How 5 more years of austerity will affect your digital marketing

With the news that the Conservatives have enough seats to form a government, we take a look at the various ways that further austerity measures could impact your digital marketing strategy.

Ecommerce slowing down?

The latest stats from the IMRG show that the growth in online spending was only in single figures last quarter, for the first time ever.

Speaking in April, Tina Spooner, Chief Information Officer at IMRG, said: “There are a number of factors that may be influencing this apparent slowdown in online retail sales growth – such as a maturing market or uncertainty around the upcoming election.”

Now that we know the Conservatives are back in power – and this time without a coalition partner – will ecommerce spending take a hit?  

Consumers looking for a bargain?

Austerity measures don’t necessarily mean that everyone is worse off (and thus spends less). As the gap between rich and poor widens, some people are spending plenty, while others are hunting around for a bargain. This means that if you are a bargain brand (see: the rise of Aldi and Lidl) or a high-end brand, perhaps sales and revenue will increase. But the retailers in the ‘crowded middle’ could see declining revenue (think of Tescoas people tighten their belts (or flash the cash). 

If you are hoping to keep the bargain-hunters on side, remember:

  • Add value by offering (and promoting) services such as free delivery or returns on your website. Luxury packaging (think the Net-a-Porter signature black bags) and added extras (MiH Jeans gives away a nice tote bag) will make people feel better about spending more. 
  • Use your promotional selling points in your channel marketing – you can add promotional text to Google Shopping listings, for example.
  • Ensure your products are listed on price comparison sites and comparison search engines (CSEs).

Do bear in mind that people’s concepts of ‘cheap’ are totally relative. If you want to run price-based messaging, use actual price-points instead of generic words like ‘cheap’ and ‘discount’. If you aren’t actually the cheapest, searchers will at least be able to see that before they click through to your site (and waste your precious PPC budget). This approach also lets you run advertising that is more aligned with your branding, so you don’t have to suddenly become a ‘bargain’ brand. Take this example of ski holiday company Powder White:

Marketing budgets moving to digital?

During the last recession, marketing budgets were directed towards online channels, in a bid to improve measurement and prove return on investment.

Naturally, marketers will be looking firmly at the channels that show a clear (and positive) return on investment. Paid Search is great because it’s straightforward to run, test and optimise, and measure, while usually offering a decent ROI compared to other channels. According to Forrester & Shop.org research,  respondents felt that the top channel for customer acquisition was search engine marketing, including paid search (85%).

  • If you use Product Listing Ads in Google Shopping, Custom Labels can help you optimise the appropriate adverts to make the most of your budget.
  • Do plenty of testing. Testing your marketing is far quicker and easier online, the tools are widely available, and making changes to a website is definitely preferable to applying them across 100 stores.
  • If there is money available, do invest in a responsive website. Google’s new algorithm will benefit Mobile-friendly websites, so you can nab traffic from your competitors if you take this step first.

As well as paid channels, there are several digital marketing strategies cost very little, but do require smart application:

  • Think about how you can become more creative with first-party data, such as CRM and product information. Gift-finder apps are a good example of displaying your inventory in a more engaging way. With your own list of emails, you can create profitable Custom Audience segments in Facebook.
  • Focus on SEO – a solid content marketing strategy, based on evergreen search topics as well as the latest news, should stand you in good stead.
  • Get your house in order. Prioritise function over fanfare, and make sure your website works properly before worrying about how it looks.

Harder to win over customers?

Another angle to this is trust. What we’ve seen with anti-cuts protests, low voter turnouts and the rise of smaller parties is – surprise surprise – people don’t trust the political class. An Ipsos MORI poll in January found that just 16% of Britons trust politicians to tell the truth. However, as Affilinet note in their recent trust index, politicians may be 10th but ‘brands’ aren’t faring much better, placing 9th. The IAB noted in 2012 that austerity had created consumers with less brand loyalty, because they were more hesitant about entering into long-term ‘relationships’ with brands. So what can you do?

  • Include user and expert reviews and ratings (on site and in channel marketing) – even if not all of them are entirely positive. You can link your website with your Google Plus account to pull these in automatically.
  • Employ user-generated content, such as images shared by fans on social media, across your website and other channels.
  • Offer a personalised experience by recommending appropriate items when someone is on a product page, making use of search history and CRM data to understand consumer behaviour, and creating targeted paid search adverts and email campaigns. (Barilliance estimates that up to 31% of ecommerce revenue comes from personalised recommendations).

That said, eMarketer claims shoppers care more about free stuff than improved service. 

Expansion into new markets?  

If selling to customers at home becomes too difficult or costly, online retailers have the advantage of expanding into new markets quickly. Every market has local CSEs and search engines (Yandex in Russia; Baidu in China) that you can integrate your product list with pretty quickly. Focusing on OECD countries could be worthwhile, as they continue to enjoy stable growth.

While the UK still tops the table, Germany and Poland appear to be enjoying the steepest growth in terms of ecommerce spending, with the Polish ecommerce market expected to grow by 22.5% in 2016. 340m shoppers already come to UK websites from US and other European countries, making the UK the largest ecommerce export market in the world.

Despite slower growth, the stats still clearly show that people are spending more time and more money online, and that businesses continue to allocate much of their budget to digital marketing efforts. Moreover, digital marketing has a robust measurement framework that cost-savvy bosses will continue to love.

Austerity aside, the new Conservative government does bring more stability than was expected (with an outright majority) and confidence in the pound internationally. They have given a commitment to invest in technology – both good for businesses who hope to flourish online and internationally. Scotland, certainly, looks set to enjoy a boost to digital technologies industries. Most marketing agencies questioned by The Drum seemed to be pleased with the outcome.

On the other hand, confidence that has been gained from a stable government could be shaken with any discussions around leaving the EU, or Scotland leaving the UK, which could have a knock-on effect on marketing budgets.