Written by : Rashmi Singh
The pandemic pushed people to use e-commerce sites for buying almost everything. At the start, e-commerce businesses saw unprecedented growth. But this growth also attracted new players in the market, resulting in aggressive competition and lesser profits. To sustain the growth, e-commerce businesses might have to turn to ad monetization.
For a long time, e-commerce businesses refrained from using selling their ad space to advertisers, assuming that it might hurt their business. But there might be more to the story of e-commerce ad monetization.
Historically, almost all e-commerce businesses passed upon the chance to use ad monetization as an extra revenue stream. The reasons behind this decision are the following assumptions:
Ad Monetization Benefits Big Players
A key concern of new e-commerce businesses is that ad placements benefit only big players that attract high traffic. So, it is not worth it for them to enter into a game they do not stand a chance to win in the first place.
This concern is true to some extent. Revenue generated from ad monetization depends heavily on the traffic that your e-commerce website or app gets. However, small businesses can compete with big players by optimising ad format, ad placement, and other factors that determine the final revenue.
It Leads to Bad User Experience
Many e-commerce brands doubt that using ad monetization might lead to a bad user experience, which ultimately results in a high bounce rate or even turning to their competitors.
But the truth is – the time of plain-looking digital ads is gone. Advertisers now spend a lot of money on creating ads that do not affect the user experience. On top of that, advertisers (e-commerce sites, in this case) can use ad solutions that can help them manage their shopping experience with optimized ads.
It Leads to Sales Cannibalization
What if a competitor advertises on your website with the same product and steals your sale? This problem is called sales cannibalization. Thankfully, just like user experience, this problem can also be solved with ads management solutions.
E-commerce sites can block competitor ads using certain parameters like banning product keywords or banning all ads from a particular advertiser. This way, your user will get ads that are relevant but not competing directly with your products
Ad Monetization Needs Prior Investment
Since ad monetization is mostly a new avenue for e-commerce brands, they know only a little about the digital infrastructure needed for ad monetization to work. Many brands assume that there is a major upfront spend is required to start ad monetization.
The truth, however, is that there are many ad solutions in the market that can enable e-commerce brands to start with ad monetization without any major investment of resources.
Launching and successfully running ad monetization on your e-commerce platform can be broken down into three steps:
Define the role ad monetization is going to play in your overall business model. Is it going to be a key revenue stream or just a small, extra one? Also, define the KPIs you are going to measure to ensure that you are getting the desired outcome.
Distribute resources to ad placement infrastructure and management according to your desired outcome. Make incremental investments if you are uncomfortable with investing in a new avenue.
As of now, there are no tried-and-tested methods when it comes to e-commerce ad monetization. So, use this opportunity to test and iterate and discover what types of ad placements and formats work the best for your e-commerce site or app.
That was all about monetizing traffic on e-commerce sites and apps through ad placements. If you are also interested in starting or already running a media business, Quintype might help you with monetization.
We have built a robust content monetization platform called Accesstype. It is an intelligent subscription management platform that helps media companies generate predictable revenue with memberships and metered access.