In 2020, the global e-commerce market boomed, albeit for unfortunate reasons. US-based merchants experienced 44% YoY growth, while e-commerce sales in the APAC region shot even higher to represent 42.3% of retail sales worldwide.
The newly found affinity for online shopping also prompted many consumers to venture outside of their domestic markets. With travel remaining disrupted and online ordering being simpler than ever, it makes sense why cross-border e-commerce is entering a peak growth-stage.
.png)
Between 2021-2027, the global cross-border e-commerce market is projected to grow at an annual CAGR of 27% and reach $4,8 billion by 2026. That is despite the moderate decay in global retail spending.
In the EU, B2C cross-border commerce already accounts for 23.5% of all sales and is on track to grow by 85 percentage points by 2022.
Despite overall reduced consumer spending, luxury cross-border sales grew by 39% in 2020, especially in the Gulf region.
China is another well-known cross-border powerhouse, turning over $261.5 billion in cross-border B2C e-commerce transactions (both imports & exports). The projected YoY increase is 31% as of 2020.
To a great extent, cross-border e-commerce growth was pandemic-prompted. But it's not the only reason. The recent creation of the China Free Trade Area and the European Free Trade Agreement – combined with new technologies – majorly accelerated cross-border trade.
By all means, the market conditions are favorable for international expansion. Still, retailers need to be strategic when it comes to establishing a local presence. This eBook provides comprehensive information on how retailers can expand to new markets with performance marketing.
Performance marketing is paid advertising and brand marketing used in conjunction and compensated when the target action (click, sale, conversion) is completed. In other words, you only pay for measurable results.
For merchants, the boons are obvious — more controlled spending, measurable results, higher conversions. On top of that, merchants also gain an extra benefit of free brand exposure. Advertisements appear regardless of whether or not the consumer interacts with them. In 2020, one in four shoppers were new to the brands they bought from through affiliate links. Paid social media and video ad campaigns have also proven to increase brand recall and purchase consideration.
Pay per click — The merchant pays the publisher for every click attracted to the website. Good for attracting traffic, but conversion rates may be low.
Pay per action — Also called pay per lead, this model assumes payouts for specified actions such as form sign-ups, subscriptions, demo requests, etc.
Pay per sale — A variation of PPA, where the merchant compensates the affiliate for every successful sale attracted by the affiliate.
Pay per X — Modern performance marketing platforms allow creating custom compensation models around the desired “X” action.
Performance marketing is an umbrella term, encompassing various methods for attracting traffic and sales.
Affiliate marketing is a performance marketing channel where an affiliate receives a payout for promoting other company’s products. Affiliates can be compensated for clicks, leads, sales, or any other type of the desired action.
Action is tracked via:
Cookies: the easiest tracking method, yet can be partially effective without supporting means.
Postback URLs: the most effective and accurate option. Set up different ID tags to attribute sales to different affiliates.
Per product tracking: useful for e-commerce merchants, who run concurrent affiliate campaigns with different payout levels.
Lifetime commission: the affiliate receives compensations for repeat purchases, subscriptions, plan updates, etc.
This newer sub-niche of affiliate marketing focuses on attracting sales via sponsored campaigns, product placements, and ambassadorship, done with social media influencers.
While some influencer campaigns are geared at increasing brand awareness and product recall, much like traditional ‘celebrity’ ads do, influencer marketing can be tied to performance metrics too either via affiliate tracking or through other benchmarks such as the amount of traffic or sales generated and lead-generation form sign-ups.
Businesses get an ROI of $5.20-$20 from every dollar spent on influencer marketing.
The ever-expanding universe of paid advertising opportunities enables e-commerce merchants to dial-up traffic and sales on-demand. Depending on the niche, paid advertising budgets get distributed between the following channels:
All types of paid advertising placements can be negotiated manually — via direct deals with publishers — or purchased via an advertising network (e.g. Google Ads or Facebook Business). Or you can run multi-channel campaigns on auto-pilot via demand-side platforms. The latter is known as programmatic ad buying, which are fully-automatic, real-time ad purchase, optimization, and inventory management. Such platforms take into account hundreds of thousands of data points to gauge the ad’s performance across different assets and help marketers work out the best bid-to-value ratio.
Programmatic is going to account for 86.5% of all digital ad spend in the US in 2021.
By using performance marketing cross-border retailers can reach target consumers faster, especially in new markets. By partnering with third-parties (affiliates), you can build your market preference faster, improve brand awareness, and increase market share faster.
