“We needed a global overview of our entire [pool] of consumers and their interaction with the brand,” says Yoed Negri, global director of digital transformation, SodaStream.

Yoed Negri, global director of digital transformation, SodaStream International

Negri says SodaStream understands that its customers interact with the brand through more than one channel: email, SMS text and social media posts. But they weren’t sure how those interactions lead to an increase in conversion, he says.

“We understood that the current marketing infrastructure we had was not enough,” Negri says.

SodaStream’s marketing software provider, Optimove, offers artificial intelligence software. In 2022, SodaStream began using the capability in six markets, which represents about 10% of countries where SodaStream sells its products, Negri says. SodaStream products are sold in store at retail chains like Walmart Inc., Target Inc., and others, as well as online. The retailer sells directly to consumers in 20 markets online.

Test campaigns show how likely consumers are to convert

One way SodaStream engages with SodaStream drinkers is by sending recipes to customers they know like Pepsi-flavorings, diet flavorings and other options based on past orders. The retailer wanted to see how its customers responded to the recipes when received via email, SMS text or through social media posts, Negri says.

The beverage retailer declined to disclose the specific flavors presented, but Negri says the results showed that ads appealed differently to consumers depending on the channel. For example, for email campaigns, SodaStream saw a 3%-5% increase in conversion and 15% increase in average order value.

SMS text conversion rates were 10%-15% higher compared with email depending on the market, Negri says.

For social media posts, Negri says it’s important to note engagement and conversions.

“We see 7%-10% increases in engagement for personalized content and 5%-7% increase in conversions,” he says.

SodaStream conducted the tests over a period of four to eight weeks in late 2022, Negri says. Optimove’s AI software learns how consumers are responding to ads within six to eight weeks, Negri says.

Using AI to anticipate conversion

When deciding which campaigns to propose to which customers, Optimove’s software uses the data it collected to determine the best campaign for each, says Pini Yakuel, CEO of Optimove.

A retailer might decide to send a marketing campaign or a promotion, such as a birthday promotion, via email, SMS or a combination of both methods. Optimove’s AI determines the best combination for each customer base, Yakuel says.

Digital marketers also use Optimove’s analytics for the following:

• The likelihood to convert.
• The likelihood of becoming a top spender.
• The risk of churn (the measure of how many customers stop using a product).
• Likelihood of reactivating (also known as re-engagement, where retailers reach out to people who have previously expressed interest or engaged but have since disengaged with communications).

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Evite’s user activity plummeted roughly 95%, says Evite’s current CEO David Yeom, down to consumers sending about 1,000 invites a day. This is compared to normal pre-pandemic activity, with consumers sending 20,000 invites every day to 30-plus people, he says.

When the pandemic began, publicly traded media conglomerate Liberty Media Corp. owned Evite. As 2020 wore on and the COVID-19 pandemic raged, Yeom decided to buy out Evite with business partner George Ruan for an undisclosed sum in September 2020. As the new CEO and without public investors to please on a quarterly basis, Yeom used the lull in events as an opportunity to do a major rehaul of Evite’s customer experience and change its business model.

“What’s there to risk? User activity is down in the dumps,” Yeom says. “When you don’t have much to lose, in many ways, that gave us the opportunity to finally make the changes we’ve always wanted to make and get the business back on the path to greatness that it should be on.”

Evite pivots to revenue from premium upgrades from advertisements

Instead of relying on revenue from ads, Evite’s primary revenue stream now is from users upgrading to a premium invitation, which costs $15.99-$89.99. With premium, users have access to enhanced features, like hiding the guest list for an event, no ads on the invitation and access to premium designs, such as ones with a Disney character, premium fonts, animation, envelopes and a design-your-own feature. About 10% of its users pay for premium invitations and this accounts for roughly half of Evite’s revenue, Yeom says.

A third of its revenue is now from affiliate marketing. Evite showcases products that would be relevant to a party, such as paper plates or balloons for the host, or gift ideas for an attendee, from other retailers including Amazon.com Inc., Target Corp., Walmart Inc. and Etsy Inc.

That leaves the remaining roughly 17% of the revenue from advertising, which is now an automated program. Advertising used to be the primary source of its revenue. But the ads were getting in the way of the user experience, Yeom says. Typically, users saw an advertisement at each step in creating the invitation or RSVPing to an event.

