How to Maximize Profits and Drive Conversions in a Recessionary Environment Through Effective Ad Spend

In today's economic environment, eCommerce sellers are increasingly feeling the pinch. With consumers cutting back on spending, it's more important than ever to build efficiencies in your business and make sure that your investments are paying off.

This is especially true when it comes to your digital ad spend. With continuing uncertainty from rising inflation, pandemic resurgences, to unprecedented global macroeconomic environments all affecting the way business is conducted, it’s important for eCommerce sellers and online retailers to spend money efficiently and advertise effectively when it comes to digital ads.

Luckily, there are a few ways to ensure that your ad placements are effective at reaching your customers and ultimately driving conversions, even in the midst of a recession. By investing in targeted advertising, you are aiming for your products to be seen by the right people at the right time with the aim of closing as many sales as possible.

Get Familiar with Your Customer Base

Once you know who your target customers are and what they need, you can create relevant ads your intended audience is more likely to click on.

While getting a better sense of who your customer is may seem like an obvious first step, it's one that many businesses overlook. Knowing exactly who they are means you can target them more effectively with your marketing efforts. In turn, this will lead to more sales.

Diving into more specifics, there are several questions to ask. What are the demographics of your customer? What else, including products similar to yours such as those of your competitors’, are they buying other than your product? What brands do they like? Which range of prices are they willing to pay? What time of day are they shopping? The more answers you have, the better you’ll be equipped in converting your customers.

The deeper the understanding you have of your customer, the more likely your ads are to reach them. The more visible you are, the higher the chances of conversion, in which customers are likely to buy your brand they have grown to trust, instead of a competitor’s. Timing your ads strategically can also maximize their impact in reaching potential customers when they're most likely to buy.

Key takeaway: Your ads should be specifically tailored to the products or services you're selling and so should be targeted at an audience who is most likely to be interested in your offers. Trying to appeal to every potential type of customer will only result in wasted ad dollars toward disinterested customers. Especially during times of high shopping traffic, for example, the year-end holidays, is when you should be able to meet the demands of your customers with the right products or services in a very timely manner within a widely accepted price range.

Once you know who you're trying to reach, it's time to research keywords and competitors. Which terms and/or phrases will customers looking for a product like yours be searching for? Are your most direct competitors or sellers in related product verticals also targeting your customers? By targeting specific keywords which may include competitor terms and the use of negative targeting (excludes specific terms) your ads stand a much higher chance of successfully converting a customer.

Set a Budget & Stick To It (with Some Exceptions)

Digital ad spend, especially on multiple products across various campaigns can quickly add up, so it's important to stick to a set budget, for instance a monthly one, but also be flexible in adjusting spend accordingly as you continuously evaluate your ads’ return on investment (ROI).

For example, an expensive ad costing more than what you had allocated or costing more than ads of similar products may be worth continuing to run if it increases your overall sales and profits.The key is to follow your budgeting plan as closely as possible. .

Pro-Tip: If an ad is doing really well in terms of driving sales but you don’t have the budget or to increase its spend to drive more sales, you can rely on a fast, flexible funding option from our partners at Payability. With Payability, you’ll always have access to cash to take your business where you want. Get started with Payability today.

Test, Test, Test!

Testing may seem wasteful in a recessionary environment, but it is essential to see what’s working and what needs improvement. Among misses you’ll also have hits that fuel your business as you aim to achieve your short, medium, and long-term goals.

Consider testing when the stakes are lower, not during the holidays or your peak season with a budget set aside to experiment with your various products in ads and/or campaigns using combinations of different headlines, images, and calls to action. Once you see what’s working and what isn't, you can adjust your ad spend accordingly. The more you test, the better the chances of identifying ads that resonate with your target customers, resulting in conversions.

Trial and error, even in a recessionary environment when resources may be tight, is a good way to discover how to connect with your target customers, and it requires a dedicated budget., You can always reallocate your ad spend based on the results, so test away!

Which Ad Platforms to Spend On

There are a variety of different advertising platforms available to eCommerce sellers, each with its own strengths and weaknesses. To choose the right platform for your business, consider factors including reach, targeting options, and cost. For example, if product variety and delivery speed are part of your most important criteria, Amazon is an excellent pick. Or, if you're looking to engage a large audience, Facebook ads, an easy method for testing new creatives, may be a good option.

If you're looking for more targeted advertising, Google Ads may be a better choice. Your products will appear when someone searches relevant terms or keywords. If you have a very specific product offering, this can be a great way to get it in front of interested customers.

You can also input negative keywords, which are search terms that you do not want your ad to show up for. For example, if you sell women's clothing, you might want to add "men" as a negative keyword to prevent your ad from showing up when someone searches for "men's clothing." This tactic will help improve your click-through rates and ensure that only people who are interested in what you're selling are seeing your ad.

Amazon is often considered a top choice among sellers primarily because of its ultrafast guarantee delivery of millions of products to consumers subscribed to its Prime program and its exceptional customer service to end users. Sponsored Products, Sponsored Brands, and Sponsored Display, are PPC (pay-per-click) ad units aimed at driving sales by putting your products in front of customers while they are already shopping on Amazon. Evaluate which ad unit is the most effective in achieving your objectives and focus your budget on it.

Sponsored Products ads are designed to target shoppers who are actively searching for products like yours. Sponsored Brands ads are less common but can be effective if done well, focusing on building brand awareness among Amazon shoppers rather than specific keywords. Lastly, Sponsored Display ads typically deployed after advertisers have gained insights by the performances of their Sponsored Products and Sponsored Brands ads, may possibly exclude a “Buy Now” option if your advertised product is low on or out of stock, allowing you to replenish your inventory while preventing your ad from being clicked to avoid a negative customer experience. Sponsored Display ads is complementary to your other Amazon ad campaigns because it works by targeting products and/or customer behaviors instead of keywords that the other two ad units do.

Testing may also be a good idea when it comes to spending on newer platforms, like TikTok and Instagram. You may be able to discover your most likely target customers across multiple platforms, so it might be worth trying something new, even on a limited scale.

Once you've chosen your ad platform(s), take some time to experiment with different ad formats and targeting options to identify what works best for your business.

Measure Your Results Against Your Goals

You’ll want to regularly measure the results of your ad spend to determine the effectiveness and efficiency of your campaigns. Amazon’s platform makes this relatively easy for ads targeted within its shopping site, but for Google, Facebook, and other platforms, you may need to get familiar with their ad interfaces to get a topline idea of how your ads are doing at the beginning and end of every week. Oftentimes, it may be worth dedicating an employee or utilizing an external consultant to keep track of how ads are performing and make adjustments to budgets and campaigns accordingly.

Keep track of how many sales or leads you generate from each ad campaign and compare those numbers against your overall goals for the month, quarter, year, or any range of time that makes sense for your business. Make sure to get your tracking right for ad-driven sales outside of Amazon — if someone buys one of your products because they saw an ad on another source, you should know that. But sometimes tracking problems can lead to a disconnect, so be mindful and make sure you do whatever you need to do to track sales through all of your ads.

In today's climate, it's more important than ever to make sure that your ad spend is working hard for you. By following the tips above, you aim to ensure that your ads are driving conversions even in a recessionary environment and that your business is able to weather storms and come out ahead.

Focusing on advertising is one of the best ways to maximize profits and conversion in a recessionary environment. Why? Because when customers are cutting back on their spending, they're more likely to pay attention to ads that offer quality products, or good deals and discounts on products or services they need. By investing in advertising, you'll be able to reach a larger audience and generate more leads, which will ultimately lead to more sales.

Learn more advertising tips and the tools at Perpetua.