Since compensation is tied to performance, you can also reduce go-to-market risks, lower marketing costs, and secure higher ROAS (Return On Ad Spend).
Performance marketing tools, paired with on-site analytics, also let you analyze the entire click-to-purchase journey of your consumers and prioritize channels, producing the best results.
It is important to determine the right marketing channels for each region. Every regional market has unique peculiarities across consumer preferences, channels, and publishers. So don’t rush to “copy and paste” your domestic tactics to a new channel or market. Focus on localizing your strategies.
In an effort to scale revenues and retain users, social media networks are en route to morphing from ad platforms to marketplaces. Over the past years, Facebook, Instagram, Pinterest rolled out native shopping functionality brands can use to list and sell goods on the platform. Influencers can also tag the brand’s product directly so that their fans could shop the look without leaving the platform.
On the surface, the native shopping feature sets could make cross-border commerce easier. Since the networks take care of currency localization and local payment processing to some extent. However, most consumers are not too keen to shop socially. According to one report, 70% of US adults had never purchased via a social media platform, despite the overall e-commerce market growth. Perhaps over time the dynamics will change. But for now, paid advertising and influencer marketing campaigns drive more measurable results for e-commerce brands.
Over 83% of users discover new products and services on Instagram. Instagram leverages Facebook’s demographics data to serve relevant ads to users. Campaigns can be segmented by location, interests, behaviors, or using custom website audiences data. You can also set retargeting ads on Instagram, based on past interactions with your business page, ads, or organic content.
Pinterest is another solid acquisition channel for top-of-funnel (ToFU) and middle-of-funnel (MoFU) campaigns as users flock to the platform to research ideas, get visually inspired, or discover new products. From outfit inspiration, to gift ideas or interior designs, there are a lot of sub-niches global pinners actively explore.
Most consumers browse Pinterest in a ‘shoppable state of mind’. Retail brands have a 2X higher return on ad spend and 2.3X more efficient cost per conversion on Pinterest, compared to other social media platforms.
Google Shopping is a comparison shopping engine, operated by the eponymous platform. Launched in the early 2000s, Google Shopping has been a marketing underdog until 2019, when the platform received a major redesign and a more prominent placement in SERPs.
With the prime real estate in SERPs now occupied by Google Shopping ads, it is no surprise that fewer retailers are spending their marketing dollars on search text ads.
Google Shopping has 6 ad bidding models retailers can use to meet different campaign goals:
With Flow, you can streamline your performance marketing across multiple global channels. Generate and update product feeds for over 200 supported countries across the main ad platforms (Google, Facebook, Rakuten, Criteo, Pinterest, Instagram, Snap, Adroll and wish). Create localized ads and update product information from a centralized interface to improve your productivity and shorten the timelines for launching cross-channel multi-market ad campaigns. Localize your product feeds to display region-specific inventory, prices in the local currency, local payment options, and shipping methods.
Video as a content consumption format has seen tremendous growth over the past years. In the UK, YouTube watch time grew 27% MoM in 2020, other EU countries are onto a similar trend. So it makes sense why 60% of EU advertisers are investing in digital video advertising to build their brand, improve personalization and targeting of ads, and reach more audiences.
What types of video ads are prioritized by European advertisers?
Mobile video ads: Over 73% of marketers invested at least 40% of their digital video budgets in mobile — as mobile watch time increased significantly too. Mobile micro-ads (under 15 seconds) perform exceptionally well for mobile users. On-point and non-disruptive, such ads tend to have a higher completion rate, better recall, and higher engagement.
Outstream digital ads: Spending on Outstream video advertising — commercials that autoplay within content — tallied to €10 billion ($12.11 billion) in 2019. Markets in Finland, Greece, and the UK experienced over 40% growth. The reason for such a rising interest in outstream is manifold. Outrstream inventory tends to:
Before 2020, the affiliate market in the UK was growing at 8.4% YoY, reaching £510 million ($703 million) in 2019. France has an affiliate market of similar size, while Germany tops the EU list with an estimated market of $1,34 billion.
In 2020, the European market was in turmoil due to on/off lockdowns and overall economic uncertainty among the consumers. Yet, just like globally, the volume of e-commerce transactions increased, including cross-border purchases, as travel was disrupted. Affiliate volumes also rose across sectors: 66% in electronics, 80% in gifts and flowers, 41% in health and beauty, and 26% in home and garden. Respectively, as the sales shifted to online, over 42% of publishers reported an increase in website traffic last year.
