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Why Are Brands Advertising in California Losing Their Minds?

Facebook doesn't balk at the boycott, how SMB's are responding, and some great new targeting options coming to your social ads.

Rob Bettis

Jul 5, 2020 • 11 min read

Thanks for subscribing to The Cache - a weekly summary of the most important stories, trends, & commentary in eCommerce marketing, curated by Rob Bettis.

To those in the states, I hope you are having a wonderful & safe July 4th weekend.

There is a lot to cover this week, so let’s dive in!

🔎 Search

Bringing free retail listings to Google Search

Free listings in Google Search results makes your offers more accessible to the hundreds of millions of people who shop on Google each day, connecting you to more customers in more places—whether they’re across the country or across the street. Initially, free listings on Google Search will appear in a product knowledge panel that shows buying options for a particular item, like this tea kettle:
Today, the buying options in this panel are all sponsored links. Starting this summer, these listings will be free. We’re rolling this out in the U.S., first on mobile, followed later by desktop. Learn more about listing your products for free across Google surfaces in our help center.

Finally, Shopping ads continue to be a great tool for merchants to engage with consumers and will appear separately at the top of the page, clearly marked like Google’s other ad units. Merchants can choose how to show up and shoppers can choose where to click.

My pal, Brady Callahan, said it well:

Today, Pinterest has published a new report which shows that Christmas-related searches are seeing a major increase, months out from the event, as people look forward to what they hope will be a major post COVID-19 celebration.
As per Pinterest:

“In the face of COVID-19 and stay-at-home orders, people are looking forward to looking forward. 2020 has been a hard year, and consumers are craving the comfort of the holidays. They want this season to feel more festive than ever before, and they’re asking for brands to help them get there.”

As you can see in this screenshot, posted by Michael Vittori (and shared by social media expert Matt Navarra), now, in your Custom Audience options through Facebook Ads Manager, there’s a new option to create a listing based on ‘Shopping’.

Click through on that and you’ll have three new options to build custom lists for ad retargeting:

The available options are:

People who viewed products People who added any products to their basket People who purchased any products

Facebook CCPA compliance challenges: Limited Data Use

This week, Facebook announced a new feature called Limited Data Use (LDU). As of July 1, LDU has been automatically enabled for all Facebook business accounts, limiting the way user data can be stored and processed in the Facebook ecosystem for all users Facebook identifies as residents of the state of California. The feature automatically detects if a user resides in California, and applies limited data use rules (more on those later). But that feature will only stay on until July 31—then Facebook requires businesses to update their pixel to include an LDU parameter.

This post is a must-read for anyone advertising in the state of California. Until there is further clarity, many advertisers are simply dropping California from their targeting:

The hard truth about the Facebook ad boycott: Nothing matters but Zuckerberg - CNN

Despite some similarities, Facebook is less susceptible to outside pressure than most businesses, experts say. It’s led by a CEO, Mark Zuckerberg, who exercises complete voting control over the company and can’t be removed by shareholders. And that could vastly complicate the campaign to hit Facebook where it hurts.

“Disney couldn’t do this, and Apple couldn’t do this. They’re run by committee,” Martin said. “If it was a company run by committee, they would have to react, because the committee — the board of directors — would be threatening to fire the CEO to protect revenue. That doesn’t have to happen here.”

Indeed, Facebook appeared to strike a defiant tone earlier in the week. “We do not make policy changes tied to revenue pressure,” Carolyn Everson, Facebook Vice President of Global Business Group, wrote in an email to advertisers this week obtained by CNN. “We set our policies based on principles rather than business interests.”

Whether the boycott will even have a measurable impact on Facebook’s bottom line still remains very hazy. That’s partly due to the number of participating brands, the timing of the campaign, and ambient factors such as the pandemic that may make it challenging to link any potential dip in Facebook revenue directly to the boycott. Additionally, there are few alternatives in reaching audiences the size Facebook can offer, along with a nearly unmatched data trove for ad targeting. The earliest any impact could become apparent will be when the company reports its third quarter earnings results this fall.

Of the companies that have joined the boycott so far, only three — Unilever, Verizon and the outdoor equipment retailer REI — rank among the top 100 advertisers on Facebook, according to data compiled by Pathmatics, a marketing intelligence firm. In 2019, Unilever ranked 30th, spending an estimated $42.4 million on Facebook ads. Verizon and REI were 88th and 90th, respectively, spending an estimated $23 million each.

