you to allocate the additional labor costs you might have used to manually count your inventory to your marketing efforts, like your PPC campaign.

Inventory accuracy can also help with the promises you made on your website and in your ads. For example, you might create ads around on-time delivery and customer satisfaction. If your customers aren’t getting their packages on time, this can show your customers that you aren’t fulfilling your promises.

Keeping your inventory as accurate as possible allows for a few mistakes when it comes to delays. By seeing that a particular item is starting to run low on your warehouse shelves, you can be proactive by ordering more products. This in turn reduces the need for your customers to wait for a restock of their favorite item.x

However, a Campaign Automator can present customers with great alternatives and perhaps still make a purchase from your site when your items are low on stock.

Lastly, it can help guide ad efforts by helping you decide on which product to promote. If you have items that have been collecting dust on your shelves, it can be a motivator for you to create a campaign around them allowing you to reduce your storage costs at your warehouse.

On the flip side of this, you can also see how fast a product is selling and create a campaign to generate even more sales and revenue for your business.

2. Inventory Shrinkage

Inventory shrinkage plays a part in inventory accuracy. Inventory shrinkage ultimately explains why your inventory might not be accurate. Unfortunately, it’s unavoidable to have some amount of shrinkage. Why? It really boils down to three main root causes — employee theft, lost goods, and damaged goods.

Similar to inventory accuracy, missing inventory increases costs for your business. However, inventory shrinkage can be reduced. By working with a fulfillment provider that implements measures to reduce shrinkage, you can save money. However, you can even implement these measures yourself.

Here are measures you or your fulfillment provider can take to ensure inventory shrinkage is avoided:

By implementing these measures, you can avoid damaged, lost, or stolen inventory. Reducing the amount of money you spend on replacing items.

3. Better Rates with Carriers

The benefit of working with a fulfillment provider is better carrier rates. The rates you receive when working with national carriers aren’t the same as what 3PLs receive. 3PL providers work one-on-one with national carriers to get the best deals possible for both businesses.

In most cases, the right 3PL provider for your business can reduce shipping costs per item — enabling you to compete on price. By receiving better shipping costs, you use the additional spend you would save towards your PPC campaign.

You also have the opportunity to reduce product costs allowing for you to have a potential lead on your competition. But, you might ask fulfillment companies to get better deals on shipping. As mentioned before, fulfillment providers have one-on-one relationships with national carriers, but that is not all.

The first reason is package volume. Since normal fulfillment providers have dozens of brands and products sitting on their shelves, national carriers are constantly coming through the warehouse to pick up items instead of visiting one store a few times a month.

The second reason is contracts. Each 3PL creates contracts with the national carriers at the beginning of the year. These contracts involve negotiations and deals to ensure that the fulfillment’s clients get the best deals possible.

4. Packaging Supplies

Another way fulfillment can be cost-effective and allow for your PPC campaign to grow is the packaging. Fulfillment companies know packaging. It’s their job.

By offering different size boxes and infill options, fulfillment companies can help you find the right packaging system for your company.

You might not think it can reduce costs, but finding the perfect box for your products is essential. Why? The wrong size of your box could create additional costs for your business. Most national carriers rely on DIM weight over actual weight; however, both are used.

DIM weight vs actual weight

DIM or dimensional weight is a formula used by carriers to determine the price based on the volume of the package. By using this formula, carriers are able to add in box size rather than just weight. The actual weight is just that — the actual weight of your package.

As mentioned before, carriers use both options to determine the billable weight, but it’s more of an either-or scenario. If your box is heavier than the DIM weight calculation, you will be charged for the actual weight of the package. If your DIM weight is more than your actual weight, then you will be charged based on the DIM weight instead.

The issue businesses will run into is picking a larger box for a smaller item. This in turn increases your shipping cost. By picking the correct box, you will pay the appropriate amount for shipping and not run into additional shipping costs.

Green Packaging

Did you know that 64% of Americans spend more on green products? If you sell green products, why not go the extra mile with green packaging? For some fulfillment companies like Red Stag Fulfillment, the leftover cardboard is turned into infill — reducing the number of times plastic infill is used. It helps the environment and also reduces costs on infill.

5. Increase Customer Orders

If you work with a fulfillment provider, you can gain customer loyalty. Having your packages arrive on time and intact, it can make your customers happy. Happy customers increase customer loyalty.

Accurate and on-time deliveries can make or break a customer’s buying journey. It might sound a little extreme but think back to your recent delivery that was late. How did you feel about the brand as you anxiously waited for the delivery? You might not have been too happy.

For some people, it could convince them to hold off on ordering from that brand for a while or ever again. However, a package that comes on time and in great condition can persuade your customer to come back to your site.

By increasing happy customers, you could see an increase in orders which in turn allows you to have more revenue to plan campaigns based on your marketing strategy.

Conclusion

By turning to fulfillment, you can look at ways to be more cost-effective and allow you to add additional funds to your PPC campaign or even create new ones. So, it’s important to look for an ideal partner that cares about your inventory and delivery standards.

You might see a complete change in available funds when making your fulfillment cost-effective, but a little goes a long way when it comes to PPC campaigns.

This is a guest post by Jake Rheude, Vice President of Marketing for Red Stag Fulfillment.

About the author:

Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.

Want to Increase Your Ecommerce Conversion Rate? Learn the 5 Factors That Influence It.

Are you looking for a helpful guide on how to increase ecommerce conversions? You’ve landed on the right page. But before we dive in, let’s quickly cover the basics.

What is Ecommerce Conversion Rate?

Ecommerce conversion rate is a metric that is calculated by dividing the total number of site visitors by the number of conversions. Because it’s a key metric for your store’s success, it pays to invest as much time and resources as possible into its optimization.

How To Measure Ecommerce Conversion Rate

You need two values to get your website’s conversion rate — the number of conversions and the total number of visitors. You can get both values from Google Analytics.

Here’s a simple formula for determining your website’s conversion rate:

Conversion Rate = (# Of Conversions ÷ Total # Of Visitors) x 100

For example, the number of conversions is 10 and the total number of visitors is 100, this will be the equation:

conversion rate = (10 ÷ 100) x 100

conversion rate = (0.1) x 100

conversion rate = 10

​​​​​​​What Is A Good Ecommerce Conversion Rate?

You might be wondering: what is a good average conversion rate for an ecommerce store? The short answer is that it depends on your market.

Omniconvert recently ran a study to determine the average conversion rates for the most popular ecommerce niches, and here’s what they found:

But while it’s fine to settle with a good conversion rate by this definition, it’s a sweeter deal to go beyond the average. This grants you the opportunity to outperform your competition and generate higher income.

For example, if the average conversion rate in your industry is between 0.90% to 1.00%, it’s best to aim for a higher figure — 2.50% (or above).

