Currently we find ourselves in a world where there are more and more opportunities in the e-commerce space , in past times there had not been so much competition. According to Shopify experts indicate that “the plummeting return on ad spend is pushing brands to prioritize customer lifetime value and promote brand loyalty «.
Trust is the main currency of the future of electronic commerce.
Experts in e-commerce state that “brands must be transparent, authentic < /span>and find yourself easily available to your clients , especially where they spend most of their time: in social networks. Social commerce is at the center of online shopping for tomorrow's consumer, with brands investing in video and live shopping» .
Investments in brand humanization
Direct-to-consumer organizations, or as their English acronym indicates, DTC (Direct to consumer), are also investing in online communities to humanize their brands, increase customer retention and overcome skyrocketing advertising costs.
Thrive in this new e-commerce landscape with a unique vision and actions.
According to extensive research by Shopify experts, which was conducted with hundreds of direct-to-consumer brands and thousands of consumers, they were able to identify the most important trends. for this 2022, strategies and products that your organization needs to stabilize itself ahead of its competition. Learn more about the future of e-commerce.
First trend in the future of electronic commerce: increasing acquisition costs are forcing organizations to foster long-term relationships with their customers.
Companies strengthen connections with customers by putting their brand identity front and center. In addition, direct-to-consumer competition is increasing, even though the doors of retail businesses have been reopening, e-commerce sales have not decreased, which is a influx of DTC brands competing for customer attention.
High advertising costs.
It has been evident that digital advertising costs are skyrocketing on all platforms, which is why they are consuming marketing budgets and endangering marketing models. customer acquisition.
The creation of brands allows us to attract and retain customers.
Organizations are outperforming their competition by investing in brand building, increasing customer lifetime value, conversion rates in the short term, and attracting buyers out of the market in the long term.
The evolution of technology has made it easier to buy and sell online.
Technological advances and the growth of available marketplaces have made buying and selling online easier than ever. As organizations moved online during the COVID pandemic, the global trend toward digitalization moved at lightning speed. Even as regions begin to reopen, e-commerce sales continue to rise.
Numbers merchants follow consumer demand online, flocking to e-commerce on record. This means more brands are competing for customers. As a result, digital advertising is more expensive and less lucrative than ever.
Worldwide e-commerce retail sales from 2014 to 2024
Merchants spend more and earn less
According to 350 respondents (global commerce decision makers) by Shopify experts agree that competition is the biggest obstacle to achieving growth during 2022 .
It's becoming increasingly difficult to get a decent return on ad spend, as privacy laws limit marketers' ability to target ads and consumers who are better at blocking ad interruptions. The cost per click for paid search ads increased 15% between the second and third quarters of 2021 alone.
The report generated by Shopify experts in July 2021 showed “a 15 to 20% drop in Instagram advertising reach in Europe,” says the founder and Kepios CEO Simon Kemp. “That's huge. Tens of millions of impressions disappeared due to certain types of laws and changes in Apple policies.
Despite the changing digital advertising landscape, 41% of brands plan to increase investment in organic and paid search. Many hope that advances in hyper-targeting will make their advertising dollars more effective in targeting consumers who are ready to buy. But there are at least three problems with this approach:
Audience segmentation is not as reliable as marketers believe. Harvard Business Review tested the accuracy of digital profiles sold by data brokers and the results were dismal. The age level was only correct 23% of the time, and the gender was correctly identified in much less than half of the cases.
Asadvertising platforms become more competitive, brands that have not developed familiarity and trust with consumers will become more entrenched in a direct marketing battle to offer customers the lowest price.
Even when high upfront advertising costs and granular targeting generate short-term profits, they are not long-term profit generators. Creating a sustainable customer base will require brands to build awareness and trust among consumers who are not ready to buy or are not yet in the market.
Brands that rely more on short-term performance marketing will have a harder time in the increasingly crowded retail space. It's no surprise that the world's leading companies will have brand building at the center of their marketing strategies in 2022.
Get ahead of the competition by investing in your brand
Marketers who want immediate, measurable results tend to undervalue branding, which is a longer-term investment. That's why 70% of marketers who are cutting their budgets in 2022 will sacrifice brand-building investments, and only 13% will reduce performance marketing spend. But performance-based advertising is only part of the equation.
While conversion rates are important, most consumers already have a brand in mind when they are ready to buy. In fact, Google reports that more than 80% of customers do their research online before making a purchasing decision. A company needs a strong brand to earn a place in the minds of consumers.
A strong brand not only makes performance marketing more effective in the short term, it is also the foundation for sustainable growth. Strong brands attract more organic acquisitions, retain more customers, and can increase prices—the most powerful lever you can use to increase profits. As the digital space becomes more crowded, brand identity and brand awareness will become increasingly crucial.
Learn how to combat rising acquisition costs in 2022.
Author: Álvaro Lafee, President of LogosCorp