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10 Performance Marketing Trends to Watch in Retail in the 2020s

The performance marketing trends rippling through retail in the 2020s have a major phenomena in common: a focus on the customer experience. There is no such thing as a predefined customer journey anymore. Instead the “journey” is a collection of real-time engagements that are tailored to a shopper’s needs.

Here’s a closer look at 10 trends that should remain top of mind for performance marketers in retail in the 2020s.

1. The playing field is leveling, creating an imperative to revisit successful channels while also looking to alternatives.

Channels like search and social are part of nearly all retail marketing mixes. The challenge today is that some of the most popular ad platforms within these channels are becoming saturated. The biggest examples are Google and Facebook, which collectively own about 60% of the U.S. digital ad market

Does that mean these platforms and channels will be any less important in the 2020s? Not at all. They’re as critical as ever and will remain cornerstones in retail marketing strategy for some time to come. What this competition does mean is that marketers must A) revisit their approaches on saturated platforms to identify emerging white space, and B) diversify their mix to extend into platforms where their specific audience lives.

Platforms like Amazon and Pinterest have tremendous headroom for growth in the 2020s. So do nascent channels, like voice and wearables. That said, remember that good channels grow quickly. Even if you see huge boosts at first, it will only be a matter of time before competitors enter the space.

This dynamic constantly puts marketers in a position of driving incremental improvements more so than massive growth, whether through platforms that are already part of their mix or new ones. It’s a shift in mindset that will characterize successful performance marketing in the 2020s. 

2. Marketers are breaking out of the individual channel mindset and thinking more holistically about their mix.

Channels that we take for granted today were just coming into their own in the 2010s. Mobile. Video. Search engines with greater sophistication. Social media. While the 2010s were about the emergence of new channels, the 2020s will be about the integration of these channels, as marketers strive for a more cohesive customer experience.

Marketers are accustomed to equating Google with search activity, Facebook with audience interests, and Amazon with purchase behavior. But today, different mediums must complement and reinforce one another, not exist in silos. Marketers should look to their shoppers’ behavior, business goals, and other similar inputs to guide their decision making around the role that each platform should play in their overall efforts.

While the 2010s were about the emergence of new channels, the 2020s will be about the integration of these channels.

That can mean generating top-of-funnel customers through a mix of Facebook dynamic ads for broad audiences, Pinterest Shopping Ads, paid search campaigns that target non-brand keywords, and Showcase Shopping ads.

Or powering the middle of the funnel with Amazon Sponsored Brands that focus on competitive terms, Facebook retargeting, and branded keyword campaigns on search. Or securing bottom-of-funnel buyers with Amazon Sponsored Products and Google Shopping campaigns optimized for trademark traffic.

There are more ways to leverage key digital marketing channels than ever before, creating a breeding ground for inventive approaches of engaging with shoppers across the funnel and driving performance growth.

3. The lines between direct response and branding are blurring.

While most retailers have traditionally run direct response and branding separately, the lines between these initiatives are now blurring. As a result, the very purpose of various channels is becoming multifaceted.

Take text ads. It’s becoming increasingly effective to create campaigns that support branding goals (such as by targeting generic, top-of-funnel terms), and other campaigns that drive sales (such as by targeting trademark and other low funnel terms).

What’s more, ad platform developments are also contributing to the blurring of lines between direct response and branding. Case in point is Google’s introduction of Discovery Ads and Gallery Ads, which we covered in depth in a previous post.

Those formats increase Google Ads’ versatility as a branding tool, and a place where the customer experience can begin. As a result, marketers will need to have facility with this variability, and embrace even greater collaboration across performance marketing and branding departments.

4. Social media is driving multiple stages of the buying cycle—not just discovery.

Another major example of those blurred lines is social media. Platforms from Facebook to Instagram, YouTube, Pinterest, Snapchat, and TikTok continue to create and iterate ad offerings. For instance, while Facebook ads for broad audiences are oriented toward branding goals, retargeting ads on the very same platform align with direct response.

The expansion of social advertising comes at a good time, when marketers need new ways to drive growth and differentiate from competitors. At the same time, the expansion of social as a performance marketing channel creates more complexity for planning and decision making.

Some of the most critical questions marketers will ask themselves in the 2020s are: How are social media platforms and their ad offerings changing? Which platforms align to my customer profile and shopper habits? It will be increasingly important to be able to answer these questions, and furthermore, continually adapt marketing plans to shifts in the paid social landscape.

5. Expect increased differentiation and specialization among marketplaces and their ad offerings.

Another performance marketing trend to watch: marketplaces. They continue to solidify their place in the customer experience. They attract shoppers through several shared benefits, including vast product selection, convenience, and low prices. (Listen to our podcast with Internet Retailer Research Director Fareeha Ali for more on marketplace growth.)

But as the marketplace sector expands, platforms will have to increasingly differentiate their value propositions to survive. We’re seeing this trend take hold as Walmart develops its online marketplace to compete with Amazon. For instance, unlike Amazon, Walmart does not require an account subscription fee.

When it comes to marketplaces, the priority today is to establish a clear strategy for the platforms that mesh well with your customer profile and business goals.

From a marketing perspective, the launch of the Walmart Advertising Partners Program in January was major news for brands, who can now directly buy on-site search and sponsored product ads on Walmart.com. Although Walmart’s ad platform fundamentally operates similarly to Amazon’s in these early days, Walmart will certainly roll out new features over time—just as Amazon will. Maintaining a close watch on these developments will be key for brands as they determine which products make most sense to sell and advertise on what marketplace.