5 Factors That Influence Ecommerce Conversions

To help you achieve a conversion rate that’s better than the average, take note of the factors that can affect the increase in conversions.

1. Product-Audience Fit

The product-audience fit refers to market demand (or lack thereof) for your product. And achieving product-audience fit is among the pillars of a successful business.

If you achieve product-audience fit, it means the market is on your side. There’s demand for your product, and you know how to reach the right type of customers searching for it.

Here are tips on how you can achieve a product-audience fit:

2. Order And Payment Forms Design

Your order and payment forms’ design is also one of the reasons a customer might decide whether or not they want to pursue buying your product. If your form makes the order and payment processes difficult for them, a potential customer is likely to leave your website before completing a purchase.

Here are the elements in a form that make things difficult for online shoppers:

Image source

If your order and payment forms aren’t optimized for mobile, you have another problem to fix.

According to different studies, the conversion rates on non-responsive forms dip quite significantly. Considering that a big segment of shoppers prefers to use their mobile phones to make purchases, the responsiveness of your forms could make or break your business.

Here are more tips for designing order and payment forms:

3. Supported Payment Methods

Payment gateways are merchant services that process payments for ecommerce stores. They’re a vital part of your website because, without them, your customers can’t send you payments.

This is also why it’s important to choose a trustworthy payment gateway that your customers would find easy to use.

The most popular high-quality payment gateways are:

A concern is, that there could still be security vulnerabilities involved even if you choose high-quality payment gateways. Malware issues, data breaches, and incidents of fraudulent hacking are possibilities — and they’re out of your control. The solution? Be aware of them and seek protection in advance.

Here are the best practices for choosing supported payment gateways:

Giving customers alternative payment options can also influence conversions. That’s because even if some payment gateways are more popular and commonly used, there are customers who’d find it more convenient to transfer money using other methods.

Here are some alternative payment options:

4. Trust Badges

Trust badges are visual symbols that you can add to your website that confirm the trustworthiness of your business. For an ecommerce website, gaining the trust of customers is of paramount importance.

Image Source

As the image below shows, one of the reasons for cart abandonment is the lack of trust that customers have in an ecommerce website. Notably, the bar chart shows that 17% of cart abandonments happen because a customer doesn’t trust the site.

Image Source

A fair way to look at this situation is to put yourself in your customer’s shoes. If you’re about to buy from a website, wouldn’t you feel secure if it had a trust badge?

Here are facts about using trust badges:

Below are the main types of trust badges.

One concern is that there could still be security vulnerabilities involved even if you choose high-quality payment gateways. Malware issues, data breaches, and incidents of fraudulent hacking are possibilities — and they’re out of your control, even more so when you do not protect your devices from prominent threats.

The solution? Be aware of them and seek protection in advance.

5. Customer Support

Customer support can make or break your business. If your customer support works like a well-oiled machine, you’ll see your website’s conversion rates skyrocket. But if you won’t bother making customers feel like they can rely on you, the rate will go down.

Aside from raising conversions, here are the other reasons customer support is important:

The most effective channels for customer support are phone (VoIP phone system) and live chat. Their main advantage over email is that the conversations are happening in the real-time, solving customer problems as they arise.

Here are more approaches you can take to deliver impressive customer support:

Conclusion

Remember that in order to increase your ecommerce conversion rates, you need to focus on optimizing different functions and areas of your business. After all, conversions are just a reflection of how likely the customers are to purchase products through your website.

Persuade them that it’s a good idea, make this process easy and fun, and later delight them post-purchase — and you’ll do just great!

This is a guest post by Vlad Shvets, the growth manager at Paperform.

Optmyzr's Q4 2021 Holiday Season Guide to Search & Shopping PPC

Q4 2021 is upon us and it’s shaping up to be one of retail’s biggest ever holiday seasons.

According to the Google-commissioned Ipsos COVID-19 tracker, as of June 2021, 58% of US shoppers said they were planning to buy more online this season than in previous years. And 59% said they’d shop earlier to avoid an item being out of stock.

Global conditions have people buying online more than ever, and while it at first seemed to be a temporary shift, that doesn’t seem to be the case anymore. Consumers have grown accustomed to the convenience of online shopping over the past 2 years and look set to stick with it, even after the worst is over.

But if you thought Q4 of 2020 was a mess for PPC and eCommerce, you might want to buckle up for this year. While we can use last year’s experiences as a yardstick and be more prepared, 2021 comes with its own set of challenges.

Global Conditions Behind Increased Unpredictability

1. Everyone’s Handling Health Regulations Differently

Last year, two things happened:

  1. Most physical stores were closed, so there was no option to shop offline
  2. Many people weren’t hosting gatherings because there was no vaccine yet

This year, parts of the world like Australia and Malaysia are still shut down either fully or partially. Others, like Norway and Iceland, have gone back to normal (or some kind of new normal).

Some people are vaccinated; many aren’t. Some people are traveling and vacationing again; others still haven’t seen their loved ones since 2019. Some people still aren’t comfortable with large gatherings; others don’t mind them so long as the necessary precautions are taken.

The bottom line is that every little corner of the world is handling health regulations in their own way, and that makes it difficult to predict what consumer habits might be like this holiday season.

2. The People Want Travel

Travel demand has risen, with more people planning to either head home for the holidays or take a much-needed vacation.

But it’s complicated because of the travel restrictions still in place. In many places, travel demand is not as high as 2019 and before, and might continue to stay where they are for longer.

Travel-related gifts are likely to see greater demand this year, and electronic gift cards might prove to be a safer alternative given shipping restrictions and delays.

3. Supply and Demand Aren’t In Sync

Travel restrictions and smaller gatherings don’t always mean lower demand. If anything, 2021 has seen more moments of shopping and gifting, and that will likely increase during the holiday season.

Another factor to keep in mind is the earlier purchase period. Given the shipping delays they faced in 2020, many customers began their holiday shopping way ahead of time this year.

Source: https://about.ads.microsoft.com/en-us/blog/post/august-2021/6-moments-that-will-mean-more-this-2021-holiday-retail-season

Having faced shipping-related issues last year, some customers will turn to local suppliers and stores this year. It’s not a bad opportunity to source products and raw materials locally, or to build relationships with local vendors and partners.

4. ‘Shippageddon’ Is Worse This Year

Retailers are seeing an exorbitant rise in the price of shipping containers as well as an increase in transit times. CEO of Simple Modern, Mike Beckham, pulled together some numbers that show exactly how drastic this rise has been.

The implications range from not receiving goods on time to your customers not receiving their orders in time for the holidays. And then there’s the increased costs impacting your profit margins and freedom to discount.

