It’s no secret that online shopping grew exponentially during lockdown. UNCTAD has released the latest figures, showing that ecommerce sales rose to $26.7tn by 2020. 30% of global gross domestic product (GDP).
According to the same report online shopping accounts for 23.3%, compared with 15.8% last year. The UK had the third-highest rate of growth among seven major economies. A further study conducted by Retail Economics for NatWest revealed that just 46 percent of UK consumers purchased at least one product online. previously only ever purchased in store.
Although not as well-known, the 195,000 UK-based logistic enterprises are equally important. employing more than 2.5 million key workersThis allowed it to happen. But, success was far from certain. In week one of the pandemic, logistics companies reported only four of 10 confidence levels. according to a survey of the industry by technology firm Touchstar. 76% of businesses experienced a general downturn by week two. By April 3 2020, 69.5% had closed or stopped operations in delivery and logistics.
The difference between success stories and others was the willingness and ability of the successful to adapt to the new reality. Palletised Shipping Services was one such success story. The company was founded in 2014 and offers fast, efficient, and cost-effective transport solutions both within the UK, and internationally, through its online booking platform.
With a strong, digital offering that is well-suited to the needs both of businesses and individuals there were two clear opportunities for the lockdown.
- Many companies had to find new suppliers in order to transport their goods after disruptions in supply chains in B2B marketplaces
- E-commerce transactions have seen a dramatic rise, and this is due to an efficient, accessible delivery service.
PSS had to ensure its customer acquisition strategy was as efficient as possible in order take advantage this rare opportunity and be the preferred provider of bulk goods shipping. The logistics company achieved this thanks to a partnership with MCG Digital Media, customer acquisition specialists.
Return on investment
Gez McGuire, MCG Digital Media founder, outlines exactly how he was able to take the business from a position of making a loss on initial transactions through to 4:1 return on digital adspend: “Historically, PSS has often made a loss when acquiring a new client from PPC advertising.
“The business’s low-cost model means that, like many firms within the logistics industry, after deducting adspend it realizes profit from the second or third transactions. It was crucial that PSS’s Google Ads ran as efficiently as possible to allow it to take full advantage these extraordinary circumstances and ensure that all businesses have access to fast and effective delivery.
“To achieve this we set to work analyzing more than five years of data to identify the devices and time segments that delivered the lowest cost per acquisition (CPA) and then segmenting it into:
- Primary converters – those with the lowest cost to acquisition
- Secondary converters – those with a higher CPA but still driving sales
“We then set to work to create a granular campaign structure using all of the elements that had worked historically and created a much more targeted, segmented campaign approach. This gave us complete control of our budget spend in terms:
- Time of day (morning/afternoon/evening/weekends)
- Conversions of historical data into primary or secondary formats
- Device (desktop/tablet/mobile)
“As a result, the campaign structure grew from three core campaigns to 18, each focused on either primary or secondary converting keywords, the optimal time and day and best-performing device.”
Having segmented the data, MCG Digital Media was able to draw on more than ten years of digital advertising experience to manually optimize campaigns, identifying trends and CPA parameters that were realistic and, more importantly, ‘sticky’. The customer acquisition consulting was then able use the latest AI bidding techniques in order to further improve their Return on Investment.
McGuire explains further: “Our unique method of initial manual bid management considers fluctuations in the data where we see higher-than-normal click-through rates and a cost per click that is at least 5% lower than the bid for that particular keyword. We identify these patterns and manually reduce keyword bids by small percentages using a unique method we developed back in 2006, before smart bidding existed. It allowed us to get the initial results that we needed.
“Over the initial three to six months, we constantly optimized and manually altered bids, budgets and campaign delivery to get a full understanding of the marketplace – not just the cost per acquisition, but also the immediate revenue generated by the PPC campaigns at each campaign level.”
He adds: “With time against us, our aim was to roll out the new customer acquisition campaign strategy as quickly and effectively as possible.
“The average cost per acquisition for the previous 12-month period was £16.28. We set a goal to reduce this by 10%. In fact, we more than tripled that target, with average CPAs down to just £10.35 within the first 60 days – a 36% reduction.
“By month three, we had achieved a 47.79% reduction, delivering a reduction in the cost per acquisition of 55.59% over a rolling 12 months up to March 2021. In fact, the cost of acquisition for the first two month of 2021 was remarkable at 77% lower than the first two of 2020.
“In the 12-month period up to March 2021 we also increased the PPC conversion rate from 6.14% to 17.07% across the board, achieving an increase of over 178% in conversion rates, and increased the PPC sales volume from 2,008 to 5,322 – a 165.04% increase.
“The campaign delivered £178,000 in immediate revenue directly from a PPC spend of £37,000, which is just under 5:1 in terms of turnover related to adspend. PSS’s average margin is 22.5%. This means that the company made an immediate profit from PPC campaigns. Our only limitations were the operational requirements of our business and the available adspend. However, we were able to deliver exceptional revenue returns with a modest 16% increase in the adspend.
“Additionally, we know that on average each new customer will complete at least three transactions per year. This means that by a conservative estimate PSS will have generated over £500,000 in revenue through PPC alone – a 14:1 return on investment.”