E-commerce businesses are sailing in the ever-changing digital technology landscape. In 2023, where will the trends head? What are some of the keys for e-commerce businesses to keep in mind to grow their business?

Simon Hsieh, Head of Performance, Tech & Export at Google Taiwan, shared what he thought was the most crucial concept of e-commerce: “Platforms such as Google or Meta are not necessarily just a media, they are a kind of sales channel. Many would consider online advertising as an outdoor billboard, which you can put ads on it as long as you have budgets and designs. Actually, online advertising is more similar to a channel with great flexibility, where we can help brand clients find their customers, sell their products and grow their businesses! ”

Machine Learning Finds Best Selling Opportunities

But how does the platform enable such capabilities? “The credit goes to machine learning. Not simply a cool tech, it can be utilized to find selling opportunities!” In this era of mobile devices, one can say that the space for digital ads is boundless. As long as the clients have the right sales strategy, they will be given a great sales opportunity.

“The right sales strategy requires keeping track of several KPIs, such as selling price, ad spend, and the ROAS (return on ad spend),” Simon explained with figures. Assuming each product sells at NTD $300, and the client is willing to pay $100 for ad spend, then the ROAS would be 3. Once we identify the target number, Google’s machine learning algorithms will track down all the possible selling opportunities with the ROAS being 3 amongst the boundless online ads space. It is the power of machine learning.

Machine learning algorithms also allow ad customization according to different customer preferences. “A product might have many selling points. Some customers care about its look, some value its usability, and some are price-driven. In this regard, clients can prepare multiple sets of ad materials, such as two titles, five ad copies, and 10 video clips. The machine learning model will mix and match different ad combinations catering to various customer segments like the price-sensitive group or those value design aesthetics. What’s the purpose of such targeted advertising? We are all in for closing deals.” This form of advertising has its name–performance-based advertising.

Fueling Businesses: Unlimited Investment within Target

There are barriers to entry in the field of digital advertising. For brands, partnering with a great media agency can save efforts for better results! Savvy in working with media agencies, Simon found that many of them do not have the right mindset. Many agencies allocate ad budgets proportionally with uneducated guesses. For example, they might spend 50% of the budget on search, 35% on Youtube, and 15% on Display. However, such budget allocation does not necessarily help their clients drive sales.

“A good media agency will discuss with their clients, review previous sales performance, and understand their business goal. Then they will design an advertising strategy that factors in the sales data,” said Simon.

Simon continued, “five years ago, I started to talk about a concept of ‘unlimited investment within target‘ which many people did not understand at that time.” The “target” refer to the business goals, mostly ROAS or CPA(cost per acquisition). If an ad is making money for clients, then it makes sense to capitalize more budgets on the ad.

“Those who get the gist of this idea will come to me and ask, ‘how do I spend my money?’ If the money does not get spent, they are concerned because it means the business is not growing.”

“Agencies have to take in performance-based metrics. If you stick to brand awareness as the key metric, what the system would find are those people who see your ads, but not those who make the purchase. If the advertising strategy does not align with your business goals, you are wasting the budget. When your competitors are winning with the right metrics, your brand may fall behind in the game.”

Media Agencies as Business Partners

When brands are choosing an agency partner, Simon finds exploring the following questions a good start:

1) Does the agency familiar with GA(Google Analytics)?

2) Does the agency complement my brand? Can the agency produce performance-based materials?

3) Can the agency produce high-resolution video clips at a low cost?

4) Can the agency discover the selling points of my products, and create a synthetic performance with machine learning algorithms?

5) Can the agency identify underperforming materials and make optimization?

“Agencies are the business partners, and they help clients develop sales-driving ad strategies. A powerful agency can even tell its client which platform has the potential to capitalize on.”

Simon insisted that the data analytic capability is a must-have for agencies. Media agencies need to identify and optimize underperforming materials on time and help clients eliminate waste in their budget. Which video clip attracts customers? Which content goes viral? These insights are signals for future strategic planning. “The accumulated data can inform us of possible actions such as adjusting ad materials, tweaking the target audience, or changing the ad frequency.” With adjustments made correctly, the ROAS will improve accordingly.

In this interview, Simon also shared his observation on HH Galaxy. “Many media agencies focus themselves on media and prioritize media relations building. Unlike them, HH Galaxy provides its clients with fully-integrated services from sales and marketing to business operations. Assisting everything from product listing to data analytics, and from advertising to logistics, HH Galaxy has tremendous advantages in helping their client succeed. HH Galaxy is irreplaceable in the market.”

Digital Trends in 2023: Video Contents

When asked about digital advertising trends in 2023, Simon promptly replied, “driving conversions through video content is the future. Customers can make purchases while watching short videos or live streaming.”

Youtube Shopping will be launching in Taiwan soon. Simon’s team partnered with Mr. & Mrs. Gao, a famous youtube channel, for market testing. They displayed product links of fan merchandise when Lao Gao, the YouTuber, was doing live streaming. The audience could make purchases immediately with a few clicks, and the result was surprisingly good. “We believe Youtube Shopping is the key growth driver for cosmetics and apparel brands. In the future, it will benefit many other industries.”