With containers costing way more and taking longer to arrive, shoppers are likely to encounter lower or different stock than usual, fewer discounts on what’s available, longer delivery times, and higher shipping charges.

5. Last-Mile Fulfilment Is Suffering

Rising demand via online shopping impacted last-mile fulfilment last year. Adding to the pressure this year is the risk faced by people on the ground – those actually making the deliveries.

UPS has projected that they will receive about 5 million more packages than they can deliver per day during the peak holiday season. That’s a surplus of hundreds of millions of parcels over the entire season, and the difficulty in finding enough people to counter that is not likely to make the situation any better.

Shopping and eCommerce PPC: How to Prepare

1. Track Your Inventory

Given the high demand volume and shipping issues this year, it’s not a bad idea to make sure that you track your account’s inventory more closely than usual. Work with other teams to make sure high-demand products are restocked quickly or ahead of time. And keep your available inventory up-to-date to avoid overselling or disappointing users.

2. Automate What You Can

The usual holiday season rush is accompanied this year by other uncertainties like shipping delays and last-mile delivery constraints, so you need to be able to focus on hitting KPIs without added stress. Enabling and pausing campaigns, adjusting bids, and keeping track of anomalies are just some of the things our Rule Engine can automate for you.

3. Use Messaging To Your Favor

If you think it’s too late to place additional stock orders or that customers might order from you too close to the holidays, you need to make sure to tell them about any potential delays. Give your customers all the information – clear product images and descriptions, expected delivery time and charges, and anything else that might be relevant.

You could also add incentives like a freebie or discounts for people who get their orders late, or a free delivery option for people who opt in right away to post-holiday delivery. Remember, it’s the little things that go a long way in wooing customers back to your brand next year.

Search PPC: How to Prepare

1. Attract Customers Using Promotions and Deals

Who doesn’t like a good offer during the holidays? Use your ad text and extensions to highlight the incentives that are likely to attract a given segment of users. Even if you absolutely can’t offer discounts due to margin issues, consider throwing in a sweetener that can be redeemed in early 2022 when things settle down.

2. Pay Attention to Your Messaging

This year, the situation demands that you be especially mindful of how you word your ads in order to build and sustain relationships.

PPC teams advertising items where crowds are implied (concert tickets, amusement parks, resorts, etc.) should be mindful of their messaging. Not everyone is comfortable being around people again, so focus on the experience rather than the scale of the event to avoid subconsciously putting fence-sitters off.

Make sure you let your audience know what kind of precautions you’re taking, and how you’re making the event or venue safer for those attending. If your event requires proof of vaccination for admission or a cap on the number of people allowed, state it in the ad/landing page as relevant.

3. Experiment with New Ways of Advertising

Recycling your Q4 ad strategies from past years might get you so far, but to really stand out requires that you explore new ideas. Similarly, it’s not a bad idea to test a new channel or format that you haven’t prioritized in the past.

Carving out a small experimental budget – one that won’t bankrupt your main campaigns but still help achieve statistical significance – may uncover a lucrative channel that you never knew existed.

YouTube, video, social, shopping, and native advertising can all prove worthwhile if you have traditionally stuck to search and display. And vice versa!

It’s Not All Bad… Here’s What You Can Look Forward To

Last year, PPC managers had absolutely no clue what to expect. This year is better in that we know that chaos is impending.

Use the data from last year to prepare for issues related to your supply chain and last-mile delivery, demand fluctuations, availability of crews/supplies, and preferences or regulations related to gatherings. Of course, this requires you to pay close attention to backend services, performance data, and consumer habits.

While a lot has changed since 2020, some strategies from last year still apply, and you can always go back and see what worked for you before modifying them to the current situation.

But there are definitely things to look forward to this year. Linda Shi from Microsoft listed out 6 moments that will mean more in the holiday season 2021 – all great places to begin planning what you need to do to succeed this year!

Why container shipping delays are a big deal for eCommerce PPC in 2021

Last year, everything changed. Is this the “new normal”? Will things go back to the way they were? Or is there more change to come?

Change is, in fact, the only certainty. Since the world’s emergence from COVID-19 hasn’t gone nearly as smoothly as hoped, I’m betting that there are more rough waters ahead during the rapidly approaching holiday season for those of us in PPC.

Everyone used to know what was going to happen during the holidays. Q4 is when retailers make and surpass their sales targets. Black Friday and Cyber Monday will be huge. But since last year, such truths have been fraying at the edges.

What’s changed? Because of the greater unpredictability of supply chains, consumers are doing their holiday shopping earlier than ever, when more items will be in stock. But that’s not news since it happened last year. Discounts won’t be as sizable as they used to be, but that’s not news, either.

What is news? I believe that mathematically based predictions, grounded in solid figures such as manufacturing and shipping costs, are more likely to yield new information and insights than retrospective trend-watching.

I’ll walk you through an example below. While my numbers are based in reality, they will vary from one company to another so use them to understand the way a hypothetical retailer might think about how much they can spend on digital marketing.

Shipping Costs & The Retailer’s Dilemma

By now, retailers have long since placed orders for the holidays. Because of supply-chain disruptions, they’re probably spending more in manufacturing and raw material costs than before. An order that cost $40,000 last year may cost $50,000 now.

Then they’ve got to ship those goods in a container from their point of origin, probably China, across the ocean to wherever their warehouses are located.

Here’s where retailers are really feeling the pinch.

Shipping costs are calculated per container rather than by container weight. You may have shipped your $40,000 worth of goods for $4000 last year. This year the shipping cost per container has more than quintupled to over $20,000.

I personally know someone who’s paying closer to $25,000 per container as of late September. Ouch!

Shipping costs have gone through the roof for a number of reasons, including COVID-related port closures and such macroeconomic factors as ongoing supply and demand imbalances. Industry analysts see no relief in sight before 2023.

What’s a retailer to do? Should they:

Let’s go back to the math. If the goods are marked up a typical 200%, what retailed for $80,000 last year cost $44,000 ($40,000 for the goods; $4000 for shipping), leaving a profit of $36,000.

This year, retailers could raise prices, for example 10%, so the goods now retail for $88,000, but costs have gone up even more to $75,000 ($50,000 for goods and as high as $25,000 for shipping), leaving a profit of only $13,000.

The cost of doing business is threatening to put retailers out of business.

There’s another option for raising margins. Unfortunately, it’s to spend less on advertising, particularly PPC advertising. It’s likely that retailers will attempt to pass some of their losses on to their agencies. That means you.

Let’s look at this more closely.

Bending Over Backwards

One of the things that makes PPC advertising so amazing is its flexibility. You choose a budget, write a message, select keywords, and pick a bid or target. All this can be changed easily and as often as you like.

