Is Your Retail Brand Relying Too Much on Social Media?
The pandemic put a spotlight on the value of social media marketing for retail brands. But as prices for ad space skyrocket, many brands are starting to wonder, is there a better strategy?
By Robert Woo, Writer @ Endear
Have you checked in on your Marketing team lately? They might need a hug. Not just because doing marketing for retail brands is a tough gig (and it is!), but also because if they’re like most teams today, they’ve had to tighten their belts due to the skyrocketing cost of advertising on the social media platforms.
Ads on Facebook have increased 61% year-over-year. Google’s display ads have increased 75%, along with search CPCs up about 14%. Instagram is up 23%. And TikTok is sucking up all the dollars by increasing a whopping 185% year-over-year.
A 2021 report by Twilio reported that the Customer Acquisition Cost (CAC) for fashion (clothings, shoes, accessories) averaged $129, and that 57% of fashion retailers pointed to this rising CAC as a threat to hit their sales goals. So again, you are not alone in the least if your team is feeling the pinch of higher advertising costs.
Retail brands across the board are seeing their marketing budget not going as far as it used to, which is making it hard to keep up with the competition on these social platforms. And while many are shoring up their content game to garner more organic traffic, that has always been a strategy with a longer time horizon. For quick conversions via short-term marketing campaigns, brands are continuing to pay through the nose in an increasingly crowded social marketplace.
Why Are Costs Increasing on Social Media?
The steady increase has origins in the pandemic, as retail brands were forced to sell nearly completely online. This necessitated allocating more spend to online ads across social media, and competition drove up the price of placements. Even today, as stores have opened up their physical locations again, brands have developed a taste for online marketing since it has proven to be effective, which has kept online advertising budgets higher. And let’s be honest, when something works for Marketing, companies are slow to move away from channels of revenue and profit.
Then there was the sudden “death” of tracking cookies across iOS and Android that made 3rd-party data less accurate. Because advertisers could no longer target specific shoppers and had to resort to more general, sweeping audience groups; the cost of advertising increased as ad efficiency decreased. Today, marketing teams are spending more and converting less – not a great combination when competition keeps increasing on social platforms.
And unfortunately, the days of cheap Influencer marketing is coming to an end as well. Brands are paying nearly 100% more today in order to leverage Influencers than they did pre-pandemic. While a part of this is the market maturing and pandemic-related increases, it is also a social media marketing channel that hadn’t seen critical mass until only recently. Like all good things, it’s getting crowded, forcing marketing teams to reevaluate their limited budgets in 2023.
So what can your retail brand do?
Break the Social Media Addiction
Like all addictions, the first step is admitting that you have a problem. Has your brand overextended itself on advertising via social media? How much of your ad spend is allocated to the various platforms? On average, before the pandemic, companies used to allocate about 13% of their marketing budget to social media. Of course retailers, especially in fashion, tend to spend more because of the social nature of their products. However, if you’re finding that your brand spends higher than 30% of your marketing budget on social media, it may be time to cut back.
Keep in mind, social media platforms come and go. While younger marketing managers may have cut their teeth on Facebook and grown up with Instagram, platforms like Friendster, MySpace, and Google+ went the way of the dodo (yes, a ghost of MySpace still exists, but you get the point). Today, Gen Z isn’t using Facebook much, TikTok may be outlawed in the US, and who knows what Elon Musk is doing with Twitter.
Our tech megaliths aren’t as stable as you think they are.
Furthermore, retailers should embrace the fact that shoppers are looking to return to brick & mortar stores among other trends that will define commerce in 2023. Here are three ways your brand can wean itself off of social media marketing and find even more effective channels to sell your products.
Create More In-Store Events
More and more shoppers are craving reasons to leave the house, and studies show that the majority really do want to shop in brick & mortar stores again. And brand marketers know that there is no better way to make customers into loyalists than giving them a great in-store experience.
Bring them physically back by running more in-store events. Bring in an expert stylist for a night of tips and tutorials. Hold a mixer night for members of your loyalty program. Hold in-store promotions for parent-child shopping events.
Leverage Your Own Zero-Party Data
Social media advertising costs are rising because 3rd-party data took a big hit. So instead, use your own CRM data gathered directly from your own website and in-store customer activity in order to market to highly-targeted segments of your audience once again.
Endear’s Shoppable Stories mimic the look and style of the videos retailers run on social platforms such as Instagram, but they run off CRM data.
Not only can your marketing team curate a selection of products that’s right for very specific audience segments, but also your Stories are no longer constrained by what Meta allows you to show, not to mention the social platforms eating a chunk of your ad spend for running the ads in the first place.
Use SMS Marketing
Gen Z might be staying away from Facebook and other social platforms, but they are champions of text messaging. By using your CRM data to create segmented SMS campaigns, a small marketing team can reach a ton of people by using automated text messaging platforms.
And again, this is a less expensive channel than paying for ads on social media platforms, as well as more efficient when it comes to personalization. SMS is the most intimate and efficient communication channel with an open rate near 100%, as well as an immediacy that social platforms can’t compete with.
Of course, a downside is that you need a customer’s phone number to engage in SMS marketing which limits finding a new audience. But coupling SMS with a product/audience discovery campaign such as affiliate marketing can help your marketing team rely less on social media platforms while using lower CAC channels.
Excited to try Endear to help you curb your social media advertising addiction?
Click here to learn more about our pilot program.