Introduction
ROAS, or Return on Ads Investment and sometimes loosely termed as ROI, is a common performance marketing term used to identify past and potential efficiencies of advertising investment. Businesses frequently use ROAS as a key performance indicator (KPI) to assess the profitability of an investment. It is incredibly helpful for tracking progress over time and removing uncertainty from future business decisions. Any business, regardless of size or industry, may greatly benefit from knowing how to calculate return on ad investment.
We had the opportunity to manage marketplace in platform sponsored ads for a leading pet care brand in three markets, the Philippines (PH), Malaysia (MY), and Singapore(SG) on their Shopee and Lazada platforms. This petcare company had multiple brands within the store with nearly 700 active SKUs crossing multiple categories and variants.
The Challenge
We had less than 2 weeks to onboard the client and we began by looking into past performance data and examining trends by markets, budgets planned vs. actual pacing, ROAS, revenue and CIR Targets, planned vs. actual deliverables, brands in the respective marketplace, categories, SKUs, placements, keywords, and bids prices.
Our objective was to drive more Revenue and while improving the ROAS for each of the markets and platforms. When the client was onboarded, budgets were underpacing and ROAS was not met, which meant a dual challenge in growing revenue while improving the investment efficiency. In addition, having to deal with a revolving door of SKUs with new SKUs introduced and sold out statuses meant the team has to find ways to manage investments and build up revenue for new products.
Singapore, Malaysia, and the Philippines had distinct campaign times and product preferences with Singapore favoring more premium products, Malaysia skewing towards more mass market cat food while the Philippines had a large population of pet lovers who drove demand for both cat and dog food with a rising interest in cat litter. Then we focused on underperforming categories in relation to market demands and pushed them into new categories.
Achieving the best selling brands on Shopee and Lazada
The Solution
1. Product Selection Framework
At first, we revised the structure for choosing products with a budget allocation distributed among all products to cover long tail (Especially for Lazada), identified Top 5% Hero SKUs (stock keeping unit), High potential Products from the Store and then planned the introduction of new products in order to make a strong, positive first impression which is important to profitability.
As opposed to merely selling high volumes of a small number of popular things, we also engaged on Long Tail Product Activation by increasing visibility for long tail products and tapping into the power of marketplace to channel difficult-to-find items to a big number of clients.
Furthermore, we used a Test and Learn Strategy to test different bidding strategies and new sponsored solutions launched by Lazada and Shopee to find opportunities to enhance the effectiveness of the ads and maximise the share of search. To increase GMV (Gross Merchandise Value), some of the new ad features including the “new product launcher,” “first search slot”, maintaining high SOV for certain Hero categories and keywords were utilized and SKUs within and utilising the available platform and ad-type based optimizations.
Subsequently, by raising the bids of the products with high conversion rates and low expenditure SKUs, we concentrated on long-tail product activation using all automated campaigns on Lazada and Shopee. After that, efforts were made to set up aggressive bids for the SKUs in order to generate more impressions and direct the audience into the lower funnel.
2. In Marketplace Ads Media Investment Plan
Breakdown investment on a daily media strategy with budgets assigned in accordance with
- Product Selection framework
- Using the activity calendar to map out the Activities and using the Teasing periods with increased budget allocations to cater traffic on pre hype days.
- With tracking of Budget allocations, top-ups, Actual Spends, Leftovers and daily budgets is created and adopted into all marketplace and platforms.
3. Rigorous Ads Optimizations on Daily / Weekly / Monthly / Peak days
Meanwhile we concentrated on establishing the appropriate bids and bid adjustments based on the performance history of all the biddable products in its portfolio and adjusted to new targets to win and increase traffic.
Daily / Weekly Ads Optimizations:
- Commerceplus Team worked on optimizations on a daily basis to create first stage of stability to ad accounts. Key metrics to look at includes looking at keyword level CPCs (Cost per click), switching on manual Ads optimizations, setting up broad level keywords.
- Meanwhile, we prioritised effective optimizations by categorising SKUs, purchasing advertisements for top-performing SKU suggestions, increasing the budget pace for ideal placements, lowering the CPCs, and concentrating on raising the average ranking for top performing keywords.
- We then automated product search ads by toggling auto keywords where platform runs its own keywords and bids which we don’t have visibility and control over the performance. Additionally, we can simultaneously run a mix of automatic and manual keywords, scale the results for Ads optimization, and add keywords over time with exact match to increase coverage while lowering costs.
- We also have the option to use Sponsored Discovery, which is another excellent ad type. We have used this type by adding up the premium placement fees in Manual mode and have seen positive results for many SKUs as well as complimented the overall GMV generation because Sponsored discovery typically provides higher ROI.
- Furthermore, in order to cater to the traffic depending on their interests and the kinds of products they are looking for, we developed Category level campaigns. This allowed us to provide them with more personalised search results and, in turn, let us understand and scale the performance based on results.
Peak Day Ads Optimizations:
- Ads Optimizations to keyword bidding begin five days beforehand, with enhanced bidding activated and budgets increased to capture greater coverage and support Add to cart (ATC).
- To ensure that budgets were accessible to high ROI, low Cost into Revenue (CIR) items on peak day, the Commerceplus team worked through the peak hours from 8 pm the night before to 2 am on peak day. Increase spending for products with a high conversion rate but low spending by enhancing keyword performance.
4. Monitoring SKUs and campaigns every two hours, increasing budgets for running out, ranking by highest to lowest GMV, and concurrently examining CIR.
5. Sorting the SKUs from Highest to Lowest Conversion Rate (CR) and raising the bids for products with low spending but a healthy CR% so that these products generate more money.
6. The most crucial thing is to keep track of all the Ads optimizations made to reset the game after Campaign Days, while also analysing the products with the most potential and boosting their daily budgets.
Monthly Ads Optimizations:
To improve cost efficiencies, we moved winning keywords into a new bucket of keywords and then switch to exact match to help reduce costs. We also moved winning keywords into Shop Ads to increase coverage at Shop level using Exact Match as well.
The Results
- We were successful in using Search and Discovery ad types and drived more Revenue while spending optimally and achieved the Targets and successfully established the best daily budgets for SKUs.
- With the aid of Shopee Ads optimizations, we were able to increase spending, activate longtail products, and generate more revenue, all of which resulted to monthly ROIs of up to 18X for Philippines, 7X for Malaysia, and 6X for Singapore.
- GMV on less well-liked product categories increased by 50% as a result of the long tail strategy.
- The ROIs of PH up to 15X, MY up to 6X, and SG up to 5X were reached through Ads optimizations and campaign structures
Peak Day Achievements:
- For the PH Market, we have been able to generate ROIs of up to 42x on double dates and up to 32x on paydays.
- For MY Market, we have been able to deliver up to 22x ROI on double dates and up to 18x on payday sales.
Final Thoughts
If you want to make the most of the marketplaces, whilst being as efficient as possible, we are ready to assist you with that. Commerceplus makes product and advertisement management easy. We have extensive data analytics tools to give you insights into the market, competition, your products, and ads. We use algorithmic clustering to predict valuable keywords, and we use AI to help you optimize inventory, marketing spend, and customer support.
If you have any additional questions about how to How to optimize your marketplace sales, please send us an email at contact@commerceplus.asia or contact us to organise a quick 30 minute audit.