But especially when the world is in upheaval, certain advantages can become disadvantages. With other options off the table, your client might ask you to dial down bids or set a more aggressive tROAS.

The simple formula for calculating breakeven tROAS is 1 divided by the margin expressed as a percentage. Based on my example from before, last year, there was $36,000 of profit—a 45 percent margin—to work with when buying ads. Dividing 1/45% yields a breakeven ROAS of 222 percent.

In other words, you can spend $1 on ads for goods that cost $1.22 to manufacture and ship, sell those goods for $2.22, and break even.

This year is very different. Your $13,000 margin is only 26 percent, which means you need a ROAS of 385 percent (1/26%) to break even. In other words, to break even you can only spend $1 on ads to sell $3.85 worth of goods that cost you $2.85 to manufacture and ship.

Going from a tROAS of 222% to 385% may cause low-ball auction bids that will probably assure that your ads will no longer appear on the first—or even the second— page of results.

This will be a challenge, especially if your brand competes with a better known brand that is able to raise its prices more or that has better pricing power with freight lines.

But while I can’t predict what your retailer clients will do, it seems wise to be ready for when they ask that their PPC campaigns bear at least some of the new cost of doing business.

Product Mix

At Optmyzr, we have always advocated multiple PPC campaigns, each with their own targets based on the profitability of different product categories. Not all products are created equal. It looks like the product mix will be quite different this year, and our usual advice is more pertinent than ever.

Shipping costs, again, are calculated on a per container basis, not on how much the container weighs. This year shipping a 40-foot container may cost $25,000, whether that container holds artificial Christmas trees or decorative string lights.

But you can fit a lot more string lights than Christmas trees into the same-sized container.

Let’s say 200 artificial trees are the same volume as 48,000 boxes of lights (based on me measuring the size of my own holiday decor). If a Christmas tree retails for $195, sales of the 200 trees will yield $39,000. If a box of ornaments retails for $10, sales of the 48,000 boxes will yield $480,000.

Let’s look at shipping costs again. The $21,000 in additional shipping costs is about 54 percent of the $39,000 of revenue from the sale of trees. For the ornaments, the increase is 4% of revenue, which is clearly much easier to absorb when setting the new tROAS bids your clients will probably be demanding.

Retailers will de-prioritize items with a low potential revenue per volume and vice versa, So, there will be more lights but fewer trees to hang them on.

Those string lights can still be marketed through PPC more easily because the tROAS doesn’t need to change drastically to preserve profits. Whereas for trees, the change in tROAS required to stay even might be too drastic, shocking the Google Ads system and tanking your sales volume.

The important point to take away here is not about trees or lights, but rather that a metric like ‘price per volume’ — something we typically don’t think about in PPC — may actually have a big impact on what we’re tasked with advertising this year.

Acquiring New Customers

It’s likely that the downstream effects on conquesting, or acquiring new customers, will be significant. I may prefer Target to Walmart. But if Walmart has artificial Christmas trees and Target doesn’t, and I need a tree, I’ll overcome my prejudice and start shopping at Walmart.

If Walmart has a product others don’t, there’s far less need to discount it. Availability will be the key to sales. Guaranteed home delivery and Buy Online Pickup in Store (BOPIS) services, rather than pricing, are the value-adds that will help win the game.

The holidays this year are going to be even more different than last year. The effects of much higher shipping costs are going to be significant and ripple throughout the retail ecosystem.

Forewarned, however, is forearmed. Taking account of these factors will help PPC agencies and professionals mitigate the effects of increasingly unpredictable markets.

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How to Optimize Ecommerce Campaigns with Blended ROAS

Digital advertising has been booming in recent years. At the same time, we’re seeing stricter data protection laws and the rise of first-party data.

With this, comes the need for sharper metrics to measure your advertising success. One of the go-to metrics most of us relied on for several years was Return on Ad Spend (ROAS), a key indicator of how well our ads are performing.

But as online advertising became more complex, so did the campaigns. You’re mostly no longer limited to one channel or ad type. Instead, your advertising efforts likely span multiple platforms and formats.

As a result, we need a more comprehensive way to measure overall marketing performance. This is where Blended ROAS comes in.

What is Blended ROAS?

Blended ROAS is a metric that calculates the overall effectiveness of your marketing by measuring the ratio of total revenue (from all sources, not just paid ads) to total ad spend.

Unlike traditional ROAS, which only looks at platform-specific return, blended ROAS considers your entire revenue stream—whether it’s from organic traffic, repeat customers, or email marketing.

Here’s how it’s calculated:

Blended ROAS = (Total Revenue / Total Ad Spend) * 100

Why is Blended ROAS important?

As data protection laws get stricter, we’re losing more precise data in individual advertising channels. And much of the data we have is now modeled and not fully clear.

These changes mean that the ROAS we’ve relied on for each channel is not reliable. So it’s harder to see exactly what impact each advertising investment has on our bottom line.

A blended ROAS approach combines all expenses and revenues across channels, providing a more realistic view of the overall impact of your marketing efforts.

There are several reasons why Blended ROAS is important, especially in today’s multi-channel marketing environment:

1. It gives you a holistic view of your marketing performance.

With so many digital channels driving revenue, relying on individual platform ROAS doesn’t tell you the full story. Blended ROAS gives you a more complete view of your advertising effectiveness and lets you evaluate our marketing strategy in its overall context.

2. It helps you make better-informed budget allocation decisions.

By understanding your overall return, you can make better-informed decisions about where to allocate your budget. For instance, if a channel has a low individual ROAS but contributes significantly to your overall revenue, you may still want to continue investing in it.

3. It factors in the long-term value of repeat customers.

A lower ROAS on a particular campaign may still be valuable if that campaign is bringing in repeat customers. Blended ROAS helps account for this, as it measures how all touchpoints contribute to your long-term success.

How to work with Blended ROAS?

Step 1: Gather data for all your channels.

Start by tracking total revenue and total ad spend regularly. Then, review and gather data for all your marketing channels, both expenses and revenue.

Step 2: Calculate your Blended ROAS regularly.

Calculate your total blended ROAS by comparing total expenses with total revenue from your backend.

Monthly or weekly calculations will give you a good sense of how your blended ROAS fluctuates and when adjustments are needed.

Make sure you include all revenue sources in your calculations. This includes organic traffic, social media, email marketing, and any other channel that contributes to your overall sales.

Step 3: Adjust Blended ROAS based on Customer Lifetime Value (CLV).

Blended ROAS becomes even more valuable when combined with Customer Lifetime Value. If you’re acquiring customers at a lower upfront profit but they stick around and make multiple purchases, your blended ROAS will help justify those initial costs.

Step 4: Adjust your strategy based on this data.

