Advertising for online shops

Online retail is an arithmetic business. Every marketing question reduces to whether the cost of acquiring an order is below its contribution margin, and most shops do not know that number precisely enough.

The number that governs everything

Contribution per order, honestly calculated:

If you are willing to spend half of contribution on acquisition, the permitted cost per order is £15.77, which for most categories dictates a fairly strict bidding position.

Calculate per product group

An aggregate figure hides everything. Shops usually contain product groups with contribution margins ranging from 15 to 60 per cent, and a single target applied across all of them overspends on the thin ones and underspends on the profitable.

Split campaigns by margin band, not by brand or by category convention.

Returns are a marketing variable

A high return rate is often caused by the advertising: wrong expectations, missing size information, images that misrepresent colour.

Reducing returns by three percentage points frequently improves profit more than any bidding change, and the levers are in the product page: better images, size guidance, honest descriptions, and customer photographs.

Repeat purchase decides sustainability

A shop where 15 per cent of customers buy again can afford to acquire at contribution. A shop where 55 per cent do can afford to acquire at a loss on the first order.

Measure it, by cohort, and use it to set the acquisition target. Then invest deliberately in the second order: the packaging insert, the follow-up sequence, the reorder reminder timed to consumption.

The channels, in the usual order of efficiency

1. Search on product and brand terms. Highest intent, first to scale.
2. Shopping feeds. Feed quality is the whole game; titles and attributes matter more than bids.
3. Remarketing, tightly capped and excluding buyers.
4. Email, the highest-margin channel and the one most often neglected.
5. Social advertising, effective for discovery categories, expensive for replenishment.
6. Marketplaces, volume at low margin and no customer relationship.

The feed is the campaign

For shopping channels, the product feed does more than the bidding. Complete titles with the attributes people search, correct categories, accurate availability, and images on a plain background.

An afternoon spent on feed quality regularly outperforms a month of bid adjustment.