The highest-spending 100 brands accounted for $4.2 billion in Facebook advertising last year, according to Pathmatics data, or about 6% of the platform’s ad revenue. Topping the list were Home Depot (HD), Walmart (WMT), Microsoft (MSFT), AT&T (T) (which owns WarnerMedia, CNN’s parent company) and Disney (DIS).

Much of the rest of Facebook’s ad revenue comes from small and medium-sized businesses, ad executives say. It would likely take tens of thousands of them, acting over a significant period of time, to put a big dent in Facebook’s bottom line.

As Facebook boycott calls increase, DTC brands get stuck in the middle | Modern Retail

“Politically, most of these brands agree with the notion to stop spending on Facebook,” said DTC marketing strategist and investor Nik Sharma. “At the same time,” he went on, “these brands are just as reliant on Facebook to ensure they are hitting things like revenue goals.” He estimated that 60%-80% of most marketing budgets for digitally native brands is on the Facebook platform.

In Sharma’s estimation, brands stuck in the middle are the ones that especially need the social media platform for growth. “Any of the brands that are doing eight figures of revenue are probably pretty reliant on Facebook,” he said. They have investors, board members and fiduciary duties that require them to essentially grow at all costs.

Mike Duda, managing partner at Bullish, agreed that many brands likely won’t be able to commit to such a boycott. “I don’t think there’s going to be a lot of DTC pull out,” he said, “not when so many DTCs did so well [on Facebook].”

That’s especially true now; major advertisers pulled back digital advertising budgets when the coronavirus first hit, which customer acquisition costs to go down dramatically. One report said they went as much as 50%, in fact.

For smaller players, it’s about understanding whether a few company’s moves will actually have an impact on the advertising ecosystem. “You would need a pretty dramatic number of brands to completely pull out,” said Sandro Roco, founder of the beverage company Sanzo. “I don’t think it’s going to move the needle if it’s just a few brands.” Smaller DTC brands pulling out wouldn’t have much of an impact beyond hurting themselves.

At the same time, now could be the time to begin making inroads to diversify away. Duda, for example, has considered holding office hours for brands to talk about how to diversify marketing approaches.

Meanwhile, other channels are still small but may be seeing opportunities to strike. Sharma pointed to Snap, as well as other media like billboards and podcasts, as areas brands may turn to if they want to at least try to rely less on Facebook. “If I’m Pinterest, I’m probably doing backflips right now,” said Duda.

This perfectly describes many of the brands I serve.

Is keyword targeting coming to Facebook?

📈 Reporting & Revenue

WSJ: GoogleBot can add products to shopping carts

A Google crawler has been adding products to e-commerce site shopping carts, the Wall Street Journal reported Wednesday. Sellers have been complaining about a serial cart abandoner named, John Smith. Turns out John is a Google bot. A Google spokesperson told the Wall Street Journal that it built systems to ensure the pricing seen on the product pages is reflected when a user adds a product to the cart.

Google told Search Engine Land in a statement, “We use automated systems to ensure consumers are getting accurate pricing information from our merchants.”

Sellers that upload their product feeds to Google Merchant Center may not realize it, but they agree to having Google’s bots crawl their sites for price verifications when they agree to the Terms of Service. The bot is designed to ensure the price in the feed matches the price on the product page and when the product is added to the cart.

The automated system will disapprove items that don’t pass pricing verifications.

I wish Google Analytics was smart enough to filter out this automated system, so it wouldn’t skew abandoned cart metrics.

Ecommerce Software Statistics and Trends | TrustRadius Blog

On TrustRadius, eCommerce products for both small and large businesses have seen significant growth over the past month. Shopify leads the pack, closely followed by SAP Commerce Cloud (formerly SAP Hybris) and Salesforce Commerce Cloud.

Interestingly, some of these products are content management systems, rather than dedicated ecommerce platforms. For example, Kentico, Wix, and Squarespace are all website building platforms that are frequently used to create online stores. But they are also commonly used to set up other types of websites and blogs.

These types of tools tend to be preferred by SMBs due to their user-friendliness and low cost. However, a tradeoff of using lightweight website builders is decreased eCommerce-specific functionality. Especially for enterprise-level organizations that need the ability to deeply customize their online store, larger eCommerce platforms may be a better option.

Note the dominance of SMB in eCommerce software and Facebook advertising (from a prior story). Today’s eCommerce battles are no longer fought in the trenches but in the niches.