Use Blended ROAS to regularly adjust your marketing strategy and budget allocation. It helps you make sure to invest where it provides the most return in terms of overall business growth.

When you’re looking to scale, Blended ROAS can help you determine whether or not you’re ready to increase ad spend. If your blended ROAS remains healthy, it indicates that your overall marketing efforts are effective and can handle increased investment.

Read more: Andrew Lolk, Founder & CEO of SavvyRevenue discussed in detail how you can work with Blended ROAS in this article.

But, Blended ROAS is not a magic bullet that works for every advertiser.

There are challenges with Blended ROAS too.

1. Accurate tracking across all channels is essential.

To calculate Blended ROAS effectively, you need accurate tracking for every channel and ad type in your campaign. This can be challenging, especially when you’re using different tracking systems for various platforms.

2. Blended ROAS can be tricky to compare between campaigns.

Comparing Blended ROAS across campaigns isn’t always straightforward, as the performance of channels and ad types can vary based on campaign goals and target audiences.

3. It may overlook long-term advertising impacts.

Blended ROAS only measures revenue generated during the campaign period, which means it might miss the long-term effects of your ads on customer behavior and brand awareness.

However, despite these challenges, the advantages of Blended ROAS far outweigh its limitations—especially if you’re using a robust attribution and ad automation platform. These tools can simplify tracking by centralizing data from multiple channels, giving you the ability to make real-time, informed decisions.

Implement Blended ROAS in your marketing strategy

Marketers have grown accustomed to an abundance of data that tells us exactly which ads perform best and how many purchases each one generates. But it’s important to remember that advertising existed long before this level of granular data was available.

In short, this transition is just a return to basics and not one to be feared.

While it’s important to look at platform metrics, focusing solely on them limits your ability to see the full impact of your advertising efforts.

At the end of the day, the key questions remain: What are your revenues? What are your expenses? And how is your marketing spend contributing to the bigger picture?

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5 Ways to Reduce Ecommerce Fulfillment Costs Without Sacrificing Quality

Having a cost-effective business can help aid your PPC campaign efforts. How? By saving money in different aspects of your business, you can set aside the additional funds to go towards your campaigns.

Businesses will consider cutting production costs or thinking about the quality of their products. But, fulfillment is normally the one thing that often gets overlooked.

An ideal fulfillment partner will help your business save money. Reducing fulfillment costs allows you to allocate funds to your PPC campaign. For fulfillment, there are different aspects that can be cost-efficient for your business.

In this article, we discuss how to reduce fulfillment costs without sacrificing quality or customer experience.

1. Inventory Accuracy

Inventory accuracy is what you would think it means. It refers to inventory inaccuracies between your physical inventory and what is in your records. For most businesses that work through a 3PL provider, it would refer to the inconsistencies you might have with the inventory management software and what is actually in stock, whether it’s in the warehouse or in your store.

By keeping an accurate count of your inventory, you can reduce unneeded costs. How? First, you can reduce the number of purchases from your supplier. For example, you might see that you’re low on a best-selling item, so your instinct is to submit another order to your supplier. But, what if your inventory numbers actually were off? This could result in additional spending that was ultimately not needed.

Second, you can potentially reduce labor costs. By working with an inventory management system or a fulfillment provider that already has one, you can accurately keep track of your order and not spend hours manually counting all your items. Allowing you to allocate the additional labor costs you might have used to manually count your inventory to your marketing efforts, like your PPC campaign.

Inventory accuracy can also help with the promises you made on your website and in your ads. For example, you might create ads around on-time delivery and customer satisfaction. If your customers aren’t getting their packages on time, this can show your customers that you aren’t fulfilling your promises.

Keeping your inventory as accurate as possible allows for a few mistakes when it comes to delays. By seeing that a particular item is starting to run low on your warehouse shelves, you can be proactive by ordering more products. This in turn reduces the need for your customers to wait for a restock of their favorite item.x

However, a Campaign Automator can present customers with great alternatives and perhaps still make a purchase from your site when your items are low on stock.

Lastly, it can help guide ad efforts by helping you decide on which product to promote. If you have items that have been collecting dust on your shelves, it can be a motivator for you to create a campaign around them allowing you to reduce your storage costs at your warehouse.

On the flip side of this, you can also see how fast a product is selling and create a campaign to generate even more sales and revenue for your business.

2. Inventory Shrinkage

Inventory shrinkage plays a part in inventory accuracy. Inventory shrinkage ultimately explains why your inventory might not be accurate. Unfortunately, it’s unavoidable to have some amount of shrinkage. Why? It really boils down to three main root causes — employee theft, lost goods, and damaged goods.

Similar to inventory accuracy, missing inventory increases costs for your business. However, inventory shrinkage can be reduced. By working with a fulfillment provider that implements measures to reduce shrinkage, you can save money. However, you can even implement these measures yourself.

Here are measures you or your fulfillment provider can take to ensure inventory shrinkage is avoided:

By implementing these measures, you can avoid damaged, lost, or stolen inventory. Reducing the amount of money you spend on replacing items.

3. Better Rates with Carriers

The benefit of working with a fulfillment provider is better carrier rates. The rates you receive when working with national carriers aren’t the same as what 3PLs receive. 3PL providers work one-on-one with national carriers to get the best deals possible for both businesses.

In most cases, the right 3PL provider for your business can reduce shipping costs per item — enabling you to compete on price. By receiving better shipping costs, you use the additional spend you would save towards your PPC campaign.

You also have the opportunity to reduce product costs allowing for you to have a potential lead on your competition. But, you might ask fulfillment companies to get better deals on shipping. As mentioned before, fulfillment providers have one-on-one relationships with national carriers, but that is not all.

The first reason is package volume. Since normal fulfillment providers have dozens of brands and products sitting on their shelves, national carriers are constantly coming through the warehouse to pick up items instead of visiting one store a few times a month.

The second reason is contracts. Each 3PL creates contracts with the national carriers at the beginning of the year. These contracts involve negotiations and deals to ensure that the fulfillment’s clients get the best deals possible.

4. Packaging Supplies

Another way fulfillment can be cost-effective and allow for your PPC campaign to grow is the packaging. Fulfillment companies know packaging. It’s their job.

By offering different size boxes and infill options, fulfillment companies can help you find the right packaging system for your company.

You might not think it can reduce costs, but finding the perfect box for your products is essential. Why? The wrong size of your box could create additional costs for your business. Most national carriers rely on DIM weight over actual weight; however, both are used.

DIM weight vs actual weight

DIM or dimensional weight is a formula used by carriers to determine the price based on the volume of the package. By using this formula, carriers are able to add in box size rather than just weight. The actual weight is just that — the actual weight of your package.