Awin — proposes a vast inventory of affiliates across the EMEA region.
TradeDoubler — one of the largest European affiliate networks.
YieldLink — focuses on Germany and the DACH region.
As mobile traffic overtook desktop traffic in Europe too, the advertising volumes have shifted respectively. In 23 EU markets, mobile ad spending (55%) overtook desktop (45%) for both search and display ads. In France and Germany, mobile advertising is the fastest-growing ad spending category.
Not surprising, EU consumers are among the most avid users of ad blocking software on desktop. Per Statista, 42% of consumers in Greece and 34% in France use ad blockers — that’s nearly 1.5X higher than the US rate, where only 27% of consumers use ad blockers. It’s possible that some advertisers are shifting to mobile, a medium still relatively untarnished by ad-blocking.
Japan and China have the largest affiliate markets in the region. The Japanese affiliate market is poised to reach $4,4 billion by 2023. Overall, the local industry is well-established and mainly controlled by sub-affiliate networks (Affiliate Service Providers or ASP). Basically, an ASP is an agency partner that matches your brand with relevant local affiliates. Self-service affiliate platforms and CPA affiliate networks are not popular in Japan. Though you can find Japan-based affiliates through global networks. Rakuten Advertising platform provides access to regional affiliates and provides performance-based marketing solutions to cross-border retailers.
China has several affiliate websites focused exclusively on providing information, deals, and discounts on cross-border e-commerce products (e.g. as SMZDM, 55haitao, and Dealmoon). Such platforms provide a mix of editorial and user-generated content so that the published content rises organically to the top based on the number of clicks, likes, comments. Perhaps due to this ‘engagement’ mechanism, such affiliate websites boast rather high CTR (Click-Through Rate). For instance, SMZDM reported 10% per-click conversion rates for listed products.
China also has ‘traditional’ affiliate networks such as Yiqifa and Duomai that aggregate inventory across thousands of local affiliates. Such networks also double as influence marketing hubs and let you organize campaigns with local influencers. The downside is that such platforms typically charge an annual membership fee of $3,000-$4,500 for access and oftentimes require a company entity in China. The alternative route is partnering to work with a local affiliate service provider or agency who’ll broker the affiliate deals on your behalf.
WeChat is China’s fastest-growing “super app” with 1.17 billion users among Chinese-speaking consumers. Tripling as a social media app, online product/services marketplace, and payment method, WeChat is one of the leading channels for connecting with local consumers.
Retailers have the option to set-up in-app online stores, using WeChat Mini Programs, or run a branded account and share external links to their stores. Alternatively, WeChat proposes four advertising formats:
WeChat banner ads have CPC (cost-per-click) of 2-5 RMB ($0.30-$0.77).
In 2020, live streaming became the ‘go-to’ channel for Chinese consumers to discover and purchase new products.
The country’s largest e-commerce platform, Taobao, also doubles as a livestreaming community with over 4,000 opinion leaders, generating over 150,000 pieces of content daily. During live streams, consumers can shop the featured items immediately, pose questions, leave comments, and send virtual gifts. Foreign retailers, with registered stores on Taobao/Tmall, can participate in such campaigns.
Live streaming is expected to contribute over $70 billion in gross merchandise value (GMV) between 2019 and 2021 across Alibaba-owned platforms.
Western beauty brands, in particular, are seeing great success with live streams. In 2019, 16% of sales in this product category were via live streams. Estee Lauder, for example, hosted a 20-hour streaming marathon during the singles days with two local influencer hosts. The event attracted over 500 million views and $28 million in sales–an impressive conversion rate of 5.6%.
The livestream storm is further spreading across other Asian markets. Singapore-based e-commerce marketplace Shoppee also launched a live video app in 2019. In a year, the service amassed over 200 million views across Southeast Asia and Taiwan. Shopshops is another interesting service, operating on the intercession of influencer marketing and live stream commerce. Specializing in Asian markets, the platform hosts QVC-styled live shopping events for US brands who wish to sell internationally to Asian consumers. Retailers can recruit both Chinese and English-speaking hosts to livestream about their brand to the platform’s Asia-based audiences.
Performance marketing channels are aplenty. But different platforms (social or demand-side) are better suited for marketing to different, specific audiences. As you expand to a new market (or even channel), don’t skim on preliminary audience research. While each ad network provides targeting tools and inventory filters by demographic, interests, etc, it’s best to plan your campaign around pre-researched targets.
