E-commerce growth inverts the 60:40 rule

Multinational brand-owners are increasingly focused on e-commerce and are shifting their media spend away from brand towards performance.

That’s the conclusion of new research* from the World Federation of Advertisers and global marketing and ad agency network dentsu international.

Why it matters

The rapid growth in e-commerce (59% of WFA members claimed double-digit growth in e-commerce share of sales compared to 2019) is challenging many aspects of corporate behaviour and structure. One of those is that organisations attaching the highest importance to e-commerce are ditching the 60:40 ratio of brand to performance spending recommended in studies by marketing effectiveness experts Binet and Field.

Takeaways 

• Seventy-one percent of major multinationals say e-commerce is either ‘critical’ (51%) or ‘very important’ (20%) now, but the figure rises to 93% over the next two years.
• Brands that are most exposed to e-commerce are spending 59% of their media budgets on driving short-term sales. 
• Brands that regard e-commerce as important (or growing in importance) allocate just 37% on driving immediate sales. 
• Another consequence of growing e-commerce activity is the nature of KPIs used here, which are moving from activity and volume to commercial contribution.
• There are also structural challenges to be addressed as e-commerce is often managed in siloed teams. 
• Delivering integrated media planning that meets the needs of both short and long-term planning is one of the barriers to success (42%). 

*Developing a Successful Strategy for Global eCommerce and Marketing is based on responses from 41 major multinationals, across 13 sectors, with 46% in media roles and 48% in sales/e-commerce roles. Total combined global ad spending of respondent companies represents in excess of $50 billion.

Sourced from WFA [Image: Getty images]