How To Increase E-Commerce Profitability In Turbulent Times

Tighter competition and the emergence of digital advertising platforms have made it harder and more expensive for e-commerce retailers and brands to scale profitably, according to Tucker Matheson, co-founder and Managing Partner at Markacy, a New York City-based digital marketing strategy firm. 

Additionally, inflation, rising interest rates, supply chain disruptions, and global conflict have depressed consumer spending this year.

To address these challenges, brands need to balance profitability with strategic brand awareness investments. A McKinsey survey revealed that 78% of CEOs now rely on Chief marketing officers (CMOs) to help build strong brands that contribute to business growth. As marketing shifts to become a profit center, here are some tools and tactics to help you get the most out of your marketing budget this year and next.

  • Define and track a profitable media efficiency rate (MER) to measure a brand’s financial success and model revenue goals, budgets, media mixes, and customer acquisition costs. You can use this e-commerce profitability calculator to determine the ideal MER.
  • Focus on your most profitable and trackable marketing tactics.
    • Facebook: Creative is the key to Facebook and Instagram performance. Test new ads every two weeks and ensure ad content is aligned with your marketing calendar. 
    • Google: Take Google to maximum profitability by capturing brand volume, optimizing Google Shopping, and refreshing Display, Discovery, and YouTube creative quarterly. 
    • Email/SMS: Brands should measure monthly email list growth and test a variety of tactics and partnerships to drive email and SMS list growth. In addition to gaining first-party data, brands should also focus on gaining zero-party data about their customers’ profiles, interests, and preferences.
    • Website/SEO: Shopify and other cloud-based content management systems provide brands with unique insights and access to a robust app marketplace that supports website reviews, subscriptions, merchandising AI, and more. Brands also have to stay on top of keyword research and develop organic content strategies.