“It was too much and everywhere,” Yeom says. “Basically 90% of all those ads are gone now.”

Evite’s move to generate revenue from premium features instead of ads is smart, says Paula Rosenblum, co-founder and managing partner at retail consulting firm RSR Research.

“Websites that are so filled with ads — mostly re-targeted, to boot — are incredibly annoying,” she says. “I’d gladly pay a little to stop the endless parade so I could take my time and peruse the products and/or services.”

But, Evite has to tread lightly with how it showcases its affiliate products, as those can appear just like an ad to a consumer. For example, in an email about a party, Evite will have a link to buy the host a gift from one of its affiliated retailers.

Or, after an invitee RSVPs to an event, Evite shows a pop-up to send the person a gift from one of its affiliates. Yeom says party-throwers have the option to turn this off and about a quarter of consumers elect to do so, he says.

Evite prompts party-goers to buy a gift from one of its affiliate retailers.

“We want to have good balance, and not fall back in the traps of what we used to be as a business,” Yeom says.

Yeom says the affiliate product links are meant to be helpful to planning or attending an event, whereas a banner ad may not be. RSR’s Rosenblum says many affiliates have successfully provided links to other merchants without annoying users.

This overhaul in revenue, however, was a tough change, as half of Evite’s employees were either on the sales team or supported the sales team. At the end of 2020, Evite eliminated its sales team and those employees were let go or received a new role.

Many employees had an “if it’s not broke don’t fix it” mentality about the ads, Yeom says. But that attitude had to go, he says.

“There’s a better way, and you don’t have to compromise the experience for guest or host,” Yeom says.

The new Evite launches

The rebranded Evite launched in April 2022, when many U.S. consumers had already resumed their normal pre-pandemic activities. And that includes going to events, celebrating milestones and going to parties. Meaning, Evite has regained its 100,000 annual active users, who send and receive Evites.

A year after this pivot, Evite turned a profit for the first time in a decade, the company says. Plus, in the birthday category specifically, user activity “has never been higher,” with users sending 25,000 birthday invites every hour, Yeom says without sharing more.

User feedback has been “phenomenal,” Yeom says, and Evite plans to continue adding upgrades to its premium service.

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AI image analytics show what people like to see on screen

Roman Vorobiev, director, design and artwork management. Mars Petcare

Vizit’s software produces a score on a scale of 0-100. The higher the rating, the more appealing an image is to a group of online consumers. Vorobiev wanted to link how these scores could lead to higher conversion rates.

Online shoppers prefer different details

In Mexico, online shoppers prefer green and yellow colored packaging for Pedigree dog food.

Using AI in design

Harvesting images

Quick changes using AI

What is image analysis in AI?

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For the first time, Amazon’s average cut of each sale surpassed 50% in 2022, according to a study by Marketplace Pulse, which sampled seller transactions going back to 2016.

The research firm calculated the total cost of selling on Amazon. This includes the commission, fees for warehouse storage, packing and delivery, and money spent to advertise on the site. Paying Amazon for logistics services and advertising is optional, but most merchants consider these a necessity.

Sellers have been paying Amazon more per transaction for six years in a row, according to Marketplace Pulse. They were able to absorb the increases because the company was attracting new customers and rapidly increasing sales. That changed when pandemic lockdowns eased and people chose traveling and dining out over online shopping. Last year, Amazon generated the slowest sales growth in its history.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Buyers are pickier than ever before

Consumers are far more deal-conscious than they were during the pandemic, so Amazon merchants fear fees and raising prices. Along with the steady increase in fees, that means many sellers are struggling to make money. Now, some are shifting to handling shipping themselves and spending less to advertise on Amazon’s site.

“For these small businesses, it’s getting harder and harder to be profitable because they are spending more and more money on Amazon fees,” said Juozas Kaziukenas, Marketplace Pulse’s founder and CEO. “Amazon might be tempted to keep increasing fees because it’s in a tough spot, but you have to reach some kind of equilibrium.”

Amazon sellers choose to use its logistics services because, on average, they cost 30% less than alternatives. Merchants are free to buy advertising anywhere, company spokesperson Mira Dix said in an emailed statement. The fees Amazon charges reflect the company’s own costs and investments, she said.

“Many selling partners have built and run their businesses without advertising,” she said. “If they choose to advertise their products, they have many service providers to choose from. Sellers are not required to use our logistics or advertising services, and only use them if they provide incremental value to their business.”