As mentioned before, carriers use both options to determine the billable weight, but it’s more of an either-or scenario. If your box is heavier than the DIM weight calculation, you will be charged for the actual weight of the package. If your DIM weight is more than your actual weight, then you will be charged based on the DIM weight instead.

The issue businesses will run into is picking a larger box for a smaller item. This in turn increases your shipping cost. By picking the correct box, you will pay the appropriate amount for shipping and not run into additional shipping costs.

Green Packaging

Did you know that 64% of Americans spend more on green products? If you sell green products, why not go the extra mile with green packaging? For some fulfillment companies like Red Stag Fulfillment, the leftover cardboard is turned into infill — reducing the number of times plastic infill is used. It helps the environment and also reduces costs on infill.

5. Increase Customer Orders

If you work with a fulfillment provider, you can gain customer loyalty. Having your packages arrive on time and intact, it can make your customers happy. Happy customers increase customer loyalty.

Accurate and on-time deliveries can make or break a customer’s buying journey. It might sound a little extreme but think back to your recent delivery that was late. How did you feel about the brand as you anxiously waited for the delivery? You might not have been too happy.

For some people, it could convince them to hold off on ordering from that brand for a while or ever again. However, a package that comes on time and in great condition can persuade your customer to come back to your site.

By increasing happy customers, you could see an increase in orders which in turn allows you to have more revenue to plan campaigns based on your marketing strategy.

Conclusion

By turning to fulfillment, you can look at ways to be more cost-effective and allow you to add additional funds to your PPC campaign or even create new ones. So, it’s important to look for an ideal partner that cares about your inventory and delivery standards.

You might see a complete change in available funds when making your fulfillment cost-effective, but a little goes a long way when it comes to PPC campaigns.

This is a guest post by Jake Rheude, Vice President of Marketing for Red Stag Fulfillment.

About the author:

Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.

Want to Increase Your Ecommerce Conversion Rate? Learn the 5 Factors That Influence It.

Are you looking for a helpful guide on how to increase ecommerce conversions? You’ve landed on the right page. But before we dive in, let’s quickly cover the basics.

What is Ecommerce Conversion Rate?

Ecommerce conversion rate is a metric that is calculated by dividing the total number of site visitors by the number of conversions. Because it’s a key metric for your store’s success, it pays to invest as much time and resources as possible into its optimization.

How To Measure Ecommerce Conversion Rate

You need two values to get your website’s conversion rate — the number of conversions and the total number of visitors. You can get both values from Google Analytics.

Here’s a simple formula for determining your website’s conversion rate:

Conversion Rate = (# Of Conversions ÷ Total # Of Visitors) x 100

For example, the number of conversions is 10 and the total number of visitors is 100, this will be the equation:

conversion rate = (10 ÷ 100) x 100

conversion rate = (0.1) x 100

conversion rate = 10

​​​​​​​What Is A Good Ecommerce Conversion Rate?

You might be wondering: what is a good average conversion rate for an ecommerce store? The short answer is that it depends on your market.

Omniconvert recently ran a study to determine the average conversion rates for the most popular ecommerce niches, and here’s what they found:

But while it’s fine to settle with a good conversion rate by this definition, it’s a sweeter deal to go beyond the average. This grants you the opportunity to outperform your competition and generate higher income.

For example, if the average conversion rate in your industry is between 0.90% to 1.00%, it’s best to aim for a higher figure — 2.50% (or above).

5 Factors That Influence Ecommerce Conversions

To help you achieve a conversion rate that’s better than the average, take note of the factors that can affect the increase in conversions.

1. Product-Audience Fit

The product-audience fit refers to market demand (or lack thereof) for your product. And achieving product-audience fit is among the pillars of a successful business.

If you achieve product-audience fit, it means the market is on your side. There’s demand for your product, and you know how to reach the right type of customers searching for it.

Here are tips on how you can achieve a product-audience fit:

2. Order And Payment Forms Design

Your order and payment forms’ design is also one of the reasons a customer might decide whether or not they want to pursue buying your product. If your form makes the order and payment processes difficult for them, a potential customer is likely to leave your website before completing a purchase.

Here are the elements in a form that make things difficult for online shoppers:

Image source

If your order and payment forms aren’t optimized for mobile, you have another problem to fix.

According to different studies, the conversion rates on non-responsive forms dip quite significantly. Considering that a big segment of shoppers prefers to use their mobile phones to make purchases, the responsiveness of your forms could make or break your business.

Here are more tips for designing order and payment forms:

3. Supported Payment Methods

Payment gateways are merchant services that process payments for ecommerce stores. They’re a vital part of your website because, without them, your customers can’t send you payments.

This is also why it’s important to choose a trustworthy payment gateway that your customers would find easy to use.

The most popular high-quality payment gateways are:

A concern is, that there could still be security vulnerabilities involved even if you choose high-quality payment gateways. Malware issues, data breaches, and incidents of fraudulent hacking are possibilities — and they’re out of your control. The solution? Be aware of them and seek protection in advance.

Here are the best practices for choosing supported payment gateways:

Giving customers alternative payment options can also influence conversions. That’s because even if some payment gateways are more popular and commonly used, there are customers who’d find it more convenient to transfer money using other methods.

Here are some alternative payment options:

4. Trust Badges

Trust badges are visual symbols that you can add to your website that confirm the trustworthiness of your business. For an ecommerce website, gaining the trust of customers is of paramount importance.

Image Source

As the image below shows, one of the reasons for cart abandonment is the lack of trust that customers have in an ecommerce website. Notably, the bar chart shows that 17% of cart abandonments happen because a customer doesn’t trust the site.

Image Source

A fair way to look at this situation is to put yourself in your customer’s shoes. If you’re about to buy from a website, wouldn’t you feel secure if it had a trust badge?

Here are facts about using trust badges:

Below are the main types of trust badges.

One concern is that there could still be security vulnerabilities involved even if you choose high-quality payment gateways. Malware issues, data breaches, and incidents of fraudulent hacking are possibilities — and they’re out of your control, even more so when you do not protect your devices from prominent threats.

The solution? Be aware of them and seek protection in advance.

5. Customer Support

Customer support can make or break your business. If your customer support works like a well-oiled machine, you’ll see your website’s conversion rates skyrocket. But if you won’t bother making customers feel like they can rely on you, the rate will go down.

Aside from raising conversions, here are the other reasons customer support is important:

The most effective channels for customer support are phone (VoIP phone system) and live chat. Their main advantage over email is that the conversations are happening in the real-time, solving customer problems as they arise.

Here are more approaches you can take to deliver impressive customer support:

Conclusion

Remember that in order to increase your ecommerce conversion rates, you need to focus on optimizing different functions and areas of your business. After all, conversions are just a reflection of how likely the customers are to purchase products through your website.

