How ecommerce firms can get the most bang for their buck with digital advertising

If you take public transport often in Singapore, you’ve probably noticed a marked shift in the visuals you’re presented with on a daily basis. Many physical advertising spots have lain empty, especially after the emergence of Covid-19.

An advertisement for an unused banner placement in Singapore / Photo credit: Tech in Asia

It appears that digital advertising is now the growing darling of businesses not just in the city-state, but in Southeast Asia as a whole. While 57% of all advertisement spending in the region goes to TV ads, it could soon be overshadowed by digital advertising, which saw its spending jump by 11.5% from 2021 to 2022. TV advertising, on the other hand, is only expected to see a growth rate of 4.6% in the same period.

“The outbreak of the pandemic led to significant improvements in digital advertising knowledge,” says Queenie Lam, global director of Tagtoo, an adtech solution provider. “Businesses had to adapt to a new reality and find ways to reach out to their customers online.”

Indeed, some digital advertising campaigns have been so effective that they’re been burned into the public consciousness – take the Shopee jingle, for instance.

That said, getting into digital advertising is one thing but being good at it is another, and it takes more than just throwing money at the problem. In the first quarter of this year, over S$1 billion (US$708 million) in digital advertising spending was considered “wasted.”

Companies will have to implement their digital advertising strategies correctly if they want to ensure success. Lam shares some best practices to help Southeast Asian ecommerce firms achieve that goal.

1. Cementing your brand

Instead of simply focusing on getting their name out there, companies should use digital advertising to help consumers understand what their brand is about and how they differ from the rest.

This is especially important in Southeast Asia as the region is a global stronghold for ecommerce, which means that existing players are seeing more competitors. Shopee, for instance, has an estimated 14 million merchants on its platform alone.

“When advertising in Southeast Asia, it’s so easy for consumers to compare prices and products online,” says Lam. “If you don’t work on branding, people will just go for the cheapest option.”

Queenie Lam, global director of Tagtoo / Photo credit: Tagtoo

She adds that there are three potential areas that ecommerce companies can capitalize on for branding: collaborations with key opinion leaders, partnerships with larger firms, and having official certifications for their products.

That said, Lam points out that ecommerce businesses still need to have a good product before they can work on branding. Without one, no amount of digital advertising will garner them the conversions they’re looking for.

2. Securing and serving loyal customers

Loyal consumers form a critical portion of any company’s customer base, and it’s important for ecommerce businesses to not rely on one-time or intermittent shoppers to increase sales, Lam says.

According to her, 80% of an ecommerce company’s revenue comes from loyal or repeat customers. It’s also been shown that growing customer retention rates by just 5% can increase profits by up to 95%.

That’s why businesses should use digital advertisements to educate consumers about their products. Studies have shown that doing so inspires trust in a company and its offerings, subsequently driving loyalty in customers.

Lam adds that getting loyal customers is something that has to be nurtured from the very start, and a good way to do this is with short, educational video content.

“Reels or short videos are more exciting. If there’s no music or movement in the image, people will just swipe away,” she explains. “But if you’ve captured their attention within the first five seconds, people will quickly discover the value you’re providing in your content.”

Photo credit: sidelnikov / 123RF

Once that segment of loyal customers has been converted, ecommerce businesses should capitalize on their data to reward them with better experiences tailored to fit their needs. Solutions such as those provided by Tagtoo, for instance, use the insights generated from AI algorithms to help businesses craft dynamic and personalized digital advertisements.

“For example, let’s say I’m a cake seller. By collecting user data, I can understand why they buy cakes, perhaps for their wife or anniversary or if there’s a birthday,” Lam says. “Then at a similar time each year, I can send them an email to remind them: ‘Hey, your wedding anniversary is coming up, do you want to buy a cake to celebrate?’.”

3. Navigating data privacy changes

Last but not least, ecommerce businesses will need to know how to navigate the digital advertising landscape without the help of third-party cookies. That’s because major tech platforms like Google and Apple have already phased out or are planning to block these trackers, which form an important part of the data-gathering process for companies.

With those changes, companies that advertise digitally could lose up to 30% of the data that can be gathered from consumers, according to Lam.

This, in turn, could have severe consequences. One of Tagtoo’s clients, for instance, used to have a return on advertising spending ratio of 11x. That figure dropped down to between 3x and 5x after the update from Apple.

Fortunately, there are ways to mitigate this challenge. By integrating server APIs from common digital advertising platforms like Facebook and Google, ecommerce businesses can access first-party cookie data directly, Lam says.

In this regard, ecommerce firms can turn to adtech companies like Tagtoo for help. One of the company’s solutions is a server-to-server service that enables ecommerce businesses to integrate server APIs in a plug-and-play fashion rather than having to fork out extra cash to invest in new servers and in-house engineering teams.

Removing tunnel vision

As the worst of the pandemic passes, Lam cautions ecommerce companies not to take recent increases in online sales for granted. In fact, many players might see their online sales go down as in-person shopping returns.

She adds that moving forward, ecommerce businesses need to be cognizant of the fact that online channels are just one method for people to shop. When crafting digital advertisements, companies will also need to ensure that it helps their overall performance, which includes offline traffic, instead of just driving online sales.

“At the end of the day, we always encourage our clients to take a holistic approach instead of just one particular channel,” Lam says. “If they want to do ecommerce and have both the money and the mindset, they’ll need to have the heart to face these challenges for the long term.”

Currency converted from Singapore dollar to US dollar: US$1 = S$1.40.

Tagtoo provides professional technical backing and diversified advertising solutions to help major ecommerce brands achieve their advertising goals.

To find out more, get in touch through its website.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.