Amazon is cutting costs with layoffs

Maintaining profits as sales slow presents a major challenge for Amazon’s core online retail business. Without Amazon Web Services, the profitable cloud computing business, Amazon would have posted a $10 billion operating loss last year. CEO Andy Jassy is trying to restore the balance by cutting 18,000 corporate jobs and narrowing the company’s focus.

Subsidiary Zappos laid off more than 300 employees — about 20% of its workforce — in January, the Wall Street Journal reported.

The cuts, described as being part of broader layoffs at the company, included customer-service representatives at the online shoe and clothing retailer, which Amazon bought in 2009, the WSJ said.

Longtime executive Tyler Williams also left during the layoffs, it added, part of an ongoing shakeup two years after the death of former CEO Tony Hsieh in 2020 at age 46.

Zappos spokesperson Laura Davis said the cuts were part of regular business planning, and “ultimately made to ensure Zappos is set up to continue to provide an exceptional customer experience, long-term.”

Amazon is charging merchants higher fees

In response to rising costs, Amazon increased the annual price of a U.S. Prime subscription by $20 in 2022. Last month, the company announced plans to levy fees on online grocery orders of less than $150. But charging customers more is risky. Merchants, many of whom generate 80% to 90% of their sales on Amazon, are less likely to rebel.

Chuck Gregorich, who sells fire pits and outdoor furniture, says turning a profit on Amazon is getting harder. One of his popular fire pits costs $200, of which Amazon takes $112 for commission, warehouse storage, delivery and advertising. That leaves him with $88 to pay the manufacturer, ship the product in from China and cover his overhead. He expects his Amazon logistics expenses to increase up to 8% this year under a new fee structure that took effect in January and further scheduled changes.

“I’ll have to raise my prices, and I already raised them a lot last year,” said Gregorich, who is based in Eau Claire, Wisconsin.

The higher fees have compelled Gregorich to do more logistics himself. Other carriers can deliver fire pits for $28, he said, or about half what he pays Amazon. Amazon’s delivery service often takes longer than the two days customers expect, so it’s no longer worth the premium, he said. Dix said Gregorich’s experience is “the exception and does not represent the vast majority of both Amazon sellers we partner with and customers that we deliver for.”

Sellers are cutting down on advertising to save money

Amazon sellers don’t control the commissions Amazon charges or fees for things like packing and delivery. One thing they control is advertising, and there are signs they are pulling back. Advertising revenue over the holidays grew 18.9%, a slow-down from 32.2% growth a year earlier.

Amazon is dedicating more space on its site for advertising, which  makes each spot less valuable, said former Amazon executive and president of online marketing consulting firm Pacvue Melissa Burdick. Conversion rates, which measure the number of shoppers who purchase a product after clicking an ad, declined each quarter last year, she said.

“The advertising space on Amazon isn’t as successful as it used to be for sellers,” Burdick said. “A lot of sellers are choosing to offer discounts rather than advertise because shoppers are responding more to discounts.”

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Facebook pixels traffic off existing customers, he says. Finn turned to artificial intelligence software vendor Proxima to help identify consumers beyond its customers based who are most likely to be interested in purchasing Finn’s dog supplements. There are two categories Finn wanted to reach: interest-based and existing customer/lookalike-based audiences. Interest-based groups are dog owners. They might be interested in a specific breed, or category, such as dog food or dog toys. Lookalike-based audiences are repeat/existing Finn customers. 

How does AI impact digital marketing?

Over time, the machine-learning technology identifies purchase behaviors. Finn wants to advertise to consumers likely to buy pet products. Proxima’s software maps out consumer purchasing behaviors. The algorithm takes into account the different categories consumers purchase from — consumers who also buy pet items, such as clothing or home goods. It incorporates where they live, whether West Coast, East Coast, etc., and pulls together separate audiences, which are consumers that share similar traits. 

Finn runs these groups inside Facebook’s application programming interface (API). Finn can decide how much to spend on an ad and adjust the budget for the different audiences within Finn’s Facebook ad manager account. Proxima runs a “feedback loop” to track ad performance. This includes tracking where the cost of acquisition (CPA) — the fee a retailer pays for an advertisement that results in a sale — is lowest, for example. The algorithm adjusts in real-time, reconstructing, or fine-tuning, the audiences based on successful periods to better reach potential customers.