Analyze your test campaign ROAS and see how they compare with industry benchmarks. Numbers too low or unexpectedly high indicate that you are not yet on the right track.
Language, cultural references, regional preferences, seasonality, brand positioning — all of these elements matter for effective cross-border marketing.
Once you’ve created your target audience profiles, focus on tailoring campaign collateral to their preferences. Think slogans, advertising copy, key positioning statements, product descriptions, and visuals.
Why is language localization important for success with performance marketing? Because 75% of consumers want product information in their native language and 60% never or rarely buy products from English-only websites. Respectively, companies that localized their content were two times more likely to increase their profit and 125% more likely to have higher earnings YoY.
Personalized advertising and marketing campaigns drive the best outcomes for e-commerce companies. Across markets, Google reports that ads with advanced personalization drive a 15% higher purchase intent and 30% higher CTR when compared to ads with only basic personalization.
Facebook advertising data also suggests that dynamic ad formats and creative significantly outperforms carousel-only ads. On average, dynamic ads result in 34% higher ROAS, 10% improvement in lift, and 6% lower cost per incremental purchase.
By combining proprietary sales data with dynamic ad formats, cross-border e-commerce companies can reduce budget waste, lift conversions, and subsequently scale revenues. Most ad networks and DSP platforms provide you with tools to personalize across several levels including:
Beyond ads, you can (and should) also personalize post-click landing pages — product listing or category pages, where an international customer lands. Doing so creates a continuous personalized experience, leading to higher conversions.
Programmatic ad campaigns generate measurable results and require less daily involvement. A well-configured campaign can run on auto-pilot, untying the marketer’s hands to focus on other strategic priorities.
State-of-the-art algorithms, used by programmatic ads platforms, take into account thousands of real-time data points to place the optimal bid and showcase your ad to the right person, at the right time. Cost-effective and high-performance, programmatic ads enable cross-border brands to run real-time multi-market campaigns and advertise with high-quality regional publishers.
Programmatic also enables e-commerce brands to segment campaigns, based on the customer’s position in the sales funnel. Using pixel tracking, you can serve real-time personalized creative to buyers at the consideration and decision stages and retarget the doubters across channels. Paired with a highly personalized on-site experience, localized to the customers’ market, such campaigns can secure consistent growth of international sales
Messaging and brand positioning is crucial for forming the right consumer sentiment. Pinterest suggests that nowadays it particularly pays off to be positive with your marketing (rather than urging, funny, or FOMO-focused). Modern consumers, especially younger demographics, have become increasingly vocal in their demands for transparency, sustainability, and corporate social responsibility. What’s more — they are starting to publicly call-out brands who fail to live up to their expectations.
Over 70% of Pinterest survey respondents state that “Brands and companies that I see placing their profits before people during this crisis will lose my trust forever.” Another survey by Accenture noted that 57% of consumers are more inspired to shop with a retailer that supported their staff and customers during the crisis.
Customers also take notice of the context and environment in the brands’ are being discussed online.
So how do brands elicit positive feelings and trust, especially across markets?
1. Tailor your marketing copy to make it culturally appropriate across markets.
2. Use inclusive language and adapt your visuals to appeal to diverse audiences.
3. Audit your affiliates regularly to ensure that they follow your brand guidelines and present your brand in a positive context.
4. Use advanced filtering tools for display ads to filter out negative or questionable publishers.
First, cross-border retailers need to ensure that their customer experience is tailored for international buyers. Optimize your product catalog, pricing strategies, and messaging. Look into a global shipping partner to increase your capacity and reduce shipping costs. Ensure that taxes and duties are properly calculated for each market.
Secondly, consider localizing your website experience, especially the checkout page, as it’s a critical leg of the customer journey. Ensure that all international buyers receive a localized shopping experience in terms of language, payment options, duties/taxes, shipping.
Then, move on to prioritizing your channels for different markets. Be diligent with extra marketing research, done outside of the ad platform/DSP. The effort will pay-off multi-fold in terms of higher conversions and less budget waste.
Finally, manage expectations, test and adapt. Understand the local CPC, CTR, Conversion benchmarks and align your marketing plans accordingly. Focus on increasing brand awareness at first and attracting TOFU prospects. Build a bench of affiliates, influencers, and publishers, who are driving the best ROAS. Then focus on doubling your engagement with them.
