How to set up your e-commerce advertising strategy

E-commerce companies are everywhere, which is no surprise given the internet's endless selling opportunities. There are currently over 2 billion global digital buyers, and estimates suggest that, by 2040, 95% of purchases will be made online.

With new e-commerce businesses popping up daily, the message to owners remains — "grow or die." Competition is stiffer than ever, and rising acquisition costs can make the e-commerce business model tough. However, those who implement a winning online advertising strategy and harness their data will experience transformational growth.

Advertising can boost brand awareness, drive sales, and build a loyal customer base. However, creating the perfect advertising recipe requires planning and access to the right tools. Here are some things to consider.

Advertising for e-commerce in 6 steps

E-commerce advertising can be overwhelming at first. 

Should you run display ads or search ads? What channels do you choose? And how do you monitor the success of your ads?

While there is plenty to consider, breaking your advertising strategy into smaller steps can help you achieve better results. 

Whether your goal is to attract more customers or improve your retention rate, these six steps will allow you to target customers wherever they are in the buyer journey while optimizing your most precious resources. 

Step 1: Pre-strategy considerations

Unfortunately, building an accessible, well-designed website doesn't guarantee that consumers will flock to it — even if you have the best product since sliced bread. 

Building a winning e-commerce store and site is just the beginning. To thrive and grow as a brand, you need to promote it. But before you launch your first campaign, you'll want to make a game plan.

The more knowledge you have about your target audience, the better. This process begins with market research and segmentation. As you build audiences, you'll focus on criteria like purchase history or demographics. This process is imperative when aiming to create tailored, personalized messaging.

Related: Mastering E-commerce Personalization for Brand Success

To succeed, ensure you understand the market and size of distinct audiences. For example, if you sell watches, uncover how many smartwatch buyers are luxury shoppers and how many are deal hunters. If a large portion of your audience wants affordable options without sacrificing quality, use this information to develop language that will encourage higher conversion rates. Many smart pricing tactics leverage sales psychology. 

If you have a $225 watch that no one buys, position it next to a higher-priced model. Williams-Sonoma used this strategy to sell more breadmakers. The company's catalog showcased a $275 breadmaker, but sales were slow. The company introduced a similar breadmaker for $429 and positioned it next to the $275 option. Potential buyers sensed they were getting a bargain, and sales of the $275 model nearly doubled. 

Another example is segmenting your audience based on geographic data. If you sell clothing, you may want to investigate how many potential customers live near the coast when preparing for your new beachwear and bathing suit launch. You could then pre-plan a social media campaign that attracts 20- to 45-year-old women who live in California, adjusting it based on your product line and target audience. 

Step 2: Develop your e-commerce advertising strategy

You'll want to take the following actions once you conduct market research and segment accordingly. 

Identify your target audience

Based on your market research, you should clearly understand your potential customers. Next, you'll want to identify the specific groups within this broader audience that your brand will target. 

Especially in the early stages, you can focus on one or two distinct segments of this audience. These segments should be the groups you believe are most likely to be interested in and benefit from your brand or a particular product or service.

Subaru is a prime example of a brand that understands its different market segments within its target market. Subaru's entire market connects with its brand. However, when creating ads, the company focuses on specific segments of its target market, ranging from adventurous hikers and kayakers to high-end consumers. One of the brand's most revolutionary campaigns was launched in 2016, targeting gay and lesbian consumers — based directly on market research. The brand nailed it, and since then, Subaru has invested heavily in automotive LGBT advertising. This community has become one of their core market segments. 

Position your brand

Next, you must craft a compelling brand message to stand out in a crowded market. 

Start developing a brand personality based on the types of customers you're trying to attract and maintain consistency. 

For example, if you're targeting new moms, you may want to focus on the humanizing effects of motherhood. As Meryl Streep put it, "Everything gets reduced to the essentials" when someone becomes a mom. It's a unique experience that's both beautiful and challenging. Your brand may want to show you understand the struggles of this new role, empowering and supporting them. Being that guiding light for these new parents could be very impactful in helping you develop authentic brand-customer relationships.

 Huggies is a great example of a brand doing just that. 

Huggies understands its audience, especially when considering successful advertising strategies like its "No Baby Unhugged" campaign. Huggies focuses on connecting with new parents and targeting various segments, including those with premature babies. 

Here is one of many examples from this ongoing, award-winning campaign. You can watch the full video here.

Step 3: Choose the right paid advertising channels

Now that you understand the market well and who your brand wants to go after, you can explore various marketing channels. You'll want to match channels with your audience and brand positioning. 

