Client Background
Our client is an e-commerce business in the Home Improvement niche that approached us with declining sales and excess inventory. The primary challenge was a consistent drop in orders despite having a generous product stock.
The business was among the first to bring a new product to market in its niche and reaped the benefits of being the first mover.
However, despite stellar performance for the better part of last year, it did not manage to maintain the advantage and performance started deteriorating rapidly as competition increased and new players entered the market.
The client came to us after 9 months of decreasing sales, with the last 3 being the worst.
In this case study we will look at an analysis over a 6 month period, starting in March and ending in September, and look at what it takes to become competitive again in a maturing market, after losing a significant advantage.
Initial Situation
When we took over the paid accounts, we identified several critical issues:
- Continuous decline in orders.
- An overly conservative strategy focused on maximizing ROAS at the expense of order volume and profitability
- Complicated checkout process with frequent errors
- A single-channel approach using only Performance Max campaigns on Google Ads
- Broad audience targeting on Facebook and no product segmentation
- Inappropriate bidding strategy for the account’s data
- Failure to recognize and react to changes in competition
Strategic Approach
Comprehensive Audit and Restructuring
We implemented a multi-faceted strategy to revitalize the client’s digital marketing efforts:
- Conducted thorough audits of Google Ads, Google Analytics 4, Google Tag Manager, Merchant Center, and Meta Ads
- Simplified the entire Checkout Process
- Optimized the Shopping Feed using advanced third-party tools
- Revised messaging and ad creatives
- Refocused the business on its core USPs (Unique Selling Propositions)
- Developed a multi-channel marketing approach
Marketing Channel Diversification
One of the main issues the business had was that it only relied on a couple of campaign types across Google and Meta. Performance Max delivered great results when competition was low, but started having hiccups as more players entered the market and could not recover on its own.
Product segmentation was also not ideal on either Google or Meta, having products that catered to different audiences in the same campaigns.
- Created diverse Google Ads campaigns including tiered Shopping, Search, and Performance Max
- Introduced Dynamic Remarketing on both Google and Facebook
- Developed video and catalog-based strategies on Facebook Ads, taking the customer’s journey into account
Results Comparison (March 2024 vs. September 2024)
In the above graph, the decrease in Cost and Conversion Value is perfectly visible, as is the start of the new strategy.
We’ve managed to aggressively scale up the account from June to September, where we’ve decided to focus on optimization and maintaining the result that we, and the client, were happy with.
Performance Metrics
Increasing the spending 7 times and net revenue only by 3 might not seem that great at first glance. However, we must take the law of diminishing returns into account and realize that further doubling the spending from here will not result in doubling the net revenue as well, and might even decrease it.
ROAS however, has seen a decrease from 20.8 to 8.6, again emphasizing the fact that ROAS is not the be-all and end-all metric.
Even though we had a significant increase in spend and a decrease in ROAS, profitability has increased from $36,652 in March, to $112,714 in September.
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Conclusion
Our case study illustrates the critical importance of adaptive marketing strategies in evolving e-commerce landscapes. As markets mature and competition intensifies, businesses cannot rely solely on first-mover advantages or historical performance.
The dramatic turnaround in our client’s digital performance offers valuable insights for businesses facing similar challenges:
- Dynamic Market Responsiveness: Markets are not static. The ability to quickly diagnose performance issues, understand competitive shifts, and adapt marketing strategies is crucial for sustained growth.
- Multi-Channel Optimization: A multi-channel approach that segments audiences, diversifies campaign types, and leverages platform-specific strengths can help businesses maintain a competitive edge.
- Holistic Performance Metrics: While ROAS is a key metric, it cannot be pursued at the expense of overall business growth. A balanced approach that considers conversion volume, revenue, and profitability is essential.
- Continuous Technological and Strategic Audit: Regular, thorough assessments of marketing infrastructure, from tracking mechanisms to checkout processes, can uncover hidden inefficiencies that impede growth.
The results demonstrate that strategic intervention can dramatically reshape a business’s digital marketing efforts. By increasing conversions by 4.5x and revenue by 3.3x, we showed that competitive challenges can be transformed into opportunities for innovation and growth.
However, the slightly reduced profitability underscores an important lesson: success is not about maintaining historical performance but adapting to new competitive realities in maturing markets. As the law of diminishing returns suggests, focusing solely on one metric, like ROAS, can limit long-term growth.