Persuade them that it’s a good idea, make this process easy and fun, and later delight them post-purchase — and you’ll do just great!

This is a guest post by Vlad Shvets, the growth manager at Paperform.

Optmyzr's Q4 2021 Holiday Season Guide to Search & Shopping PPC

Q4 2021 is upon us and it’s shaping up to be one of retail’s biggest ever holiday seasons.

According to the Google-commissioned Ipsos COVID-19 tracker, as of June 2021, 58% of US shoppers said they were planning to buy more online this season than in previous years. And 59% said they’d shop earlier to avoid an item being out of stock.

Global conditions have people buying online more than ever, and while it at first seemed to be a temporary shift, that doesn’t seem to be the case anymore. Consumers have grown accustomed to the convenience of online shopping over the past 2 years and look set to stick with it, even after the worst is over.

But if you thought Q4 of 2020 was a mess for PPC and eCommerce, you might want to buckle up for this year. While we can use last year’s experiences as a yardstick and be more prepared, 2021 comes with its own set of challenges.

Global Conditions Behind Increased Unpredictability

1. Everyone’s Handling Health Regulations Differently

Last year, two things happened:

  1. Most physical stores were closed, so there was no option to shop offline
  2. Many people weren’t hosting gatherings because there was no vaccine yet

This year, parts of the world like Australia and Malaysia are still shut down either fully or partially. Others, like Norway and Iceland, have gone back to normal (or some kind of new normal).

Some people are vaccinated; many aren’t. Some people are traveling and vacationing again; others still haven’t seen their loved ones since 2019. Some people still aren’t comfortable with large gatherings; others don’t mind them so long as the necessary precautions are taken.

The bottom line is that every little corner of the world is handling health regulations in their own way, and that makes it difficult to predict what consumer habits might be like this holiday season.

2. The People Want Travel

Travel demand has risen, with more people planning to either head home for the holidays or take a much-needed vacation.

But it’s complicated because of the travel restrictions still in place. In many places, travel demand is not as high as 2019 and before, and might continue to stay where they are for longer.

Travel-related gifts are likely to see greater demand this year, and electronic gift cards might prove to be a safer alternative given shipping restrictions and delays.

3. Supply and Demand Aren’t In Sync

Travel restrictions and smaller gatherings don’t always mean lower demand. If anything, 2021 has seen more moments of shopping and gifting, and that will likely increase during the holiday season.

Another factor to keep in mind is the earlier purchase period. Given the shipping delays they faced in 2020, many customers began their holiday shopping way ahead of time this year.

Source: https://about.ads.microsoft.com/en-us/blog/post/august-2021/6-moments-that-will-mean-more-this-2021-holiday-retail-season

Having faced shipping-related issues last year, some customers will turn to local suppliers and stores this year. It’s not a bad opportunity to source products and raw materials locally, or to build relationships with local vendors and partners.

4. ‘Shippageddon’ Is Worse This Year

Retailers are seeing an exorbitant rise in the price of shipping containers as well as an increase in transit times. CEO of Simple Modern, Mike Beckham, pulled together some numbers that show exactly how drastic this rise has been.

The implications range from not receiving goods on time to your customers not receiving their orders in time for the holidays. And then there’s the increased costs impacting your profit margins and freedom to discount.

With containers costing way more and taking longer to arrive, shoppers are likely to encounter lower or different stock than usual, fewer discounts on what’s available, longer delivery times, and higher shipping charges.

5. Last-Mile Fulfilment Is Suffering

Rising demand via online shopping impacted last-mile fulfilment last year. Adding to the pressure this year is the risk faced by people on the ground – those actually making the deliveries.

UPS has projected that they will receive about 5 million more packages than they can deliver per day during the peak holiday season. That’s a surplus of hundreds of millions of parcels over the entire season, and the difficulty in finding enough people to counter that is not likely to make the situation any better.

Shopping and eCommerce PPC: How to Prepare

1. Track Your Inventory

Given the high demand volume and shipping issues this year, it’s not a bad idea to make sure that you track your account’s inventory more closely than usual. Work with other teams to make sure high-demand products are restocked quickly or ahead of time. And keep your available inventory up-to-date to avoid overselling or disappointing users.

2. Automate What You Can

The usual holiday season rush is accompanied this year by other uncertainties like shipping delays and last-mile delivery constraints, so you need to be able to focus on hitting KPIs without added stress. Enabling and pausing campaigns, adjusting bids, and keeping track of anomalies are just some of the things our Rule Engine can automate for you.

3. Use Messaging To Your Favor

If you think it’s too late to place additional stock orders or that customers might order from you too close to the holidays, you need to make sure to tell them about any potential delays. Give your customers all the information – clear product images and descriptions, expected delivery time and charges, and anything else that might be relevant.

You could also add incentives like a freebie or discounts for people who get their orders late, or a free delivery option for people who opt in right away to post-holiday delivery. Remember, it’s the little things that go a long way in wooing customers back to your brand next year.

Search PPC: How to Prepare

1. Attract Customers Using Promotions and Deals

Who doesn’t like a good offer during the holidays? Use your ad text and extensions to highlight the incentives that are likely to attract a given segment of users. Even if you absolutely can’t offer discounts due to margin issues, consider throwing in a sweetener that can be redeemed in early 2022 when things settle down.

2. Pay Attention to Your Messaging

This year, the situation demands that you be especially mindful of how you word your ads in order to build and sustain relationships.

PPC teams advertising items where crowds are implied (concert tickets, amusement parks, resorts, etc.) should be mindful of their messaging. Not everyone is comfortable being around people again, so focus on the experience rather than the scale of the event to avoid subconsciously putting fence-sitters off.

Make sure you let your audience know what kind of precautions you’re taking, and how you’re making the event or venue safer for those attending. If your event requires proof of vaccination for admission or a cap on the number of people allowed, state it in the ad/landing page as relevant.

3. Experiment with New Ways of Advertising

Recycling your Q4 ad strategies from past years might get you so far, but to really stand out requires that you explore new ideas. Similarly, it’s not a bad idea to test a new channel or format that you haven’t prioritized in the past.

Carving out a small experimental budget – one that won’t bankrupt your main campaigns but still help achieve statistical significance – may uncover a lucrative channel that you never knew existed.

YouTube, video, social, shopping, and native advertising can all prove worthwhile if you have traditionally stuck to search and display. And vice versa!

It’s Not All Bad… Here’s What You Can Look Forward To

Last year, PPC managers had absolutely no clue what to expect. This year is better in that we know that chaos is impending.

Use the data from last year to prepare for issues related to your supply chain and last-mile delivery, demand fluctuations, availability of crews/supplies, and preferences or regulations related to gatherings. Of course, this requires you to pay close attention to backend services, performance data, and consumer habits.