🛍 Marketplace

The Future of Commerce Belongs to the Frictionless | WIRED

Ask any CEO today about frictionlessness, and they’ll rattle off one or two spots where they are focused on eradicating friction: Making the web shopping experience easier, facilitating data collection from consumers, allowing employees to work from home, or using digital connectivity to help squeeze the friction out of entire systems, such as distance learning or supply chains.

Our argument goes a step further: Striving for a frictionless experience for your customers, employees, suppliers, or other stakeholders isn’t just something that the digital era has enabled you to do. At this point, it’s a requirement. If you aren’t reducing friction in every part of your business, you will soon be done.

The reason is simple: When you remove friction from a process or a system, you give the people in that system back one of the only things that is utterly nonrenewable, time. And as more and more time has been ironed out of almost everything we do—the most recent example being the elimination of commuting for much of the planet—people have realized that for far too long they’ve let someone else choose how they are going to spend their time. Those days are gone. Everyone values their own time more than they used to, and if you think you’ll be able to get away with taking more of it than you have been allocated—by leaving too much friction in place—you are gravely mistaken.

At the beginning of 2020, a business that offered you a real person in real time to help you with your needs would be considered a luxury and somewhat exempt from the forces of frictionlessness. Nobody was complaining about having an attentive waiter in a restaurant or having a hotel concierge who can tell you about the best restaurants nearby. Those days, a few months ago, were the old days. In the Covid-19 era, personal touch has become taboo. The forces of frictionlessness are now making their way into places we used to want or even demand humans.

Your business can’t beat Amazon—but there’s still a way to coexist

A binary split has emerged in online retail that makes the future look more straightforward than it has in years: Amazon owns anything basic, so if you want to own anything, it can’t be basic. It doesn’t matter what you make, whether it’s fashion, furniture, homewares, electronics, shoes, or camping gear. If people are inclined to Google a product and do price comparisons, Amazon is almost always going to offer the lowest price. And unless you have some serious value-add to offer, Amazon will eventually come for you.

Online Resale Appears to Be Pandemic-Proof

While the broader retail segment is projected to shrink by 23% this year, due in part to Covid-19, online secondhand is expected to grow by 27%, according to the 2020 Resale Report. Looking further out, it projects that over the next five years, online resale will grow 414%, while overall retail will shrink by 4%.

The most obvious answer to why shoppers are directing their web browsers and money towards pre-owned goods right now is value. Plus, with people stuck at home, browsing e-commerce sites is a way to pass the time.

Thredup found that May 2020 was a record-breaking month for new Thredup visits and that overall shoppers spent 2.2 million hours on the site — a 31% increase over pre-Covid numbers. At the same time, the company is facing unprecedented inventory levels thanks to what the report calls a “quarantine clean-out frenzy.” As a result, it’s taking it longer to process consignments (a couple months versus a couple of weeks).

Usage of voice has plateaued – for now

Now survey data from Perficient Digital suggests voice may have hit a plateau of sorts. This is the fourth year the agency has asked over 1,000 U.S. adults about their use of voice, voice search and virtual assistants. Last year, the survey found voice was second only to the mobile browser as the “first choice” entry point for mobile search (with all answers combined, it ranked fourth).
The current survey didn’t replicate this “first choice” segmentation. And overall, voice search remained in fourth position. The question was: “how are you most likely to ask questions on your smart phone?” Manually entering text into a search app, browser or search bar on the phone all captured more total votes. Usage thus appears to be flat.

📦 Distribution

CPG companies can’t afford to miss out on the DTC wave

The direct benefit of investing in a DTC strategy is clear: the creation of additional revenue streams. However, it is also critical to acknowledge the indirect value that DTC can provide CPG companies. These indirect benefits can deliver value 1.4x-1.7x the direct revenue stream and therefore are critical when evaluating which investments should take priority, resulting in fewer missed opportunities for the business. Here are a few key value drivers you should consider…

🔒 Security

Fortinet Discovers WordPress WPForms Lite Plugin Cross-Site Scripting Vulnerability | FortiGuard

Fortinet’s FortiGuard Labs has discovered a cross-site scripting (XSS) vulnerability in WordPress WP Forms Lite plugin.

For the WooCommerce crowd…if your site utilizes WP Forms Lite, you have some updating to do.

🛠 Tips & Tools

Google Display Ads – Figma

Now you can use Figma to to create beautiful, designer-quality display ads for your Google Display Network campaigns

👋 Holla!

Questions, comments, inquiries? I’d love to hear from you! Email newsletter@robbettis.com.

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