How to stop paying for ads that don’t convert
Veronika Birnkammer, marketing director, Asia Pacific, at Fluent Commerce, explains how you can avoid contributing to the half-billion dollars in digital ad wastage each year.
Brands wasted $123 million in digital ad spend in the second quarter of 2024, Next&Co’s quarterly Digital Media Wastage report has revealed.
Based on 37 audited companies, Next&Co found that the retail sector had the highest amount wasted on digital advertising at $48 million. That is a huge sum of money, especially in the current economic climate with retailers fighting for every sale.
So what actually happens when a customer sees products advertised to them online? Typically, it goes one of three ways:
Scenario 1: Item shows as in stock, order is placed, customer receives their item. This is the happy path. The one we all expect. You’ve made a sale. Hopefully there were no delivery delays and you’ve kept your brand promise. Chances of a repeat purchase are high.
Scenario 2: Item is out of stock or unavailable, no order is placed. A potential customer scrolls their favourite social media sites and sees one of your ads. They’re intrigued. They click. Yet when they do…they see the dreaded ‘out of stock’ message. Now they’re confused. Why was this product advertised if it’s not even available? The confusion turns to frustration. And you just paid for that frustration in advertising dollars. Will they click on one of your ads again in the future?
Scenario 3: Item shows as in stock, order is placed, but then cancelled. A customer places an order. They’re anticipating a confirmation email soon. But a few hours later they receive an unexpected message. “Sorry, your order has been cancelled.”
Why? It turns out you sold them something you don’t actually have available. Cue that frustration and bad experience again. Now you have a really disappointed customer. A potential negative review. And you’ll have to spend even more on customer reacquisition.
So what can be done to prevent scenario 2 and 3? Make your ads ‘inventory aware’. Here’s how it will help:
- Ads will no longer be shown for items that are out of stock: This will free up your budget to promote in-stock items that can convert to sales.
- You’ll reduce spend on items that are selling fast: If you know how quickly stock is moving, you can reduce spend on items that are already selling well and increase budget on slower moving items to increase inventory turns.
- You can adjust spend to hit target sell through dates: If you know how much stock is left, you can fine-tune your ad spend to ensure stock moves fast enough to hit your target sell through date.
The bad news is you can’t rely on your ERP system or commerce platform to give you this information. You need something that can keep inventory data in sync across all your warehouses, stores, and systems, in real-time. Something that can be queried by thousands or millions of people at once without getting bogged down.
Modern Inventory Data Processing and Distributed Order Management (DOM) can achieve this.
Despite the name, one of an Order Management System’s main jobs is actually to figure out what inventory you have available so you can show customers an accurate view of what’s ‘in stock’ across all your channels and store locations. It consumes inventory feeds from other systems. And serves them up as fast as digital shoppers can browse. And it can feed your marketing and advertising tools with inventory data to ensure you never try to sell something you don’t have again.
So if you’re a brand that is wasting advertising budget on promoting products to customers online you don’t actually have, stop. Make sure your digital advertising is ‘inventory aware’ and not only will you improve your customer experience and likely sell more through repeat purchases, but you’ll also drive down your advertising costs.
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