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How to steer clear of a recession without killing your marketing budget

We are looking into “darker” times in the world of e-commerce. 
Growth is slowing, sales are going down, and advertising and converting customers becomes increasingly expensive. The marketing is just not working as well as it used to do. McKinsey calls it the big reset of data-driven marketing

So what do you do when the free-for-all party that has been happening for the last 2 years is over? Do you cut on your marketing budget to keep the costs down? Or do you do what the most successful companies do, and look inwards to find the untapped opportunities and goldmines in your e-commerce business? Meta’s new introduction of Conversions API might be the saving grace you are looking for.

A new reality few are prepared for

The economic downturn we are seeing now has never really affected e-commerce before. It comes down to how new e-commerce is. The e-commerce industry has constantly been growing and quite literally booming in the last few years. It wasn’t until Amazon came into play 27 years ago that e-commerce started existing. 

So what we are seeing now is a new trend and a new reality for many e-commerce businesses. The e-commerce marketing growth is stagnating for a bit. But how do you keep moving forwards in a healthy and profitable way meanwhile?

Many people expect a downturn in e-commerce, and in the economy in general. And according to Forbes, more than 41% of e-commerce businesses are not prepared for how this will hit them. They have not set any protection against it.

So let’s dive into how you can protect your business in a downturn economy. And how you can come out on top again. 

Should I cut or maintain my marketing spending?

It might seem counterintuitive to you at first. Why would you want to spend more when fewer customers are spending on products and services?

Allow me to explain why you should maintain your spending, or even increase it to your highest capability. There are several reasons why this strategy is sound. 

  1. Advertising costs go down during economic downturns. Your competitors will be cutting back on advertising, and so will the rest of the world. It becomes cheaper to advertise, as you will have more leverage. So you get more value for your money. Pay Per Click advertising (PPC) will go down. Meaning you get better deals on Facebook or Google Search.

  2. You want to stay in the public eye and gain market share. A recession or slowing growth means your competitors will want to stay lean. You should too, but not by cutting the marketing budget. Your competitors will be less likely to retain customers and remind them their products and brands exist. It’s a bad spiral. If you believe you are going under, you will start cutting back on what is keeping you up (your marketing) and you will become more likely to go under.

  3. You solidify your brand image. According to Forbes, customers want consistency and stability during a recession. So, provide that to them, and you are already ahead. A brand that can show stability is increasing its value to its customers and is far ahead of others when it comes to retaining its customers. It also opens up avenues to jump in and solidify new customers from competitors. Competitors who can’t provide the same feeling of stability because they are cutting down. 

Naturally, if you are able to sustain your marketing, you are going to better results for the same amount of money. One simple reason is just that your competitors are pulling off a little bit. 

You can do much more to ensure that not only your marketing makes sense. But that your business stays profitable in times of downwards economic trends. 

E-commerce marketing is supercharged by better data

Why so many have cut down on marketing has its reasons. One of them is the ability to track data and understand customer events outside the marketing channels being hurt incredibly by the introduction of iOS14.5.

Luckily, Meta has developed a brilliant answer to those woes, the Conversions API (CAPI).  We talked to Meta about the importance of CAPI and how you could enrich the features with a customer data platform. This is their explanation:

“By feeding our algorithms with actionable insights from marketing, product, and customer data from a platform like a CDP, you are able to see the full customer conversion journey. 

This means you can vastly improve your campaign learning, relevance, and performance on your Meta advertising campaign, such as those on Facebook or Instagram”

Meta – on CAPI being supercharged by CDP data

Want to know what a CDP can do to enrich the data you are providing Meta through CAPI? then read more here

The short explanation is that a CDP is able to unify all your data, from all your sources. It provides you with a full overview of your business and customers. Furthermore, a CDP can then feed this data into the right channels and systems for them to use. This increases your marketing performance, segmentation, and ability to personalize customer experiences. 

Look inwards to stay lean without killing your marketing

The fact of the matter is: Cutting your marketing budget is a bad option if you want to stay ahead of your competitors. However, it is still key to staying lean. So let us have a look at what you can do to get the most out of your e-commerce. And this starts with data. 

