PPC Advertising: Changes in Customer Buying Habits

Billboard With Old Torn Ads

It goes without saying that the world of digital paid advertising has shifted dramatically over the past few years, especially following the impacts of Covid 19. From major changes in platform approaches, to legal extensions of privacy laws in Western Markets. Most notable in recent months is the changes in buying habits of clients in the digital landscape.

But this begs the question: How does this affect my PPC Advertising?

We will get to that, but first we need to dive a little deeper into some of the changes we are seeing in the digital landscape. After all, one cannot address an issue if one does not fully comprehend the causes of said issue.

Covid 19 and Buying Online

Probably the most obvious change in the digital landscape has been the major shift in purchasing online. Prior to the pandemic, online shopping was still seen as a growing niche of the sales industry, dominated by giants such as Amazon, Alibaba and others. It was not the obvious route to purchase a product from small or medium businesses and customers often preferred spending their time trapsing through large monolithic shopping centers or boutique shops.

All changed with the pandemic. No longer could we visit our favorite little corner shops in London or walk down the high streets of New York, or even eat at our favorite Seafood restaurant in Cape Town Harbor. Companies of all types and their clients had to adapt to a world where physically visiting a shop was no longer an option.

This shift prompted innovation in the way products are shown in online stores, forcing tired old catalogue designs to innovate with modern sleek browsing structures and visualizations of products using video, VR and augmented reality. It changed the courier process following a purchase, demanding that products be able to be shipped anywhere at any time without the need for human interaction. It also pushed many stores that never even so much as had a website, such as the world’s oldest hat store Lock & Co, into the online space, thus massively increasing the choice and range of products available through online shopping. Most importantly however, it educated and skilled even the most non-tech inclined person to become familiar with online shopping processes and sales methods.

The Savvy Digital Shopper

Now of course many of you may be reading this blog thinking, “But I’ve been shopping online for years?”. While this is certainly true,  when one looks at the majority of people in the Western World this was not the case and certainly not the case for every manner of product out there.

This new forced learning of the shoppers themselves has changed the very way us Digital Agencies design and build e-commerce stores. This change has been necessitated by a need to make the experience as painless and simple as possible for those less technically inclined. However in the same breath, we have had to adapt the navigation, presentation and flow of these sites to accommodate the needed technologies to make such an online browsing exercise into a “Shopping Experience”.

The added side effect of all this innovation is that shoppers have come to expect, as standard, the luxuries of browsing presented by large companies like Amazon, Woolworths and Tesco, who’s resources allowed them to define how online shopping should be done. This in effect has caused many issues for smaller companies who cannot easily access such mind-bending technologies as their big rivals and as such, often fall short of the trained new online shopper’s expectations.

Not to worry though, there are solutions that can be applied to smaller shops which can mimic these larger online retailers. So aggressive has the shift to the online space been, that platforms have rapidly developed effectively the same tools which these larger firms use and firms like our own have quickly been able to adapt such tools to our clients’ purposes. Thus, making sure that they do not fall behind the big boy digital shopping trend setters and, more importantly, the expectations of the new trained savvy online shopper.

Rising Competition in the Digital Landscape

So, this brings us onto the last major effect of the change in online shopping, namely the vast increase in the number of businesses competing for the attentions of those browsing the various platforms.

For those that are not aware of how PPC works, let me give you a very simplified concept of it. In effect your advert that you run, be it on Meta, LinkedIn, Google or any other platform, has to bid against everyone else for the space available through an automated AI controlled auction process. The reason one has to bid like this is that adverts, by their very nature, run counter to the desires of platform users to actually use the platform for its primary purpose.

This may sound counter intuitive given that advertisers pay to run their ads on said platform and thusly generate revenue for said platform, however you need to remember that almost every platform actually makes its money from its active database numbers and the information its users are willing to share with it. In order to get this right they must make sure the users are actually engaging with the platform and unless your advert drives engagement, it is actually a detriment to that platforms primary function.

This is why platforms such as Meta and LinkedIn prioritize adverts that generate engagement. In effect if you can make your advert more like a post or viral video instead of a pure “buy my stuff” style advert, your cost of advertising falls steeply.

But back to the bidding space. Prior to the Covid pandemic one could view the space as a half full room but because of the massive influx of companies all vying for attention it is more akin to the stock market rooms of ages past. Where every tiny difference can mean the difference between getting your ad infront of people or not.

Now add to this side of competition the realization that the number of “good” ads being seen by people has significantly increased which means that in a sense, consumers have been “trained” to expect more from their adverts.

The buying choice is not only much broader now but the attention span of an internet user is now also stretched far more than ever before.  So if your creative component of the advert doesn’t stand out or annoys the consumer or fails to get straight to the point, you have little hope that your ad will received actionable clicks. It is no longer enough to get in front of as many people as possible, you have to focus on getting the right people and the right ad format in front of them.

Internet Privacy and Platform Changes

This could be a blog article in and of itself, but to give you just the cliff notes of this, it is important to understand that user data has become extremely limited to platforms that you advertise on. In the last three years countries and corporations, such as Apple, have significantly limited the data they share with platforms such as Meta, Google etc.

