Ogilvy Consulting and Shoptet study: Brands in e-commerce

"As one of his business partners, we regularly follow the exciting story of a Czech-Slovak e-commerce entrepreneur through customer research. In addition to the bureaucratic burden and considerable initial financial investment, we know that marketing is one of the challenges for which he does not have sufficient knowledge or capacity. Marketing strategies, securing top search positions, email marketing or even creating product photography are major challenges for 36% of e-commerce entrepreneurs, according to our research," says Jindra Svítková, Head of Retention, Shoptet.

A strong brand withstands crises better

"The current turbulent situation is not easy for e-shops after several years of constant growth. On the other hand, the market is still saturated, so every e-shop has to look for ways to establish itself. In the long term, investing in the brand is a very effective way of doing this - whether it is reducing price sensitivity, speeding up and facilitating purchase decisions, building loyalty or making the brand more resilient to crises. If you want to grow in the long term, you should not underestimate brand building," says Jirka Jón, Head of Strategy & Consulting, Ogilvy.

In e-commerce, brand investment is even more important than in other segments. "This is because the customer has almost unlimited choice in the online environment and can easily switch to the competition, but also because it is easier to reach the target audience with sales campaigns and convince them to convert online than anywhere else. Sales-only campaigns may pay off in the short term, but in the long term they are more likely to lead to a spiral of rising media costs and declining effectiveness," adds Jirka Jón, Head of Strategy & Consulting, Ogilvy.

Do e-shops have a brand? Yes, but...

"When we asked respondents if they had a defined brand, we got a relatively high percentage of positive responses. A full 78% of e-shops say they have a brand. However, when we dug deeper, we found that for the vast majority of e-shops the brand is mainly the name and logo. That is, only the so-called visible attributes of the brand, while the less visible ones such as values, mission and vision, strategy or positioning are not as widespread," says Nikola Klepáčková, Junior Strategy Planner, Ogilvy.

According to them, 96% of the e-shops surveyed have a logo and name, 71% have their own visual identity, 40% have anchored values, 39% have a mission and vision and 30% work with brand symbols. Almost half (44%) have a brand that is purely visual (a combination of logo and name plus visual identity). In contrast, only 16% have a full brand strategy, with positioning the least common (14%). Almost half (48%) of the e-shops that have a brand do not take care of it. Only 43% of respondents have a brand written into everything the e-shop has or does. Overall, the brand most often influences the visual aspect of the e-shop and communication (63%). For 10% of e-shops, the brand has no influence at all.

Half of e-shops do their own marketing 

In 53% of e-shops, marketing communications are handled directly by the e-shop owner, while a third have outsourced marketing communications. Only 12% of e-shops have a marketing employee. More than a third of e-shops (37%) invest more than 20% of their marketing budget in performance marketing, 22% invest up to 20% of their budget in performance marketing and a full third of e-shops have no idea how their marketing budget is allocated.

"According to the well-known Binet and Fields rule, companies should invest 60% of their marketing budget in the brand and 40% in sales activation. However, this ratio varies from segment to segment, and in the online business this rule is even more skewed in favour of the brand at 76:24. Research has shown that only nine percent of e-shops work with an optimal distribution of marketing investments," says Nikola Klepáčková, Junior Strategic Planner at Ogilvy.

The most commonly used tools in the communication mix of e-shops are social networks (77%), PPC (60%) or SEO and content marketing (55%). More than a third of e-shops combine all of these tools. The research also revealed a positive finding - 54% of e-tailers plan to increase investment in branding this year. At the same time, 48% of them admit that they need help with branding and marketing. 

The full results of the Ogilvy Consulting × Shoptet Brands in eCommerce study can be downloaded here.

[1] Research by Ogilvy Consulting and Shoptet: Brands in e-commerce, June 2023. The research was conducted in January 2023 among a sample of 634 e-commerce respondents, 594 of whom own or operate an e-commerce store. Available at https://www.ogilvy.cz/ecomstudie.