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Email/SMS and Paid Ads Marketing in 2022

With 2021 coming to a close, we’re going to take this opportunity to look forward to the landscape of email/SMS and paid ads in 2022. 

2021 was a year full of major events in the e-commerce world. We saw the release of iOS 14.5/6 which disrupted the world of paid ads, and iOS 15 which disrupted the world of email marketing. Both of these updates caused a rippling effect across both channels causing marketers to be agile and adapt how they monitored performance, and how they determined success. While the direct effects of iOS 14.5/6 on performance can be debated (that is a large can of worms to open at another time), it nonetheless caused a shift in the landscape and so did iOS 15 on the email side. With 2021 behind us, and the implications of these major updates relatively stabilized, it’s time to look forward at what the landscape of 2022 currently looks like in the world of paid ads and email/SMS marketing in DTC e-commerce. 

Email/SMS

Email/SMS is no longer a nice channel to have or an ancillary channel to your e-com. Having a robust Email/SMS structure and strategy is crucial to scaling as an e-commerce brand in 2022. These channels have always been extremely important, but with the cost of acquisition on the ads side, they are crucial in driving higher profit sales for your business. Email/SMS should achieve between 30-60% of your overall revenue depending on your industry, and will nine times out of ten be your most profitable channels. DO NOT neglect the importance and power of a robust email/SMS strategy in 2022. Our main macro outlook for 2022 is as follows: 

  • Focusing on subscriber growth and retention is more important than ever. With rising advertising costs, it is a necessity to not only acquire as many qualified contacts as possible but also to ensure there is a structure in place focused around the retention of these subscribers. 
  • Having a well visualized creative strategy is crucial. Understand what content will resonate with your audience and the delivery format. Testing is key.
  • Timing - the inbox is getting more crowded. Understanding how you can breakthrough with the right subject line at the right time can be the deciding factor between conversion. If you don't succeed, leverage resends to those who missed it as your next low-hanging fruit.
  • Focus on key retention metrics. Understanding cohort and SKU-specific LTV for paid ads and email will be key to measuring success. Leverage segmentation and automation to maximize reach on owned channels with relevant messaging.

Paid Ads

2021 was surely an eventful year in the space of paid ads. Coming off of an above-average 2020 with advertising efficiency and costs, iOS 14.5/6 made a lot of marketers panic by creating less visibility and misattribution. Attribution tools assisted in this, but attribution is an imperfect game and will always have a margin of error. Looking at your e-com holistically and monitoring full-funnel profitability is crucial heading into 2022, along with understanding what metrics to base spend/budget allocation off of. A surface-level look at some points for 2022: 

  • CPM’s will continue to rise YOY, understanding this and being realistic about it is crucial. 
  • Increasing your return customer rate & LTV will significantly help with your ability to scale spend as an e-com throughout 2022. 
  • NC-ROAS (new customer ROAS) is the most important metric to understand overall paid advertising performance 
  • Full-funnel ROAS is the main metric that should be used when dictating budget allocation and spend increases/decreases
  • In-platform ROAS is only useful to determine budget allocations within the platform itself 
  • A consolidated account structure when scaling will continue to be more effective
  • Most e-coms this year at scale had a platform-reported ROAS averaging from 1.3 - 2.2. The landscape in 2022 will follow a similar pattern
  • Be dynamic with your spend during periods of high and low efficiency 

 

Understanding that the paid ads side has slim margins on the acquisition is crucial as an e-com owner. While achieving ROAS’s in the 3’s,4’s, and 5’s is not “impossible” it is extremely infrequent and often is an indication you are in a niche with low competition. For the extremely large majority of e-coms out there achieving a more standard reported ROAS in between 1.3-2.3 at scale is realistic. It is important to comprehend that these ad platforms are a dynamic marketplace with factors often out of the control of the marketer or the businesses as a whole, and there are no magic strategies that will all of a sudden give you a 4 ROAS at scale. There are periods of high efficiency and of low efficiency which make it crucial to be dynamic with your spend. Jack up spend and acquire more customers at a slimmer margin during high-efficiency periods, and pull back spend and lean on past purchasers and your return customer rate during periods of low efficiency. Paid ads are an acquisition vessel, and function hand in hand with email/SMS. Having these two mediums synchronized and aligned in 2022 is a must for any e-com looking to scale. While single-channel KPIs are important, both sides rely heavily on the other and must be assessed holistically. 

 

Cheers to 2021, and to a successful 2022! 🥂

Liam Veregin, Co-founder of Aplo Group

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