Since the advertising on these platforms is driven by machine learning processes, these algorithms are effectively being starved with one hand tied behind their back.

These platforms have not been idle, and have rapidly been developing new approaches to advertising, often flying firmly in the face of what we advertisers have been used to doing to get the results our clients desire.

In the past it was easy to attribute success or failure of a specific campaign via the direct stats shown on the platform, however these days we need to dig much deeper and look at the multiple data sets to draw the conclusion. All of this has also made advertising more expensive for companies, as both man hours and bidding costs have gone up significantly to reach the correct audiences for specific products.

Even concepts as sound as “retargeting” and “targeted audiences” have been heavily impacted by such restrictions on these platforms, often rendering years of data obsolete. One need only look at the impact of the Apple 14 update on look alike audiences on Meta to see that until the platform developed the tools to deal with the limitations placed on them, such previously used data sets were not usable in the same way.

Buying Habits… At long last

Right, now that I have put you all to sleep with the background lets talk about the major changes in the last 6 months and what the impact is going into the festive season:

It is apparent to anyone in the Western World that has paid even the slightest attention, that the disposable income of households is massively reduced at the moment due to rampant inflation. The politicians can lie through their teeth, underplay it and try to rebrand it any which way but we all know it is happening because our own wallets feel lighter.

This loss in disposable income has caused some major shifts in what people care about and what people spend their money on online.

What do buyers care about?

In a recent summit held by Meta, they discussed at length this very important question. I will give you the summary version of the data.

In short prior to this year people cared a great deal about moral issues when buying products. Afterall, they had spare cash to spend on being moralistic in their purchasing. As such products that were “Green” or “Locally Sourced” or “Organic” or, at least in the western markets, “businesses that didn’t do business with Russia” were favored over other considerations. Moral issues that politicians and media worry over have never been a major driving factor in buying decision, despite what the hype from twitter might suggest, but the aforementioned moral issues were ranked very highly.

However, in the last 6 months this all changed and shows little sign of reverting.

The new importance metrics all show the following three factors to be considered when deciding to buy from an online advert or company.

  1. Lower Price
  2. Readily available or close to me (ie lower shipping charges)
  3. Brand that I know and trust

The first of these is obvious. People are short on disposable income and are prioritizing the value perception and price over all other things.

The second is less obvious until one remembers that shipping and courier prices have skyrocketed in the past three years. If you haven’t yet thought of a way to incorporate some or all of these shipping charges into your online business model, make sure you do this.

And lastly, buying from a known brand says that people are opposed to risk. We know from Neuroscience that the primitive brain is very opposed to risk at the best of times, let alone during an economic downturn. Consumers are far less likely to try new products or services at present. They are especially unlikely to risk ordering from a company who is not transparent and doesn’t mitigate this risk. As such your return policies and processes should be ironed out as quickly as possible. Furthermore, your product offering should be explicit in detailing what is actually being purchased and how it fits the individual user. The fashion and service industry, in particular, needs to pay close attention to this point.

What have people cut back on specifically?

We are seeing some obvious points of cut back and a general reduction in spending by consumers. To simplify things and save a lot of time, here is a graphic which shows the drop in spend in online consumers.

Source: Meta data over the last 3 months

Impact on PPC of Spending Habits

Right, so now that you have all of the information lets discuss the direct impact on your PPC adverts across various platforms and what you can do to make it better going into the festive season.

First off, if you are not running prospecting campaigns of some type, you really should be. Yes, it is more expensive now than it was before but the need to find new clients who you can build loyalty with has never been as important. Make sure that, when you do run such campaigns, that you have considered the buyer concerns raised previously. Running a special may help, but it should not be your only option. Try instead to address the primitive brains concerns of risk first before you try going into a price competition.

Secondly, look after your existing customer base and try get them to advocate for you. You can support their efforts with boosted posts and engagement activities such as competitions. People want to feel valued by the brands they trust, they also want to be respected as the valuable customers that they are. Their hard-earned dollars are more valuable to them now and as such you need to take the time to show you take their business seriously. You have to show the same valuing of their dollars that they do. Sort your email marketing out, don’t spam them! Get your returns processes and value propositions very clear. Most importantly engage with them directly on the platforms, encourage their enjoyment and share with them an inside look at your brand identity. Treat them as people and rely less on automated responses. This will all make them feel more engaged.

Finally, change your advertising focus to develop your brand. I cannot stress enough this last point. You need to make people comfortable with your brand. They must want to relate to it. Show them the value your brand could offer them which your competition does not. Do this by streamlining your ad creatives to be clear, concise, and interesting. Cut back on pushing new products to people and focus on those products that have a legacy of being good solid buys with lots of reviews.

You can scale your PPC in this time and generate the results you want but you need to know that the digital landscape has changed a lot and you will run into trouble from time to time. Focus on streamlining your business expenses, cutting waste and develop a strong brand identity that is both interesting and risk free for a consumer. To chat about your PPC, get in contact with one of our consultants.

Best of luck to you all and I hope this will help your thinking in the digital landscape leading up to the festive season.

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