Building an Ecommerce Business, Part 5: Paid Acquisition

Knowing where to market can be daunting to new and seasoned ecommerce entrepreneurs alike. There are various alternatives, and it is often unclear which will suit your company. Digital marketing agencies can offer some answers.

I’m the creator of Beardbrand, an Austin, Texas-based ecommerce firm that focuses on beard maintenance and men’s grooming. This is the fifth installment in my series of discussions about building an ecommerce company. The preceding installments are:

With this interview, I visited with Alex Hart, founder of Great Joo Joo, an Austin-based digital advertising agency. I asked her about compensated acquisition, the practice of using advertising to get customers.

What follows is my whole audio interview with Hart along with a transcript, edited for clarity and length.

Eric Bandholz: Tell us about your company, Great Joo Joo?

Alex Hart: We are a digital advertising agency focused on acquisition. We use all the stations, for all the pleasure! AdWords, Snapchat, Instagram, you name it, we market there. Our clients range from large retail customers to small-time hustlers with electronic download products. We provide email marketing and automation solutions, too.

But our focus is on getting customers for ecommerce businesses. We’re a tiny shop. We’ve partnered with an education non-profit to make a mutually beneficial ecosystem involving the customers donating to that business, making money, and hopefully making the world a better place.

Bandholz: Give us an overview of the advertising alternatives for merchants.

Hart: The million pound gorilla is Facebook or Instagram, depending upon your audience. If your crowd skews a bit older, it is perhaps Facebook. If you are following millennials and younger, it is probably Instagram.

Then there is Pinterest. That is for visually appealing merchandise or something which could catch peoples’ attention — like a cooking recipe, which might cause selling cookware. Pinterest appears to be a little narrower in terms of prospects. Something similar is said about LinkedIn; it works nicely for B2B.

Google AdWords will be not as sexy. Companies have not given it the attention it deserves recently. In the last two decades or so, it took a backseat to all of Facebook’s innovations. That meant less AdWords’ opponents and individuals who promoted were doing really well there.

Bandholz: Does anybody market on Twitter?

Hart: Yes. Twitter does well for many people. The exceptional thing about Twitter is the capability for innovative hashtag targeting, the actual targeting of a user’s opinions.

Bandholz: For merchants that are new to paid purchase, what sort of strategy if they are considering?

Hart: I will assume for the sake of the dialogue that a large part of your subscribers are B2C merchants, targeting customers. For starters, you have got to get some images which you could become a carousel or a slideshow, possibly a brief video or a GIF. You want to have your landing page in order. There needs to be a way for people to buy. All that must be running smoothly.

Site speed is often overlooked as is ease of use from the checkout flow. That’s something which I talk about with prospective customers. I run usability and speed evaluations before an engagement even begins.

Do we have confidence that a customer we get on paid media is going to really convert and go through each one these steps? You want all of your monitoring mechanisms set up — testing the Facebook pixel, testing the Google conversion code, and making certain you’re getting it back on your dashboard and seeing what is happening.

I’ve seen a great deal of ecommerce brands feature merchandise photos without people. That is a mistake. You want people in your advertisements. It’s important for customers to make the emotional connection with the item. Even if it is a photograph of furniture, you need to add people sitting on it and looking comfortable. Humanizing your merchandise will go a long way in your own creative.

Bandholz: How do merchants know when it is time to hire a marketing company? What should they search for?

Hart: I have seen only a small number of founders launching acquisition channels well. When you are assessing an agency, keep that head that simply because people are able to discuss advertising does not mean they know the finer points of it. Ask qualifying questions, including,”Do you know how to set up a Facebook pixel?” Just hear them out. Try to get a feeling for their degree of comfort in answering that question.

Another great question is,”what’s the difference between acquisition and branding?” Branding is focused around fostering posts. You are doing it for consciousness. You could be receiving opinions, likes, and opinions. But that is not acquisition.

Bandholz: what sort of investment should merchants earn a firm?

Hart: First, do not even consider paid acquisition till you have your first 100 clients. That’s a great benchmark. You want an agency to ask,”How many buyers and special visitors? What is your overall site traffic?”

If they promise you everything under the sun, you will need proof. If they are saying like,”You hand me the creative and that I do all of the ad operations. I do all of the analytics, and I give you amazing reports.” That is a good thing, too. Just be certain that they are savvy at conducting those real numbers.

I generally tell small companies to begin between $1,500 and $3,000 a month. That makes you two campaigns on Facebook and Instagram combined at $25 per day. The first campaign is to set up dynamic product advertisements, which are for retargeting to aid with your cart and brand metrics. People have seen the item. They have already added it, and then they leave. So that is a way to recover those.

Then the next campaign could be rigorously prospecting — going out and searching for new customers.

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Bandholz: what’s a normal return on ad spend?

Hart: Revenue from advertising invest should be at least twice the cost. That is the cost of the advertisements, in addition to the agency fee or your marketing individual salary (monthly wages, not yearly ). It must be twice after you take out all of the costs; anything above that is gravy. Three to four times the investment is best. But double the investment is the minimum, at least in my standpoint.

Bandholz: How does customer lifetime value factor into the calculation?

Hart: Average order value is more important at the start than lifetime value as you simply don’t understand yet. It is dependent upon the number of SKUs you have. And if you are a subscription, you wish to learn the churn rate.

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