D2C Ecommerce retail is skyrocketing. The global D2C sales have almost doubled in the last two years, and this uptrend is likely to continue. Brands like Dollar Shave Club, Warby Parker, Casper, and BarkBox are revolutionizing the D2C space.
Consumers are also showing interest in shopping from D2C brands. Over 40% of customer spending is projected to go towards D2C retail. As a result, 78% of D2C brands have increased their marketing budgets.
However, increasing your marketing budget isn’t enough. You need to implement the right marketing strategies to get more sales.
Paid advertising has emerged as one of the most effective marketing strategies for D2C brands. Here is a comprehensive guide that will help you leverage PPC ads to drive customer acquisition.
The D2C Business Landscape and Target Audience
Ecommerce has grown exponentially in the past couple of years. Global retail Ecommerce sales have doubled from $2,982 billion in 2018 to $4,891 billion in 2021. Furthermore, they’re projected to reach $6,388 billion by 2024.
One of the fastest-growing segments within Ecommerce is direct-to-consumer (D2C) retail. D2C Ecommerce sales in the US alone touched $129 billion in 2021 and are likely to reach $175 billion in 2025.
Global Growth of D2C Ecommerce
Several factors are fueling the growth of D2C Ecommerce, including:
- Increased Profit Margins: Most brands rely on intermediaries or third-party sellers to reach their target customers. These could be retail outlets like Walmart or online marketplaces like Amazon.
These intermediaries charge a commission on every sale, which reduces the brand’s profit margin. D2C eliminates such intermediaries, allowing brands to be more profitable.
- Better Control of Data: The D2C business model focuses on building a first-rate customer relationship. Hence, brands have direct access to customer data, enabling them to learn more about their customers.
This first-party data also allows D2C brands to streamline their marketing campaigns and acquire new customers.
- Seamless Customization: Since D2C brands interact directly with customers, they have complete access to the experience chain. Marketers can easily create personalized and customizable experiences for customers.
- Digital-First Marketing: D2C marketing allows you to take a digital-only approach. Brands can use Ecommerce and social selling to drive conversions without having a physical presence.
Target Audience for D2C Brands
If you want to run successful, high-performing marketing campaigns, you need to first understand your target audience.
D2C brands primarily rely on digital channels to reach customers and drive sales. Thus, their target audience includes younger consumers that actively use online channels. Three-quarters of the D2C customer base is under the age of 55 years. Millennials and Gen Z readily shop from D2C brands.
There are various reasons younger customers prefer shopping from D2C brands, including:
- Authenticity: Since D2C brands sell directly to customers, buyers can stay assured that they’ll receive the original product.
- Affordability: D2C retail eliminates intermediaries, thereby reducing costs. Buyers can get a high-quality product for a reasonable price when they buy from a D2C brand.
- Convenience: D2C brands offer a seamless buying process to customers. Most retailers have their own Ecommerce websites where customers can directly buy the products.
D2C Sales Funnel and Acquisition Channels
The D2C marketing and sales funnel are similar to the standard marketing funnel. It comprises three stages:
- Top of the Funnel: Awareness stage, where consumers learn about your product
- Middle of the Funnel: Consideration stage, where consumers decide whether to buy your product
- Bottom of the Funnel: Conversion stage, where consumers buy your product; and, Loyalty stage, where consumers become repeat customers and recommend your products to others
D2C brands can use several channels to reach customers and drive sales. The channel you choose depends on your goals. If you’re looking for a marketing strategy to support your long-term goals, SEO and social media can be effective channels.
If you have short-term goals and want to drive quick sales, paid advertising or PPC advertising is one of your best options. Since many D2C brands focus on getting quick, consistent sales, PPC advertising has emerged as the preferred marketing strategy for them.
How Can Paid Advertising Campaigns Bolster D2C Customer Acquisition?
One of the major reasons to use PPC ads is versatility. You can use them at every stage of the sales funnel. When your prospects are in the TOFU stage, PPC ads help you increase brand and product awareness.
In the consideration stage, PPC ads enable you to filter customers based on their intent and drive engagement. PPC advertising in the BOFU stage is all about getting sales.
Quick entry, versatility, and seamless optimization are some other reasons to use PPC marketing. Unlike SEO that takes months to show results, PPC ads start driving results sooner. This way, D2C brands can promote their products instantaneously and penetrate the market.
PPC ads are highly versatile as you can run them for every awareness stage. You can tailor your content strategy and marketing messages based on customer awareness and positioning, and goals.
Paid ads also offer versatility in terms of ad formats. There are so many paid advertising formats:
- Search ads
- Display ads
- Remarketing ads
- Social ads
- Google Shopping ads
- Gmail sponsored promotions
- Instream ads (YouTube)
Additionally, PPC ads are measurable and trackable. You can set and track key performance indicators (KPIs) of each ad campaign to determine how it’s performing. This also paves the way for A/B testing — running two versions of an ad simultaneously to determine which one performs better.
This trackability and scope for experimentation make PPC ads an excellent alternative to print ads and physical advertisements that are usually not easy to measure.
Note: There is a smart way to make your print ads, billboards, and other physical advertisements measurable — using QR codes. All you need to do is create a QR code, link it to the target URL, and place it on your ad. Users can scan the code from their smartphone to engage with it.
QR codes are trackable, and you can see how many times your code has been scanned and from which location and device.