It’s also important to note that marketplaces like Amazon and Walmart have vaulted to popularity because they’re horizontally focused—they sell products across myriad categories. Other marketplaces are gaining audience because they’re vertically focused—for instance, Houzz for home goods, Etsy for handmade and vintage items, Poshmark for clothing and shoes, and StockX for sneakers.

Marketplaces like these key into unique customer needs to succeed in a saturated retail environment. Again—the 2020s are all about a differentiated customer experience. When it comes to marketplaces, the priority today is to establish a clear strategy for the platforms that mesh well with your customer profile and business goals.

6. Understand generational shopping habits—but dig deeper to achieve granular audience targeting.

How many times have you read how millennials crave experiences, lack brand loyalty, and prefer online shopping to in-store shopping? Or how Generation Z centers their brand engagement on social media and is more likely to visit a store than their older counterparts?

While trends like these are important to understand, it’s also key to realize a couple caveats with generational data. For one, these findings tend to be sweeping statements that may or may not accurately reflect your unique audience. And, generational cutoff points are not an exact science. Ask three different researchers what the birth years are for millennials, and you’ll get three different answers.

That’s why generational shopping differences should be a starting point from which to dig deeper into your unique customer profile. Leverage generational differences as an input among many to achieve more granular audience targeting in the 2020s. Other critical factors include demographics, psychographics, search behavior, and interests.

7. Behind every great marketing campaign lies an even greater marketing technology platform and team that drives it.

Performance marketing success is as much about strategy as it is technology. Collaboration at multiple levels—teams, processes, and technologies—is critical for driving results and unifying your customer experience.

That’s why it’s more important than ever to understand how automation fits in your marketing plan. Understand where automated technology excels, where humans excel, and where the two factors complement each other to drive performance that otherwise could not have been achieved through one mechanism alone. While technology can be immensely helpful, and required, for collecting and analyzing growing volumes of data, people guide the successful application of that tech against your goals.

If you’re not hitting your marketing goals in Google, Amazon, Facebook, or any other area—is it due to your approach to technology, your strategy, or both? A human-led assessment is critical to understand opportunities you’re missing in both your current and yet untapped channels.

8. Marketers increasingly recognize that automation must be continuously tailored to their business.

As we enter the 2020s, automation is standard in PPC. But automation can look very different from one tool to the next. While some forms of automation are rooted in a set-it-and-forget-it model, other forms of automation are built from the start to complement human expertise and resources.

We’re increasingly seeing marketers understand the advantages of the latter. One of the biggest reasons driving this preference is that every retail business has different product catalogs, goals, audiences, competitive landscapes—the variables are extensive and constantly shifting. Out-of-the-box automation can’t address all these nuances, in the moment they matter, and keep a retailer competitive in a rapidly changing online environment.

There’s no such thing as automation in a vacuum in the 2020s.

We’ve even seen some of Google’s tools evolve from fully automated, to automated with manual overrides. Target ROAS is a prime example. While those added features (like seasonality adjustments) can introduce some control, think about all the other, myriad factors that guide your strategic decision making around campaign management.

There’s no such thing as automation in a vacuum in the 2020s—and we’re not the only ones seeing this trend in the market. Automation requires control, transparency, and a people-driven strategy that is continuously tailored to a retailer’s business and customer experience goals.

9. The well-rounded performance marketing practitioner emerges.

All these performance marketing trends circle back to skill set. There remains a need for specialists who can raise the bar for a given channel. At the same time, there is also a growing need for practitioners who can collectively discuss the finer points of paid search, paid social, display, and marketplaces, because unifying the customer experience is everything in marketing today.

The well-rounded performance marketing practitioner will increasingly emerge, bringing a new, total package to the table. Years steeped in search, social, marketplaces, email, display, and other areas form the backbone to a macro understanding of integrated channel strategy.

What’s more, these professionals will be versed in understanding which aspects of their discipline should be human led versus which aspects should be bolstered and improved by AI, machine learning, and automation. Such a repertoire will be increasingly commonplace in the 2020s, and will empower the next generation of marketers.

10. Continued retail industry revolution is certain.

The impact of e-commerce and Amazon on the retail industry is a story of mixed implications. On one hand, we’re facing the “retail apocalypse”—characterized by over 9,300 store closings in the U.S. in 2019.

But with store closings come store openings—about 4,000 in 2019. So, too, come new jobs, and a “halo effect” on the online sector. A new store opening drives up a brand’s web traffic by 37% on average, according to the International Council of Shopping Centers.

We also can’t ignore how industry-wide disruption has contributed to reinvention of the customer experience. Loyalty programs (Ulta’s Ultamate Rewards, which account for 95% of the retailer’s sales), immersive in-store experiences (IKEA’s sleepover event), and retailtainment (American Girl’s flagship store in New York) are just a few of the ways retailers are renewing their focus on the customer experience—and driving growth for their businesses.

Revolutionizing the customer experience also permeates the marketing department. The connected consumer is motivated to use new technologies, apps, and AI to have a more personalized buying experience. At the same time, these consumers want brands to use their data responsibly and intelligently. That approach is what creates trust and loyalty in the 2020s.

The challenge that retail marketers must remember is that building trust and loyalty takes time. As consumers become increasingly informed, retailers must respond by listening to their customers and proactively addressing their needs.

At the end of the day, adaptation is more critical than ever in the 2020s. Factors like the search algorithms, ad offerings, ad costs, competitive set, and countless others are constantly in flux. When major variables change, so do marketing plans. The future belongs to agile marketers who uphold their ideal customer experience.

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