Proxima recommends merchants spend a few hundred dollars a day driving traffic to these audiences to see who responds and what traits these consumers have. By using the same advertising, the algorithm can remove some of the variables to see what resonates and what does not.

“Think of it as an intelligent game of Battleship,” says Alex Song, CEO and founder of the AI marketing software vendor.

Finn invests more of its marketing budget to attract new customers

The online brand launched in the midst of COVID-19 in Sept. 2020. At that time, Finn focused mainly on its Amazon store. In mid-2022, the online retailer wanted to shift focus to petfinn.com, Stainton says.

Currently, 60% of Finn’s overall online sales come from its Amazon store. 40% of online sales come through its website, Stainton says. A direct-to-consumer (DTC) average order value is about $43, compared with Amazon orders at $37. These haven’t shifted much since launching the brand in Sept. 2020, Stainton says. What has changed is that Finn decreased spending for customer acquisition on Amazon and, instead, is investing more in paid social marketing for its DTC website.

In January 2022, 80% of Finn’s total advertising budget went toward promoting on Amazon and 20% toward promoting the DTC website. In January 2023, they reversed the ratio, Stainton says.

“The reason we’ve been able to make that switch is because Proxima allowed us to expand the breadth of our ad spend on Facebook and Instagram,” he says.

Urban Millennials and Midwestern housewives

Finn’s demographic of shoppers are primarily female, ages 35-55. There are two behavioral, or audience, types. There is what Stainton refers to as the Urban Millennial, who are typically women buying for their first dog and live either on the West or East Coast of the U.S.

The other type are Midwestern housewives. These are young couples where the female typically makes the majority of household purchases. This region spans from Minnesota to Texas. 

Proxima allowed Finn to split groups into a younger Millennial bucket of 35-45-year-old shoppers and the other into the housewife bucket of 45-55 year old female shoppers.

Without Proxima, Stainton could have built and tested different buckets of customers over time, he says. And once he had a big enough record of each, Stainton could create and start segmenting advertising budget toward each bucket, he says.

Instead, the software allows him to create the buckets now. 

“We don’t need to have 100,000 customers to create a good audience because Proxima is identifying those customers for us and helping us to create those audiences,” he says. “We have an approximate audience for Millennials and one for housewives that differs from what we get from Facebook.”

Finn uses AI to lower advertising costs

Finn devotes about 30% of its advertising budget to its Proxima campaigns. Of that, Finn allocates the majority (80%) for marketing toward interest-based audiences who have yet to shop at Finn. 20% is devoted to lookalike customers.

“Interest-based audiences are so much broader,” he says. “There’s a lot more dog owners than there are [Finn] lookalike customers of ours.”

Finn’s shift in strategy appears to be working. Over time, ad costs have decreased, Stainton says. Finn’s CPAs have dropped significantly to $42 in December 2022 from $72 in March 2022. Stainton attributes this decrease to the brand’s overall advertising efforts, including using Proxima software.

Where does the data come from?

In early 2021, Apple’s iOS 14 changes gave consumers the option to opt out of online activity tracking. Facebook parent, Meta, lost visibility for a large portion of consumers. It could no longer tell when someone clicked on an ad that converted into a sale. The social media company told investors in February 2022 that it estimated the iOS change resulted in the loss of about $10 billion in sales.

Proxima has data from more than 15,000 businesses and retailers that have shared customer database information with one another. Smaller brands pooled their customer data together. Retailers also provided Proxima access to their email service and SMS providers.

“When I barter my audience for yours, I don’t pay anything to anybody,” Proxima’s Song says. “I’m trading something I already own.”

Merchants also provide encrypted transactional information from a retailer’s website store through the payment processors (e.g. Stripe Inc., PayPal Holdings Inc., Venmo, among others). The information is encrypted, “anonymous,” Song says. It is coded so it can be recognized when shared with Meta, TikTok, or other social media platforms, allowing Proxima’s algorithm to track progress.

What it costs Finn to use AI

Finn maintains a yearly contract with Proxima and declined to share what it pays for the service.

The online retailer runs its website using Shopify. Stainton says he is interested in trying Shopify’s software, which also uses AI to test different audiences. Shopify’s plugin price starts at about $2,000 a month but is currently only available to Shopify Plus merchants.

Stainton says Finn is not ready to upgrade to Shopify Plus yet, but plans to do so in the next couple of months.

