CommerceLive Recap: Budget Fluidity is Key to Planning Your 2021 Ad Strategy

CommerceLive Recap: Budget Fluidity is Key to Planning Your 2021 Ad Strategy

COVID-19 has proven just how volatile eCommerce markets can be. Overnight, shopping went from strolling through the mall to being on your laptop, which has led to many significant changes in how eCommerce marketing is done.  

This year, most retail stores will be closed on Thanksgiving, and in-store Black Friday deals will be pushed online. Amazon Prime Day will kick off in October, with the holiday deals running for months, rather than the typical Cyber Five days, after that. Most importantly, more and more consumers have embraced online shopping, which is making brands rethink their ad spend.  

This new reality has also highlighted how important it is to be nimble and reactive, and how much annual planning has an impact on your brand’s capability to do so.  

Recently, Pacvue Co-Founder and President, Melissa Burdick, and COO Mindy Fashaw led a discussion on budget fluidity at CommerceLive 2020. Here are some of the key takeaways from their talk during this virtual conference:

Big CPG Brands Struggle to Be Nimble

Being nimble has always been challenging for enterprise brands, especially as eCommerce has grown. During the pandemic, however, the big CPGs had no choice but to navigate the eCommerce market, as they tried to make their way into the first baskets of consumers and faced out-of-stock challenges.  

Many brands discovered that they could, in fact, be nimble when needed but the learning curve was steep. Instacart is a good example of how many brands were unprepared to jump on the new opportunity.  

As the platform grew rapidly, the big CPG brands had to act fast. That meant transitioning their spending from demand-driving activities to conversion-driving activities, and shifting their budgets very fast.  

This is just one example but it carries an important lesson for the future - there is no way of knowing what market players will be at the forefront in the future. It could be a traditional retailer that launches a new platform, a delivery intermediary, such as Uber or Postmates, or something completely unknown.  

In any case, it pays off to be a first mover and have the budget to try things out. First movers can enjoy advantages such as:

  • Being the first to gain platform expertise and gain that competitive edge.
  • Gain a greater Share of Voice for a lower investment as new platforms tend to deliver cheap clicks in their early days.  
  • Increase the chances of repeated purchases when driving early conversion. This is especially true on Instacart where consumers start shopping from their previous shopping lists.
  • Increase your organic relevance with early adoption of paid search on new ecommerce platforms.

In order to be able to seize any future opportunities, your brand needs to be flexible. And that means, you can’t go back to planning the old way. This applies to all brands, even those who were able to pivot successfully this year.

The question is, how do you build more fluidity into the planning process?

How to Achieve Budget Fluidity

Budget fluidity refers to “the ability to move budget flexibly and quickly without layers of decision-makers across platforms, channels, and retailers based on just-in-time information.”  

This entails allocating budget based on performance and KPIs, and having the autonomy to be both reactive and proactive if something is performing well. This is essential to become an early mover.  

However, as much as you might want budget fluidity for your brand, achieving it can be tricky.  

For example, there are retailer expectations and commitments that can’t always be changed, or your organization might be stuck in annual planning cycles that are hard to break. But, more often than not, budget fluidity isn’t possible because your team can’t compare KPIs from different platforms in one place.

Here are a few things you can do to achieve budget fluidity:  

  • Appoint an advocate who can champion budget fluidity.
  • Bring teams closer together so that they can plan more holistically. To do that, you need to measure and monitor the right KPIs across all platforms.
  • Set aside a fund that can be used for testing and learning.
  • Be more prepared to change things around if new information is available.
  • Build on more planning checkpoints and shorter planning cycles.

It’s important to understand that budget fluidity isn’t achieved overnight. The process might be long, and most of the above mentioned obstacles will have to be addressed to make it as easy as possible.  

Is 2021 the Year to Launch in Europe?

Planning for 2021 is a good chance to consider if your brand should start expanding into European markets. There are five aspects that will drive your entry strategy:  

  • Compliance, regulations, and tax. Look at the specific regulations for your type of product at the Amazon level and the country level.
  • Competitor sales performance. Compare the sales volume for your category to gauge expected sales in each country.  
  • Competitiveness. Look at CPC to determine market leaders in your category.  
  • Search volume. Have a look at the search volume to determine the overall demand in each marketplace.
  • Amazon’s fee structure. The referral fee and the FBA fee are the same as in the US. However, the FBA fee will be different in different countries. Calculate your margin for each marketplace.  

Budget fluidity can also make you adaptable in the new markets as you navigate new regulations and marketing tactics.

For more guidance on planning your 2021 strategy and how budget fluidity can help, be sure to watch the full CommerceLive 2020 panel here.

Takeaways from the CommerceLive session “Back to Basics: What to do When Consumers Shift from Luxury to Necessity.”
by 
Adam Hutchinson

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