The first way you can look to stay lean, but still make sure you are growing, is by looking at the value you bring to your customers. More specifically, with the goal of increasing their lifetime value. 

Customer Lifetime Value (CLV) has been on the lips of marketers for years. But during the hyper-growth phase following the global pandemic, it was never really much of a KPI for many. 

This is changing now, and let us look at why that is. Let’s look at how you can use it to get more out of your business if you can increase CLV. Up until recently, e-commerce companies used third-party cookies to inform them about their digital marketing activities. But this is changing due to privacy changes such as iOS14.5 and GDPR. 

This means that companies are now looking into first-party data to create more personalized, one-to-one engagement with their customers and increase CLV again.

What is customer lifetime value?

Customer lifetime value (CLV) represents the value of a customer during his/her lifespan with your company. 

It helps you identify your most valuable customers, how often they make purchases, how much they spend per order, and how long it takes them to make subsequent purchases. In turn, this information will help you understand how loyal your customers are to your brand. And it tells you whether or not they’re likely to continue buying from you.

Marketers who know a customer’s LTV (lifetime value) have a better base of business intelligence to make decisions to maximize the effectiveness of their ad spending.

But why is this important and how does it relate to your marketing strategy?


Think about it this way: if you know how much your customers are worth to your business, it is easier to determine how much you should be willing to pay to acquire them while still staying profitable. 

And when there are fewer customers and those left are less willing to spend money in general. Then this metric becomes even more important. 

If you are able to bring value to your current customers and increase their lifetime value, you can increase your profitability and expand to new customers. It gives you the confidence in knowing that your customers are good for your business. 

One of the most popular ways of working with data to do exactly that is with a Customer Data Platform (CDP) for e-commerce. 

How to increase customer lifetime value with a CDP

For many in e-commerce, getting an accurate and complete read on customer lifetime value is challenging. Customer data is often spread out across multiple data silos and customer touchpoints. You cant really make sense of it. And it makes it hard to work with 

These data sources include points of sale (in-store, online, phone, mobile apps, website, emails, etc.), social media, and other ways a company interacts with its customers. 

To get the most out of that, you need the data infrastructure to combine it and give you a data warehouse. Because without a data warehouse to store and unify all your information is it hard to have the understanding necessary to effectively increase customer value based on your actions.

Here are some of the ways a CDP and data warehouse can increase your customer’s lifetime value. 

  • CDPs provide a unified customer profile that combines activities across channels and interaction points, making it easier to calculate LTV with greater accuracy. 
  • A CDP can enable one-to-one personalization for successful data-driven marketing campaigns.
  • CDPs allow marketers to collect visitor data of your website or applications and build a 360-degree profile for them. 
  • Based on the customer data collected, you can segment the data based on various categories and behaviors.
  • Companies are leveraging CDPs for advanced analysis, actionable insights, and the ability to do predictive segmentation. Use this for predictive analytics to know what customers want before they know it themselves.

Today, customers expect more from brands in terms of experience and relevance than ever before. So brands must differentiate themselves by providing superior contextualized content, messaging, and experiences. 

Understanding your customers as complete people, not just segments or anonymous targets, is what will enable your company to deliver the kind of highly personalized customer experiences that will improve retention, increase loyalty, and improve the overall LTV of your customers.

Now is not the time to cut marketing spend

So while some of your competitors are looking to cut down on marketing spend, you wont have to. With a CDP and a data warehouse, you will be able to increase profitability and marketing effectiveness. 

Especially if you are able to further combine your CDP marketing with CAPI from Meta to take advantage of your first-party data. This supercharges your advertising and targeting. And further, helps allocate your budget to where it makes the most sense. That is how you manage to grow in a time when others are shrinking.

3 ways to accelerate e-commerce growth in the middle of a recession

Doing this allows you the opportunity to grab a bigger piece of the pie when the market once again starts growing. And as well all have seen, e-commerce has not yet reached its full potential of what it can be. But to get there, you need to stay profitable, and one way to do that is a better understanding of your customer’s lifetime value. 

Instead of cutting your budget. Switch to a more effective way of empowering CAPI with data from a Customer Data Platform, to create strikingly precise advertising.

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