Let's say your e-commerce business sells office desks. Based on your target audience and brand positioning, you could advertise on Reddit and X to target tech bros. Alternatively, create ads for Pinterest and Instagram that target interior design lovers, who are often active on these platforms and gravitate toward visual content. As you can see, the audience you focus on will heavily influence which social media platforms and websites you should run e-commerce ads on.

You can experiment by trying out Google Ads, Instagram, YouTube, or any other channel that makes sense for your brand. However, you should keep an eye on key metrics to isolate the channels working for your e-commerce brand so you can redirect your attention and resources if needed.

While this list is not exhaustive, it's a great starting point: "Performance Marketing Channels to Try in 2024."

When choosing the right channels, you'll need to set your budget. Knowing your budget before you begin can help you stay on track, ensuring an optimal return on investment (ROI). 

Step 4: Crafting effective ad creatives

Creating effective ad creatives involves many moving parts, from engaging visuals and messaging to measurable calls to action (CTAs).

Here are best practices for creating ad copy and visuals that resonate with your target audience and align with your brand identity:

• Clear messaging is imperative to engagement and conversion rates. Strong messaging is often simple and focuses on the offer's unique value proposition. The CTA should be compelling and provide clear direction on what the reader or viewer should do next. For example, if you create a landing page for your latest activewear collection, you could develop a compelling story by showcasing real-life customers wearing your new line instead of professional models. Add a clear CTA button following engaging visuals to buy or learn more.
• Leverage the power of emotions, focusing on storytelling, social proof, color psychology, and other e-commerce marketing tactics. An example of a brand that crushed this tactic is tentree®. The clothing line created one of the most-liked Instagram posts in history. It was simple yet incredibly powerful, focusing on the impact of deforestation — a topic that evokes emotion and encourages sharability.
• Consistency is crucial, especially when advertising across several platforms and channels. Create guidelines to ensure the tone, creative elements, and other ad components reinforce your brand identity. When looking at brands online, like Nike, the company consistently uses its iconic swoosh, dynamic imaging, and standardized color themes to help consumers connect to the brand immediately. 
• Adapt creatives based on the platform with a full understanding of user expectations. For example, an ad that works well on LinkedIn may not resonate with your Instagram audience. Fishwife is a prime example of a hip brand that uses vibrant imagery and simple messaging to transform a kitchen cupboard staple. They focus on Instagram ads, as Fishwife's content is highly visual.

Step 5: Track campaign performance 

To optimize resources and make data-informed decisions, you must track your ad spending and metrics for continuous improvement. Performance monitoring allows you to make smart adjustments. So, set clear goals, define key performance indicators, and monitor spending. Invest in a data hub that simplifies this process, monitoring the metrics that matter most to your business or campaign. 

Leverage the data available to alter a current campaign or to optimize your ongoing strategy, paying attention to impressions, clicks, conversions, etc. You should also conduct audits to understand the financial health of your e-commerce business, focusing on operating profit margins, return on assets (ROA), net profit margins, etc. 

Dive deeper with this guide: Why ad spend tracking is a must for every digital marketer.

Step 6: Optimize and keep on testing

To get the most out of every campaign, invest in A/B testing and ongoing optimization to refine and improve performance. For example, as an e-commerce brand, you could design two different versions of a landing page for your next social campaign and then track which design performs better based on pre-determined metrics.

Other options include two CTAs, each with different wording, or the design of your online store (for example, products displayed in a list view vs. a mosaic view.

Stay on top of your data to measure marketing effectiveness using analysis methods like marketing mix modeling (MMM). This approach will help you better predict the impact of your advertising efforts on e-commerce sales. 

Future trends in e-commerce advertising

To stay ahead of the competition, you must be aware of emerging e-commerce trends and evolving technology. 

For example:

• In the coming years, you will likely see the growing use of generative artificial intelligence (AI) to create targeted ads while boosting scalability. E-commerce platforms are among AI's leading adopters, using machine learning to leverage personalized recommendations, sales forecasting, and pricing optimization. Brands ranging from Disney to Wendy's are already testing dynamic pricing strategies. To remain competitive, you must be willing to experiment with AI-powered solutions — or at least be aware of their applications. 
• Leverage one-touch, frictionless payments through platforms like Instagram and TikTok. If you have an Instagram business account, you can use the Instagram Checkout feature to process purchases in two to three taps. TikTok also allows users to buy products directly from a brand's profile or ad. 
• Amazon is a major player in e-commerce, which you can use to your advantage. Leverage strategies that optimize branded mini-shops or develop an affiliate sales program. Millions of consumers interact with the platform daily, which can significantly boost awareness of your brand. Let Amazon-related data guide your ongoing strategy. 

