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The eCom Comeback: Riding the Wave After the Storm

Why a new wave of opportunity is on the horizon—and how to prepare for the challenges of Q4's ad spending surge.

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The DTC Times
October 6th, 2024

To say the post-pandemic has been a struggle is an understatement.

For many, it was an extinction-level event. 

The macro-environment changed quickly and violently once the free money was turned off and inflation crashed down on everyone like a tidal wave. 

The result was a catastrophe for many. For the ones who stuck around, it meant a complete change to the way they did business just to survive. 

Things might not be all doom and gloom anymore though. Well, except for the rise in ad digital costs that are about to hit everyone…

Today:

  • Things are looking up

  • Get ready for rising CPMs

  • How to improve your new customer acquisition

  • Quick hits ← Find out how to best market to each generation, from Boomers to Gen Z

Things are finally looking up for eCom?

We all have crises of faith sometimes. 

And it’s understandable if what you’re doing is building your third failing eCom company that sells whimsical shoelaces. 

But hey, even those of us building lean with airtight Ops and margins get these moments. Especially these last few years, some of the toughest for small businesses and digital brands alike.

But…

After hitting its peak in 2020 at 16.4% of total retail market share, e-commerce shrank to 13% over two years as per data from the Federal Reserve Bank of St. Louis (credit to Sean Frank’s post). 

And DTC operators have felt the crunch. 

Investment dried up, profitability was the only way to survive, and everyone had to go lean. 

But as you can see in the graph above, eCom is bouncing back, big time. In fact, we’re closing in on the COVID peak. 

Where will it stop? 

They might be right. Vantage Market Research says global retail will grow about 34% between now and 2030, while projections by Statista suggest eCom will grow 50% within the same timeframe. 

Takeaway: If you’re having one of those moments, chin up. The Pandemic pulled forward years worth of demand and created a kind of mania, which many of us paid for once everything returned to normal. 

It has taken about 24 months, but e-commerce is back on the steady growth pace we saw before the world went mad. 

Soon there might be a new wave of DTC and e-commerce opportunity…

Now the bad news…get ready for expensive ads this quarter

Dr. Jonathan Snow from the Snow Agency pulled some Q3 data from his portfolio and found that ad costs have been climbing since July.

From his post: 

“JULY '24:

  • CPMs: Flat MoM, UP 11% YoY

  • Cost per purchase: Up 13% MoM, Up 21% YoY

  • Spend: Up 25% MoM, Up 3% YoY

AUGUST '24:

  • CPMs: Up 22% MoM, Up 33% YoY

  • Cost per purchase: Up 6% MoM, Up 26% YoY

  • Spend: Up 4% MoM, Up 6% YoY

SEPT '24 (thru 26th):

  • CPMs: Up 9% MoM, Up 38% YoY

  • Cost per purchase: Flat MoM, Up 38% YoY

  • Spend:  Down 7% MoM, Up 2% YoY

He didn’t share any efficiency metrics, but he did say: “Despite lesser performance, ad spend continues to rise MoM and YoY.”

And let’s just assume their tactics have remained unchanged. 

What does this tell us?

There is a huge election coming up. Plus BFCM spending is starting earlier than ever. 

Together, these guarantee a hike in ad costs, but likely a seasonal one.

Takeaway: Expect lesser efficiency, and prepare accordingly. Oh, and congrats if you are a Meta shareholder.

How to drastically improve your new customer acquisition in one step

This one from Dr. Snow again.

Shopify Audiences now allows Plus users to access “Existing Customers”. 

According to Dr. Snow, it is the gold standard of existing customers for Meta. A far cry better than Klaviyo’s, which he had been using until now. 

Shopify has one of the richest first-party databases to accurately identify your existing customers - more so than Meta, Google or TikTok. 

Results from his first test: 

“Synced this Audience for a brand and saw a 78% lift on existing customers identified in Meta alone when compared to the Klaviyo lifetime purchaser audience.”

This is great for a few reasons: 

  1. More accurate exclusions. This is especially good for ASC+ campaigns, which tend to show ads to low-hanging fruit (e.g. existing customers), even when you exclude them (likely because the exclusion lists weren’t great.)

  2. You’ll be feeding better signals as to what you’re looking for into the algorithm, which will help it get better at generating those results for you. 

  3. It syncs automatically every week, no need for export. Nice. 

Takeaway: Switch to Shopify Audiences’ Existing customers list. It’s better.

Quick hits

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