Leveraging Google PPC Ads for D2C Customer Acquisition
Paid advertising is beneficial for D2C brands, but it’s also competitive. Almost every D2C brand uses paid ads to increase awareness and boost customer acquisition.
So how can you stand out in a saturated market?
Here are four steps you can take to effectively use PPC ads for increasing customer acquisition, retention, and revenue.
1. Planning Ad Campaigns Based on Your Marketing Strategy
The first step in setting up a paid ad campaign is to formulate a marketing strategy that includes reaching prospects across awareness stages. Let’s look at how you can use paid ads for each awareness stage.
Top of the Funnel
In the TOFU stage, your aim should be to create brand awareness and educate people about your brand and the products you sell. Display ads enable broad interest targeting, and hence, they’re best suited for building awareness.
You can also use social media ads and search ads to engage people at the top of the funnel.
Middle of the Funnel
Customers in the middle of the funnel are aware of your product but aren’t yet ready to buy. At this stage, your ads should focus on instilling confidence in their minds. You can do that by sharing case studies and testimonials. You can also promote the benefits you offer, like a “free 30-day money-back guarantee.”
Remarketing is effective at this stage. In remarketing, you show ads to people who visited your website or a product page but didn’t complete a purchase. Retargeting ads can help nurture these prospects and push them further down the funnel. Besides, retargeting ads have a 10x higher CTR than traditional display ads.
Targeting rivals is another useful approach in the MOFU stage. It’s an aggressive advertising strategy where you target potential customers searching for your competitors. The idea behind this strategy is to show the customers what you offer is better than what your competitors provide.
Bottom of the Funnel
The final stage is the bottom of the funnel, where your only objective is to convert a prospect into a customer. At this stage, you can leverage branded search campaigns, high-intent search ads, Google Shopping ads, and retargeting.
2. Tracking Ad Campaign Performance
In the previous section, we delved deep into developing a paid advertising strategy based on the awareness stage and your marketing goals. Now, let’s discuss the KPIs you can measure to track the performance of your ad campaigns.
The KPIs are different for each awareness stage.
- Impressions: Total people who viewed or ad (clicked or not clicked)
- Click-Through Rate (CTR): Total users who clicked your ad
- Bounce Rate: Users who clicked your ad but did not take any action
- Time Spent on Site: The average time a user spent on your website after clicking your ad
- Cost per Thousand Impressions (CPM): The money spent to get 1,000 impressions.
- Cost Per Click (CPC): The average money spent to get one click on your ad.
- Lead Generation Rate: Number of leads generated per 100 clicks
- New User Conversion Rate: Number of users who completed a purchase
- Return on Ad Spend (RoAS): The average revenue earned on every $1 spent on advertising.
- Sales: Total sales
- Customer Acquisition Cost (CAC): The money spent to acquire one new customer.
- Return on Investment (ROI): Total profit earned from running the ad campaign
By combining all these metrics, you can track the performance of your ad campaigns accurately.
3. Optimizing Ad Campaigns to Boost Conversions
Now that you know which metrics to track, let’s understand how you can optimize your ad campaigns using these KPIs to boost conversions. We’ll pick a use case from each funnel stage for better understanding.
Let’s start with the TOFU stage. Suppose you run a display ad campaign that gets a lot of impressions but hardly any clicks (low CTR). It could be an indication that your ad isn’t catchy enough. Changing the image, headline, or description of the ad can help.
When you show ads to prospects in the MOFU stage, your ads may get a lot of clicks but few conversions (low conversion rate). A low conversion rate indicates that your offer isn’t engaging enough to convince the prospect to take action. Changing your landing page and revamping your offer can help.
You can also use A/B testing to test different landing pages, ad copies, keywords, audiences, etc., to find the best-performing options.
In the BOFU stage, you may have a high conversion rate but low RoAS. This means your ads are getting conversions, but the revenue generated is low. You can resolve this issue by reducing your customer acquisition costs.
4. Developing a Robust Lead Nurturing System and Sales Funnel
Gone are the days when siloed marketing was effective. Even though paid advertising is the most useful marketing strategy for D2C brands, you must complement it with other marketing and customer experience strategies.
For instance, you can support your paid ads by leveraging organic SEO. Ecommerce SEO has many benefits. It helps you rank higher on search engine results, drive brand awareness, expand remarketing audiences, and generate leads to fill your marketing funnel. Moreover, a solid SEO strategy can help you reduce your paid advertising costs.
The next step is to boost the user experience at each touchpoint. D2C brands generally use various touchpoints to acquire customers. Some examples include paid ads, organic SEO, social media, and email. It’s essential to identify all these touchpoints and ensure a seamless onboarding process on all of them.
Finally, invest in post-purchase engagement to elevate customers to the stage and loyalty and advocacy and increase their lifetime value (LTV). Asking for feedback, requesting referrals, and implementing cross-sell/upsell strategies are useful ways to engage your customers after a purchase.
The rise of D2C brands has been one of the major trends in the Ecommerce space in the last couple of years. Many customers prefer buying from D2C brands to enjoy authenticity, low prices, and convenience.
If you are a D2C brand, you can leverage paid advertising to increase brand awareness, engage potential customers across awareness stages, and drive customer acquisition.
This is a guest post. The views and opinions expressed by the author are solely their own and do not represent that of Optmyzr.
About the author:
Akshay is a digital marketer and a startup enthusiast exploring the myriad avenues of everything marketing. At Beaconstac, he enables companies to bridge the gap between the physical and digital worlds through the use of custom QR codes.