Set your e-commerce brand up for success

Setting up a successful e-commerce advertising strategy requires you to dive deeper into various strategies, from personalization and retargeting to social media ads and the use of search engines.

To stay relevant to your target audience and achieve growth, you must have a mindset of continuous learning and adaptation. Data-driven insights will help you create ads that resonate with your intended audience while driving a higher ROI. Launch advertising campaigns, test, and pivot if needed. 

The future of e-commerce is bright, yielding countless opportunities for business owners across many industries. Future e-commerce leaders will make the most of the technology available to benefit from data-driven decision-making, ad personalization, and more. 

FAQ

What is the difference between marketing and advertising?

Marketing and advertising are terms that are sometimes used interchangeably. However, they differ. 

Marketing is an ongoing process that involves an overall strategy to promote your brand to your target audience. It includes all activities to build and maintain customer relationships and brand identity. Advertising, however, is a specific tactic within the marketing strategy. It focuses on promoting a particular product, service, or idea, typically through paid channels. 

For example, informational videos on YouTube may be part of marketing efforts to increase brand awareness. On the other hand, YouTube video ads promote specific offerings as part of a broad marketing strategy. Ads are essential for quick results, but they're just one part of a comprehensive marketing strategy and long-term business goals.

Some of the hottest forms of advertising for e-commerce brands include influencer marketing, video advertising, social media ads, and native advertising. While advertising is effective, organic marketing tactics, such as social media engagement and content creation, also play a vital role in achieving brand success.

What are some of the top e-commerce advertising strategies?

There is no one-size-fits-all strategy when it comes to e-commerce advertising. However, some of the top options include:

• Social media promos that boost awareness and draw attention to special deals. For example, a two-day-only Black Friday sale that increases hype surrounding your brand. 
• Search ads that leverage keyword research to drive higher customer acquisition rates. 
• Retargeting campaigns that follow up with site visitors, displaying related product ads. 
• Tailored omnichannel messaging based on customer lifecycle and behavioral data.

What are the best e-commerce advertising channels? 

The best channels for your brand depend on your strategy and audience. If your goal is to focus on influencer marketing, you may want to investigate Instagram or TikTok. 

Here are some tips:

• Understand your industry and business model — for example, if you're selling directly to consumers from your e-commerce site, social media and search engine campaigns are a great way to drive traffic, increase awareness, and generate sales. 
• Know where your target audience is and look for trends. 
• Conduct a competitor analysis to see what's working for them and what's not. Use that data to revise your omnichannel strategy. 
• Evaluate your budget to ensure your resources are spent wisely. If you have a minimal budget, search channels and retargeting can be effective options. As your budget grows, you can expand into more channels, focusing on variables like ROI.

Ready to set up your TikTok ads? Check out our 12 expert TikTok advertising tips first.

What KPIs matter most for e-commerce advertising campaigns?

When launching a multi-channel advertising strategy, you must focus on the various buying stages, like awareness, consideration, purchase, and repurchase. While these stages (and their order) can vary, depending on the funnel type, knowing what KPIs to measure and when is crucial to your success. For example, you'll want to keep an eye on click-through rates and impressions when launching a brand awareness campaign. In contrast, for a conversion campaign, focus on increasing your conversion rates while keeping down your cost per acquisition.

Set KPIs based on the channels you're using. For Instagram, you might track reach, clicks, and reel engagement. For Google Ads, you might track quality score, average cost-per-click, and return on ad spend.

Why should e-commerce marketers prioritize personalization efforts?

When developing a digital advertising strategy, it's not enough to segment your audience into groups — you must personalize each experience. Data shows that brands that do so generate 40% more revenue from those campaigns than average players. Personalization is something 71% of consumers expect, and 76% get frustrated when that doesn't happen. So, it's not optional if you want to stay competitive. 

Here is what consumers expect:

• Easy online navigation. 
• Relevant product or service recommendations. 
• Tailored messaging based on the consumer's needs.
• Milestones to be celebrated. 
• Post-purchase follow-ups. 
• Trigger-based communication based on behavior.

What does the future of digital advertising look like?

From data maturity to artificial intelligence (AI) in advertising, massive shifts are happening in the industry. Check out these performance marketing resources to discover what the future may bring and how to prepare for these changes.