Nest event writeup: It’s All Change
Slashed budgets and defensive strategies have been the order of the day for retailers for some time, leaving them struggling with slower brand growth. Even more worrying is the declining performance that is evident in many areas of the sector.
Thankfully, the market is showing signs of recovery. But this only raises more questions. Namely, are retailers ready to take advantage of macro conditions when they improve – and when will retailer confidence return?
Our recent breakfast event, It’s All Change, explored this topic and why a full-funnel, social-first approach that continuously rotates creative will be key to unlocking marketing success. The session featured three keynote speakers from Nest:
- Luke Jonas, Chief Growth Officer
- Rodrigo Aspillaga, Operations Director
- Ankur Shah, Advisor
Setting the scene
Luke Jonas outlined the current state of the market and how Nest believes this is shaping retailer strategies. “There’s a sense of optimism in the air, which may flow down to consumer behaviour. From a brand perspective, we’re seeing a tale of two cities. Some brands are being defensive, whilst others are on the offensive. It’s not necessarily under-optimised marketing strategies that are prompting defence. Rather, it can be the category or product market fit.”
Part of the problem is that brands have been slow to accept that performance marketing alone is not enough. The key to success is layering brand building alongside performance campaigns: full-funnel performance.
With the landscape shifting, Luke advocated that brands need to be brave and bold. “A static marketing approach won’t be fit for the environment you’re working in. The onus is on marketers to present the business cases, make those changes and take advantage of new situations.”
The winds of change are blowing – across paid social
Rodrigo Aspillaga picked up the thread by assessing why paid search has taken a back seat. “Google was the biggest selling channel for ecommerce and direct-to-consumer (D2C) brands five years ago, which can be attributed to measurement and people focussing on the last click. But now it’s a lot more complicated to scale with a customer acquisition cost (CAC) that your business can allow.”
This is not to say that Google doesn’t still have a role to play – its Q2 performance this year was stable compared to 2023. However, it’s Meta that has really established itself as a platform suited to scaling.
That’s why, over the past 15 months, we have been shifting spend allocation for a group of previously Google-first clients. We were able to increase Meta spend by 60% YoY for the group with stable efficiency whilst maintaining Google spend at similar levels to capture demand.
This comes despite a slight increase in platform costs, with Meta CPMs rising 6% YoY. Rodrigo attributes this to the increased efficiency and opportunities present. “Brands are realising they can’t just rely on conversion strategies that worked in the pre-covid era when platforms had all the data in the world.
“In order for brands to scale, they need to focus on driving awareness to fuel the funnel and reach the right number of people. Because of the limited CPMs, conversion activities hit the same people time-and-again, meaning you need to cast a wider net. That explains why awareness spending has risen 4.2x YoY.”
Reel results guaranteed
Rodrigo identified Reels as one of the most effective growth levers. “Brands are spending a lot more on this placement, and not just because it’s an additional tick-box. Reels works best when you treat it separately, rather than as an order placement within your BAU set-up.
“When you do a separate campaign, or separate ad-set that specifically targets Reels, and prioritise user generated content (UGC), the conversion rate is 186% higher whilst cost-per-acquisition (CPA) is 44% lower versus Reels via auto-allocation.”
Meanwhile, we saw a significant improvement in ad performance when running conversion objective Reels. In one test, conversion objectives saw a 150% higher CVR resulting in higher ROAS than our BAU conversion activity.
Advantage+ Shopping Campaigns (ASC) are also a hot topic right now. Meta’s tool has proven itself to be excellent at driving volume. However, Rodrigo warns that “it can be quite dangerous because it targets low-hanging fruit – it’s very much a bottom-of-the-funnel tool.” The best way to utilise these is by guide the algorithm via bid modifiers, ensuring that your targeting is more closely-aligned to ideal customer profiles (ICPs). Using this strategy and prioritising more lucrative markets can facilitate a 37% reduction in CPA.
Looking beyond Meta
However, not only Meta should be factored into the mix. Adopting a cross-channel approach opens the door to cohesive, collaborative strategies. What’s more, it improves planning accuracy. Being channel-agnostic and defining your KPIs and where your brand sits in its growth journey drives efficiency and accuracy.
TikTok is proving to be an effective platform for BOF performance. Not only is average CVR up by 182% over the past twelve months, but strategies are becoming more sophisticated. Brands are beginning to understand that scaling on TikTok requires an abundance of UGC content.
Finally, there’s YouTube, which Rodrigo identified is a good alternative for any brand trying to drive incremental gains. “Meta remains great for generating awareness. However, we’ve seen that CPMs on YouTube can be 20% lower than Meta.” This doesn’t mean that one is better than the other. Rather, it’s important to identify if YouTube is the right channel for your brand. This means researching if the audience is there and whether or not the content will resonate.
Why is full-funnel necessary?
So why full-funnel?
Rodrigo hammered the point home that “performance-only activity simply doesn’t scale growth anymore”.
Investing a percentage of your budget
in brand awareness objectives on channels like Meta decreases CPA and improves ROAS, as it drives incremental reach
(aka reaches new people at a low cost) whilst leveraging lower CPMs.
Nest’s clients that are utilising a full-funnel performance strategy have experienced a 20% Meta ROAS uplift YoY in Q2 2024, compared to a 7% reduction for those that don’t.
New is better
Nest is obsessed with two things: vertical retail and ecommerce, and constantly striving to find a competitive edge for clients.
But as Ankur Shah pointed out: “The problem is that these are mature platforms that have been around for 10-15 years. So how do you find an edge? Have you been demanding enough of your agencies or internal teams? Rather than following best practice, how do you get into a position to start using the data that you have to outperform and give yourselves an unfair advantage?”
The situation isn’t made easier by the fact that platforms put themselves first. And because they don’t have access to all brands data, they’re immediately at a disadvantage as they can’t make informed decisions.
Nest recognised that if it could leverage the data that Meta and Google couldn’t and combine it with its trading data, it could make more insight-driven decisions around creative, full-funnel and performance on a daily basis – and that together, these could lead to an increase in return on investment (ROI).
Ankur then discussed some of the products the agency had developed over the past 12 months to make this a reality.
Our latest creative tool is Nest Hummingbird, which identifies ad fatigue long before it happens. If you’re having to do creative at scale, how do you know which ads to take out?
“If you’re relying on Meta’s algorithm, you’re in a position where you have to wait for an ad to fatigue before you turn it off – or you’re relying on gut feel.
“Remember, Meta has no incentive for you to remove that ad earlier, because they’re generating cash regardless. Our approach is to predict ad fatigue before time on an account-client level. Even if this is just a day ahead of time, and we have the creative ready, we can prepare to churn out content faster. Provided we do that, the ROI is very heavy, it’s repeatable edge and it’s sustainable.”
Ankur closed the session with some food for thought. “Platforms do not have your best interests at heart; the model simply doesn’t allow it. Therefore, if you want to get ahead of the algorithm, you need to be doing something fundamentally different.”
Want to learn more about best-in-class full-funnel strategies and how to effectively leverage paid social to crack the Q4 retail puzzle? Check-out Nest’s latest report – The Readout July 2024 – for a comprehensive breakdown featuring the most up-to-date data and insights.
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