“The gains that we see off those campaigns have to cover the extra percentage we’re paying Proxima and the base fee — which they do,” Stainton says, without revealing how much they pay.

Social media strategy in 2023

Moving forward, Stainton says the brand intends to expand its reach on social media in 2023. For example, the online retailer has learned that videos that perform well on TikTok almost always perform well on Facebook, “but not the other way around,” he says.

So, once something performs well on TikTok, Finn adds it to Facebook and begins tracking results with Proxima.

“When we get a winner there [TikTok], we dump it straight into Proxima at scale, instead of dumping it in and seeing how it performs, [paying] more day over day and spending two weeks to scale it,” Stainton says. “We can drop it in and have a high degree of confidence that it’s going to perform in those audiences.”

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Will livestreaming ever be as big in the U.S. as it is in China?  “Absolutely not,” says Ken Natori, president of The Natori Co.

“But, for us, from an ecommerce perspective, it is important to be an early adopter of livestreaming,” he says.

Ken Natori, president, The Natori Co.

The retailer’s second livestreaming event on Oct. 22 featured stylist Engie Hassan, who promoted her favorite looks. Viewers were able to live chat during the session and ask questions about products. While Hassan presented, Natori employees answered shoppers’ questions in real time via chat. 

During Natori’s Oct. 22 livestreaming event with stylist Engie Hassan, shoppers could chat and ask questions in real time.

Livestreaming to connect with new customers

Hassan has 159,000 followers on her Instagram account, EngieStyle, and has tagged Natori on various posts where her clients are wearing the brand’s items among other designers. 

An evolving livestreaming plan

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Expect Big Tech backlash

Sustainability continues to be important to consumers

Digital marketers will rely more on retail media networks 

Big players buy up cash-strapped online retailers

2023 will force Amazon to answer for its actions

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Vinny Maurici

The opt-in era poses new challenges for online advertising. But by offering ecommerce sites that provide a helpful customer experience, B2B companies can rely less on online ads, writes Vinny Maurici, vice president, data strategy and services, Pivotree.

For years, companies have been able to track their users’ website and app activity across other companies’ apps and websites, using the resulting data for advertising purposes or for sharing with data brokers.

Last year, Apple launched a highly anticipated privacy feature: App Tracking Transparency (ATT). With this policy change, Apple users now have to opt-in to Apple’s Identifier for Advertising (IDFA), a unique code assigned to mobile devices, which data brokers and ad marketers use to track users across apps. Using this code, they can combine their users’ behavior into one comprehensive profile, providing companies with the information they need to send targeted ads.

Historically, this process took place behind the scenes, with most users generally unaware of what data was being collected and how it was being used. Now, users receive prompts the first time they open an app, letting them know how the app is tracking their data and giving them the option to opt-in.

Unsurprisingly, Apple’s ATT policy was met with outrage from platforms like Facebook and Snap, who rely on their users’ data to send targeted ads and generate revenue. And their fears became a reality – in the United States, data from analytics company Flurry showed that users chose not to opt-in of app tracking 96 per cent of the time, following the implementation of ATT.

Now, in 2022, nearly every direct-to-consumer (DTC) company is dealing with revenue contraction, shrinking margins and runaway losses. In combination with supply chain costs, heightened interest rates and shrinking venture capital investments, DTC companies are in trouble.

It’s important to note that B2B organizations are different in their focus compared with retail and DTC. While retail and DTC home in on price and customer acquisition,  B2B focuses on digital product experience and elements like punchout, which lets B2B buyers link from their procurement/spend management software to a preferred seller’s ecommerce site.

B2B organizations have long understood their customers, however, and have been less reliant on paid advertisements or targeted ads as a source of revenue. On top of that, they have been focusing especially on the product experience of finding, selecting and ordering products.

For that reason, B2B companies, once viewed as the dinosaurs of digital commerce, are now at the forefront of digital commerce strategy with many B2B distributors building more complete, in depth, and intuitive shopping experiences than retail giants like Amazon, Walmart, Etsy or Wayfair.

For once it seems, retail has to catch up on the digital front when compared to leaders in the B2B digital commerce space.

About the author:

Vinny Maurici is vice president, data strategy and services, at Pivotree, which  designs, builds and manages digital platforms in commerce, data management, and supply chains for branded manufacturers, distributors and retailers.

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