Masa Maso to Cut Ad Spend 50% in 2012
Ebrun.com, 3/02/12
Mei Shan, VP of brand promotions for Chinese online men's fashion retailer Masa Maso, revealed today that Masa Maso will focus on increasing repeat business this year, slashing ad budgets by 50% and shifting its focus to search engine advertising.
Masa Maso made three changes to its marketing strategy aimed at increasing repeat business starting in H2 2011, Mei said. The first of these was to cut spending on ad placements by half and apply the savings to increasing product quality. The second was to focus on user management, adapting different promotional and communications strategies for different categories of users and aiming to re-engage inactive users. The third was to lower the barrier to purchasing, offer certain high-profile products at discounted prices or at cost.
Mei said that repeat business rates had reached between 60% and 70%, but that the company would seek to increase the value of customer orders.
As the cost of attracting new customers continues to increase for e-commerce companies, Mei said, e-commerce companies will need to seek more effective ways of attracting customers through marketing. "Advertising costs remain high, and it often costs seven to eight times as much to attract a new customer as it does to maintain an existing one." Because of this, Masa Maso's ad spends will be focused on Baidu (Nasdaq: BIDU) search ads and portal sites this year, with a multi-channel marketing strategy, based on differing ROI rates, that could include such low-cost methods of promotion as partnerships with group buy sites, social media marketing, and e-mail direct marketing (EDM).
"Search engine marketing is usually most effective," Mei said. "Our investment in Baidu search ads will account for around 40% of our total outlay." With sales volumes of RMB 500 mln to 700 mln for 2011, Mei said, Masa Maso's ad investment will account for roughly 15% of business volume - or, based on the 100% growth Masa Maso predicts in sales this year, between RMB 70 mln to 100 mln.
Mei added that Masa Maso would not consider any offline ad spending during H1 2012, and will consider offline advertising afterwards based on ROI from each of its existing channels, and on overall market trends in H2 2012.
Many e-commerce companies are choosing to cut down on offline ad placement in favor of increased online advertising this year, including B2C clothing website Vancl, footwear B2C Yougou.com, All3C.com, shoe retailer Letao.com, diamond retailer Kela.cn, and sports clothing B2C Xijie.com, all of whom have said that they will shift their focus to online advertising.
An employee of one public transportation advertising company predicted that only major platforms would advertise on public transit this year. As medium-sized and smaller e-commerce companies, finding investment harder to come by, make profitability a priority, the volume of public transportation and subway advertising will decrease appreciably, the employee said.
Keywords: Mei Shan e-commerce Internet strategy online advertising B2C Masa Maso apparel online fashion search advertising
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