Ecommerce Advertising Growth Drivers in 2021

One of the most transformative and disruptive years for eCommerce is almost over. Companies that were able to ride this new wave of growth will be looking to invest more heavily in eCommerce advertising in 2021. Brands that struggled through the disruptions of COVID-19 will be looking to rework their advertising strategies to see strong growth in the new year.

After the massive influx of new eCommerce shoppers, the rise of several new marketplaces, and the increase in options for advertisers, where will the industry go from here? More importantly, what growth drivers will be most important for your brand in 2021?

Investing in Growing Platforms in 2021  

This year saw unprecedented growth in the overall eCommerce market and brands are expected to continue to invest in this growth in 2021, but where should you focus your additional budgets?

When it comes to pure sales growth, Amazon is still the biggest player in the industry and should see the most growth in terms of new customers and revenue. With more shoppers switching from brick and mortar to eCommerce, it is important for advertisers to capture those new shoppers early.

In terms of platforms seeing the highest percentage growth, Instacart is expected to continue the dramatic growth seen this year. With Sephora joining the Instacart ecosystem, beauty brands should invest more heavily in the platform. As the overall online grocery industry expands, Kroger should be another major marketplace to watch next year. Grocery and home goods brands should look to get in front of these new online shoppers and capture share of voice.

Depending on the industry, Target should see strong growth next year as well. For brands that aren’t a fit for Instacart, consider investing more in Target advertising in 2021.

Allocating Budgets Across eCommerce Marketplaces

With so many platforms to focus on, how should you allocate your budget between Amazon, Walmart, Target, and any other eComm marketplaces?

One of the major trends we saw in 2020 was brands putting a test budget into platforms such as Walmart, Instacart, and Target to experiment and measure the potential. In 2021, many brands are expected to allocate Walmart and Instacart budgets with a more structured and planned out investment similar to how most brands handle their Amazon advertising. Platforms such as Target and Kroger will most likely be allocated these smaller, lump-sum test budgets next year.

The advertising investment in Walmart in particular is unique because they hold a disproportionate amount of leverage for brands on the brick and mortar side. This may increase the value of eCommerce investments beyond what the actual online traffic and ROAS suggest.

Overall, brands should be as agile as possible with their budget allocations and make adjustments throughout the year based on ad performance, growth goals, and targets.

New Types of Advertising Growth Channels

Moving into the newer platforms mentioned above is still one of the best places to put your advertising spend from a competitive standpoint. Despite their rapid growth, these platforms are all going to be less competitive than Amazon in 2021. However, in terms of new types of advertising, Amazon offers opportunities that most other platforms do not.

DSP is an increasingly popular growth driver for a lot of brands that were traditionally more comfortable with paid search ads. The robust targeting features of Amazon’s DSP portal allow for more programmatic management and optimization of DSP ads. Within this portal, advertisers can use daypart bidding, geo targeting, and really granular retargeting strategies.

Another growing opportunity on Amazon is Sponsored Brand Videos. In one recent case study, a brand saw 800% higher ROAS for Sponsored Brand Videos than for their regular Sponsored Brand ads.

As competition increases across all platforms, brands need to get away from comparing ad types as separate and independent of each other. Aim to create a more dynamic, full-funnel advertising strategy which stays flexible in terms of new types of advertising, looks at performance on a regular basis, and re-allocates advertising spend based on goals and performance. For example, marketers that are hitting their conversion targets but underperforming with new-to-brand customers may choose to reallocate budget from Sponsored Products into DSP that targets frequent category shoppers.  

Growing on eCommerce Without Large Budgets

Some brands will find it more difficult to expand into new marketplaces and invest heavily in these new ad types. That doesn’t mean you are unable to grow on eCommerce marketplaces in 2021. It will simply require you to take a more targeted, granular approach to your advertising.

Using bid placement modifiers and having a more refined strategy at the ASIN and product level allows you to learn which of your items perform best in those more expensive but more premium top search placements. If you do that strategy right, cost per clicks are almost always higher for those top of search placements because they're the most competitive. But if you choose the right ASINs and the right products, the higher ROAS actually outweighs the higher cost per click. Another huge opportunity is leveraging retail landscape and conversion data to identify products that you may not really be promoting, but tend to convert at a high rate that you can put into paid search or DSP.  

Most importantly, start looking at your advertising tactics and strategies as part of a cohesive marketing funnel. How do all of these different tactics and strategies fit into a larger puzzle together? This is how you get better at pulling different levers to make the entire marketing program more efficient.  

The best way to see this entire picture is having all of your data in one dashboard, one platform, and being able to quickly and easily visualize and analyze all the data together. Then you can start to learn to analyze and assess your business, not as a sum of different parts, but as a cohesive, larger picture.

While reach is an important component to a brand’s overall strategy, in this article we will focus solely on sales efficiency.
by 
Riku Laitasalo

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