While a lot has changed since 2020, some strategies from last year still apply, and you can always go back and see what worked for you before modifying them to the current situation.

But there are definitely things to look forward to this year. Linda Shi from Microsoft listed out 6 moments that will mean more in the holiday season 2021 – all great places to begin planning what you need to do to succeed this year!

Why container shipping delays are a big deal for eCommerce PPC in 2021

Last year, everything changed. Is this the “new normal”? Will things go back to the way they were? Or is there more change to come?

Change is, in fact, the only certainty. Since the world’s emergence from COVID-19 hasn’t gone nearly as smoothly as hoped, I’m betting that there are more rough waters ahead during the rapidly approaching holiday season for those of us in PPC.

Everyone used to know what was going to happen during the holidays. Q4 is when retailers make and surpass their sales targets. Black Friday and Cyber Monday will be huge. But since last year, such truths have been fraying at the edges.

What’s changed? Because of the greater unpredictability of supply chains, consumers are doing their holiday shopping earlier than ever, when more items will be in stock. But that’s not news since it happened last year. Discounts won’t be as sizable as they used to be, but that’s not news, either.

What is news? I believe that mathematically based predictions, grounded in solid figures such as manufacturing and shipping costs, are more likely to yield new information and insights than retrospective trend-watching.

I’ll walk you through an example below. While my numbers are based in reality, they will vary from one company to another so use them to understand the way a hypothetical retailer might think about how much they can spend on digital marketing.

Shipping Costs & The Retailer’s Dilemma

By now, retailers have long since placed orders for the holidays. Because of supply-chain disruptions, they’re probably spending more in manufacturing and raw material costs than before. An order that cost $40,000 last year may cost $50,000 now.

Then they’ve got to ship those goods in a container from their point of origin, probably China, across the ocean to wherever their warehouses are located.

Here’s where retailers are really feeling the pinch.

Shipping costs are calculated per container rather than by container weight. You may have shipped your $40,000 worth of goods for $4000 last year. This year the shipping cost per container has more than quintupled to over $20,000.

I personally know someone who’s paying closer to $25,000 per container as of late September. Ouch!

Shipping costs have gone through the roof for a number of reasons, including COVID-related port closures and such macroeconomic factors as ongoing supply and demand imbalances. Industry analysts see no relief in sight before 2023.

What’s a retailer to do? Should they:

Let’s go back to the math. If the goods are marked up a typical 200%, what retailed for $80,000 last year cost $44,000 ($40,000 for the goods; $4000 for shipping), leaving a profit of $36,000.

This year, retailers could raise prices, for example 10%, so the goods now retail for $88,000, but costs have gone up even more to $75,000 ($50,000 for goods and as high as $25,000 for shipping), leaving a profit of only $13,000.

The cost of doing business is threatening to put retailers out of business.

There’s another option for raising margins. Unfortunately, it’s to spend less on advertising, particularly PPC advertising. It’s likely that retailers will attempt to pass some of their losses on to their agencies. That means you.

Let’s look at this more closely.

Bending Over Backwards

One of the things that makes PPC advertising so amazing is its flexibility. You choose a budget, write a message, select keywords, and pick a bid or target. All this can be changed easily and as often as you like.

But especially when the world is in upheaval, certain advantages can become disadvantages. With other options off the table, your client might ask you to dial down bids or set a more aggressive tROAS.

The simple formula for calculating breakeven tROAS is 1 divided by the margin expressed as a percentage. Based on my example from before, last year, there was $36,000 of profit—a 45 percent margin—to work with when buying ads. Dividing 1/45% yields a breakeven ROAS of 222 percent.

In other words, you can spend $1 on ads for goods that cost $1.22 to manufacture and ship, sell those goods for $2.22, and break even.

This year is very different. Your $13,000 margin is only 26 percent, which means you need a ROAS of 385 percent (1/26%) to break even. In other words, to break even you can only spend $1 on ads to sell $3.85 worth of goods that cost you $2.85 to manufacture and ship.

Going from a tROAS of 222% to 385% may cause low-ball auction bids that will probably assure that your ads will no longer appear on the first—or even the second— page of results.

This will be a challenge, especially if your brand competes with a better known brand that is able to raise its prices more or that has better pricing power with freight lines.

But while I can’t predict what your retailer clients will do, it seems wise to be ready for when they ask that their PPC campaigns bear at least some of the new cost of doing business.

Product Mix

At Optmyzr, we have always advocated multiple PPC campaigns, each with their own targets based on the profitability of different product categories. Not all products are created equal. It looks like the product mix will be quite different this year, and our usual advice is more pertinent than ever.

Shipping costs, again, are calculated on a per container basis, not on how much the container weighs. This year shipping a 40-foot container may cost $25,000, whether that container holds artificial Christmas trees or decorative string lights.

But you can fit a lot more string lights than Christmas trees into the same-sized container.

Let’s say 200 artificial trees are the same volume as 48,000 boxes of lights (based on me measuring the size of my own holiday decor). If a Christmas tree retails for $195, sales of the 200 trees will yield $39,000. If a box of ornaments retails for $10, sales of the 48,000 boxes will yield $480,000.

Let’s look at shipping costs again. The $21,000 in additional shipping costs is about 54 percent of the $39,000 of revenue from the sale of trees. For the ornaments, the increase is 4% of revenue, which is clearly much easier to absorb when setting the new tROAS bids your clients will probably be demanding.

Retailers will de-prioritize items with a low potential revenue per volume and vice versa, So, there will be more lights but fewer trees to hang them on.

Those string lights can still be marketed through PPC more easily because the tROAS doesn’t need to change drastically to preserve profits. Whereas for trees, the change in tROAS required to stay even might be too drastic, shocking the Google Ads system and tanking your sales volume.

The important point to take away here is not about trees or lights, but rather that a metric like ‘price per volume’ — something we typically don’t think about in PPC — may actually have a big impact on what we’re tasked with advertising this year.

Acquiring New Customers

It’s likely that the downstream effects on conquesting, or acquiring new customers, will be significant. I may prefer Target to Walmart. But if Walmart has artificial Christmas trees and Target doesn’t, and I need a tree, I’ll overcome my prejudice and start shopping at Walmart.

If Walmart has a product others don’t, there’s far less need to discount it. Availability will be the key to sales. Guaranteed home delivery and Buy Online Pickup in Store (BOPIS) services, rather than pricing, are the value-adds that will help win the game.

The holidays this year are going to be even more different than last year. The effects of much higher shipping costs are going to be significant and ripple throughout the retail ecosystem.

Forewarned, however, is forearmed. Taking account of these factors will help PPC agencies and professionals mitigate the effects of increasingly unpredictable markets.