New analysis of the e-commerce landscape reveals that traditional performance-only marketing is on its way, with sophisticated brand building taking center stage.
Nest Commerce's report finds that digital brand building, described as “full-funnel performance,” is necessary to increase awareness and acquire customers across increasingly video-first platforms such as Meta, Tik Tok, and Google. It is clear that the approach
The Readout is a quarterly trends and learnings report based on aggregated advertising data from Nest's portfolio of e-commerce clients. We use global advertising data from over 40 e-commerce brands and manage over £100m of media spend.
According to data from Nest, brands that run awareness and traffic campaigns alongside performance campaigns will see a significant return on ad spend (ROAS) of 31% year over year in Q1 2024. It was done. In comparison, his ROAS for brands leveraging performance alone was down 32% year over year.
Overall meta performance is up year-over-year, but trends vary depending on whether a brand is leveraging the upper funnel. 9% of meta spend is currently dedicated to upper funnel investments in awareness and traffic activity. This was an increase of 356% and 30% year over year, respectively, as brands shifted their budgets towards driving long-term growth and progressivity.
The verdict is clear. To win digital in 2024, full-funnel performance is a strategic necessity. You should focus on long-term investments in brand awareness to drive immediate sales while also generating future demand among new customers. Performance-only strategies, which have been dominant for the past 15-20 years, are becoming increasingly dormant.
A video-first approach is key to building your brand
The main drivers for building awareness and establishing a brand in this new environment are video-first platforms TikTok and Instagram Reels. Tik Tok performed particularly well in the first quarter, with CVR increasing 37% quarter-on-quarter. It performs well with premium viewers as well as younger audiences, making it a particularly powerful platform for discovery.
Meanwhile, Reels continues to grow in profile and Meta continues to invest as younger viewers spend more on the platform, with spending up an astonishing 217% year over year as channels go mainstream. It is showing good growth.
Limited time opportunity in meta
Advertisers currently face lower CPMs in Meta at 6% lower than in 2023, although the UK economic recovery points to potential CPM increases. Therefore, brands need to act now to build brand awareness in the market ahead of the peak season, which is likely to get crowded and costs increase significantly as summer approaches.
While UK media buyers have enjoyed improved performance in the meta and lower CPMs due to less competition, the booming US market has made advertisers more aggressive.
Post-pandemic, meta CPM has experienced significant year-over-year growth (30% in 2021 and 32% in 2022) as economic conditions improve. This is likely to increase as the UK economy continues to recover from recession. A similar analysis of the last US election revealed that in the US he CPM showed a dramatic increase of 38% in the fourth quarter of 2020.
There are some big opportunities for more progressive retailers who take a community-first, full-funnel approach. Many brands initially responded to the economic slowdown by reducing brand investment. These brands will pay dearly for this failure in the future. Unless brands anticipate a prolonged economic downturn, building a brand now is critical, and with Meta and TikTok's CPMs remaining low, now is a good time to invest.
We have heard feedback from the market that the meta is struggling, but that is not reflected in the data in this report. Our contention is that there is a real difference between brands with the right and wrong approaches to paid social, with performance-oriented brands suffering from unsustainable acquisition costs. Even if the fourth quarter results weren't great, you can still make amends for this year. But we need to act now. If you wait until late in the third quarter, it's too late.
– Will Ashton, Nest CEO
