Marketing

The power of leveraging valuable data to drive e-commerce growth for retailers

To drive genuine growth, retailers need to know which ads are generating incremental revenue, new sales strata which can be directly attributed to effective marketing campaigns. An essential element is understanding new customer acquisition and the role of lifetime value

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February 6, 2025 by Mitsunaga Kikuchi — Founder and CEO, Shirofune

Let's be clear: revenue does not necessarily mean profitable growth. In e-commerce, the embrace of short-term return on ad spend is the conventional wisdom when it comes to measuring success, but its myopic focus is overrated. Immediate results may seem attractive enough, but they obscure a broader picture of long-term profitability.

To drive genuine growth, retailers need to know which ads are generating incremental revenue, new sales strata which can be directly attributed to effective marketing campaigns. An essential element in this approach is understanding new customer acquisition and the role of lifetime value in identifying customers with the most potential. Ad automation platforms can be a powerful tool helping to steer advertising managers toward achieving these goals, particularly when it comes to deriving actionable results from data clean rooms like Amazon Marketing Cloud.

Moving beyond short-term ROAS

Like a VIP being shepherded past the velvet rope, we all understand the pleasure of immediate gratification. However, emphasizing short-term ROAS can be a rabbit hole, leading ad managers down a narrow tunnel that neglects sustainable growth opportunities. This metric, while useful, often overlooks factors that contribute to long-term profitability. Advertisers miss out on valuable customer segments and strategic insights by prioritizing short-term gains. Such an approach can create a cycle of reactive marketing strategies, where the rush for quick wins overshadows the importance of nurturing customer relationships and fostering brand loyalty.

To break free from the limitations of a short-term mindset, a holistic approach that balances immediate performance with long-term potential is key. This shift involves redefining success by incorporating metrics that consider customer acquisition costs, retention rates, and overall LTV. By focusing on the bigger picture, brands can better position themselves for sustainable growth.

Identifying ads that drive incremental revenue

Loyalty is important, but new customers are the lifeblood of every business. Understanding the value of incremental revenue is crucial for retailers aiming to grow their e-commerce presence. Incremental revenue links ad campaigns with results, providing insights which lead to growth. By adopting strategies that focus on steady incremental gains, retailers can better allocate resources and optimize their marketing efforts.

As part of an automated platform, advanced analytics solutions can effectively track which ads drive genuine growth. These sophisticated tools can identify patterns and customer behaviors to see what resonates with target audiences and leads to new customer acquisitions. By refining their approach to data analysis, retailers can focus on campaigns that yield stronger impact.

New customer acquisition and long-term value

Growth is only possible through acquiring new customers. The benefit of understanding lifetime value augments this effort by focusing on those high-quality customers whose buying patterns in the past, and their anticipated future purchases, make cultivating a beneficial relationship with them a top priority.

To optimize digital marketing for long-term success, retailers must embrace the twin strategies of customer acquisition/retention alongside lifetime value. Investing in these relationships can be both a data-driven and creative process that spans targeted advertising and personalized experiences. Through smart retention strategies, retailers can enhance customer loyalty, driving repeat purchases and ultimately boosting LTV.

Choosing the right automation solution

Acquiring customer profile and purchase data
One of the primary benefits of advertising automation is the ability to easily collect and analyze customer profiles and purchase data. This enables retailers to gain a deeper understanding of which ads have the greatest effect and contribute to higher LTV. By leveraging these insights, brands can tailor their marketing strategies to attract and cultivate the most valuable customers.

Linking ads to new customer revenue
Connecting advertising data with new customer conversion data – providing insights into the performance of each ad campaign – is a benchmark of an effective automation platform. This allows retailers to identify which ads are generating clicks, but also shows what leads to meaningful customer acquisitions. Connecting the dots between conversions and purchase/customer data on leading e-commerce platforms like Shopify ensures that retailers can accurately assess their marketing efforts.

Application to Amazon ads Using Amazon Marketing Cloud
For retailers utilizing Amazon as a sales platform, integrating Amazon Marketing Cloud can enhance their ad strategies. While it can be a challenge to use, AMC lets retailers gain a deeper understanding of customer behavior on Amazon's platform and apply insights directly to their Amazon Ads campaigns. By tracking which ads lead to new customer acquisitions and higher long-term revenue, retailers can make data-driven decisions that optimize their Amazon advertising efforts.

Real-time optimization of ad budgets
Why waste money? Automation platforms are a solution for optimizing the allocation of ad budgets in real-time. By analyzing data and dynamically adjusting ad spend, retailers can ensure that their investments are directed toward ad campaigns that attract high-LTV customers. This maximizes the effectiveness of marketing expenditures, reaping better returns across the board.

E-commerce sales continue on an upward trajectory, with more than 20% of all retail purchases expected to take place online this year and anticipated to grow to nearly 23% by 2027. By using the power of automation to focus on new customer incremental revenue and LTV, retailers can ride this e-wave into the distance.

About Mitsunaga Kikuchi

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