December 4, 2019
Cyber 5 Recap: What We Learned This Year (So Far)
When you’re running a promotion, you probably always highlight the promo in your paid search ads. But does your promo ad copy actually perform better?
As a data-driven PPC agency, Metric Theory always A/B tests promotional ad copy against non-promo ad copy before concluding that promotional copy works for an advertiser. As a result of testing, we’ve run into many cases of lackluster promo ad copy performance, at times even performing significantly worse than non-promo copy. Advertisers usually react with bewilderment and disbelief – how could a promo not work? The data must be wrong!
The data are not wrong. Promos in PPC do not always work. Long before I entered digital marketing, I studied behavioral economics. At the intersection of economics and psychology, behavioral economics recognizes that people act rationally, but that the definition of rationality includes their emotions, character traits, and other environmental factors. This could not be more true when it comes to promotions in PPC. If you see that your offer of 15% off flopped, you may find an answer in the psychology of your customers.
Below are 4 common causes of failed PPC promos that you can avoid heading into the holiday promo season.
Rationality would dictate that any promo is better than no promo. In practice, the psychology of promos is more nuanced than that. For example, I used to work with an advertiser that ran a 5% off promotion during Black Friday. Although that initially doesn’t sound like much, they sold high-priced items, and 5% off was a decent chunk of change. That said, no consumer is going to be excited by an offer of 5% off, and as such, the promo did not perform well.
The discount you offer, and whether it sounds like much, will impact how it performs. Most consumers will tell you a 20% off sale sounds much more compelling than a 15% off sale, even though they result in similar savings. If you’ve seen mixed or poor results with your promotions in the past, consider whether the offers you’re highlighting are compelling to your customers. You may find increasing the promotional offer by even 5%, or highlighting a dollar amount off instead of a percentage amount, could have a significant impact on how your promo performs.
One variable to a promotion’s performance that you cannot control is what promos your resellers and competitors offer at the same time. This is particularly relevant during heavy promotional periods like holiday weekends, Black Friday, and Cyber Monday. I once worked with a cosmetics advertiser that ran a 15% off sale during Memorial Day weekend. We A/B tested promo ad copy against their standard non-promo copy, and were surprised to find that the promo copy actually performed significantly worse than the non-promo copy for their branded terms, to the tune of 60% lower conversion rates and return on ad spend (“ROAS”).
We performed a search during the weekend and saw that one of our major resellers was promoting a 20% off sale at the same time we were advertising a 15% off sale. By running promo ad copy, we were unintentionally pushing more buyers to our reseller. Based on conversion rates, it seems even the shoppers that did click on our ad remembered the promo difference and were less likely to complete their purchase on our site as a result.
Unfortunately, you won’t know what promotions your resellers or competitors will be running until their sale starts, and if you do not see their promo in a search yourself, you may never know what caused your promotion to perform so poorly. For advertisers with resellers or very close competitors, I advise against running a specific percentage off in copy during promo-heavy periods unless you are very confident that your promo will be the strongest advertised.
Any ecommerce advertiser will have a lot to say about Amazon and the evolution of free shipping as an expectation by online shoppers. As one advertiser said to me, “If I raised all my prices by 10%, sure, I could offer free shipping too!” While some consumers might prefer that approach, others understand that free shipping is typically subsidized by higher prices. That said, that doesn’t mean they act rationally when presented with a free shipping promotion.
It’s fairly common to see free shipping with a threshold (e.g., “free shipping on orders $25+”) as a promotion or supplement to a percentage off sale. One advertiser recently shared the results of their email marketing promos, showing that their free shipping promos significantly underperformed their other promotions. This is where the psychology aspect of the promotion comes in.
Assume all online shoppers expect free shipping. When shopping on a site without free shipping, they typically do not realize that there are shipping fees until they’re in the shopping cart. At that point, they’ve already invested time in selecting items and have a psychological attachment to the products. Sure, some may abandon the cart and find similar products on a site with free shipping, but many will pony up the shipping costs to get their new items. However, if you highlight that free shipping applies only to orders over $50 in ad copy, you’re telling them up front, before they develop an attachment to a product, that they need to spend at least $50 on your site to avoid shipping costs. You’ve now set an artificial barrier to entry for shopping on your site.
When it comes to free shipping, if you do not offer it on all orders, you are often better off not highlighting that aspect of your promotion at all in your ad copy. Use it to decrease abandoned cart rates, but don’t rely on it to bring more shoppers to your site.
User experience is an increasingly hot topic in paid search, and I’m thrilled about that because it forces marketers to think more critically about shopper psychology. This one may seem obvious, but is a common mistake advertisers make. If your shoppers see an ad highlighting a promotion or promo code, and then they do not see the same promotion or code when they land on your site, don’t be surprised if they immediately leave your site in frustration.
This is especially true for remarketing and display image ads, where advertisers are more likely to forget to tie ad copy to their landing pages. If you highlight a promotion in an ad, be sure that your shopper will see that promotion on your landing page, and preferably on your main site, until the promotion ends.
With the holiday season around the corner, it’s time to think about the promotions you will be offering and how you’ll advertise them. Use this post as a starting guide for common pitfalls to avoid, but also think critically about your shoppers and their mindset as they shop. Remember that it’s not as simple as “any promo is better than no promo,” and your customers’ psychology plays as big a role as the economics of your offer.