An Interim COVID-19 Report with 2020 vs 2019 Data: The State of Ecommerce, Paid Media & Our Problem with ‘Cliffs’

Aaron Orendorff

by Aaron Orendorff

Aug. 31 2020

This special report on the state of ecommerce trends during COVID-19 centers on year-over-year data from 49 accounts managed by Common Thread Collective at ~$103M annual spend.

The central numbers we’ll explore are from January-August and include aggregate totals of …

  • Revenue: +173.80%
  • Spend: +117.22%
  • ROAS: +26.05%
  • CPM: -32.13%

Exploring Aggregate Totals of Post-COVID Data

Editorial note: The videos and narrative below were recorded in late June; all data (including charts) have been updated as of August 31, 2020

“We all know at the end of May,” said Jamie — CMO to one of Common Thread Collective’s largest clients, “ecommerce fell off a cliff.”

The line came in such a matter of fact tone that I let it drift by without so much as a follow-up. After all, Jamie (not their real name) and I were meeting to prepare for a forthcoming case study. Happier things were on my mind.

That was mid-June.

But as the buzz on social media — particularly among DTC operators, owners, and media buyers — ramped up, Jamie’s comment began haunting me:

“We all know at the end of May, ecommerce fell off a cliff.”

Were they right? They had to be. I saw it everywhere.

From March-May, online shopping slammed into public consciousness.

Propelled by necessity, the narrative included phrases like “permanent step-change,” “Black Friday level sales,” and (perhaps my favorite): “What was once a layer atop of society, will become its core functionality.”

Then, June descended, bringing with it not summer harvest of spring’s seeds … but the opposite.

What happened? What’s happening now? And, what’s the problem?

What Happened? Behold, the ‘Cliff’

Since the beginning of March, we’ve been tracking 28 accounts with a ~$75M annual spend rate managed by Common Thread Collective.

The goal was to set a pre-quarantine baseline — March 1-7, 2020 — and use that old normal to track changes in ecommerce metrics related to paid performance.

Of crucial importance were fluctuations in costs and returns.

For the former, CPMs dropped substantially in March, crawled back in April and May, and then returned to their pre-quarantine baseline in June.

CPM change data March-April

Update and interactive charts are available within Coronavirus Ecommerce Opportunities, Data & Strategies

As for returns, lower costs coupled with a world cut off from brick-and-mortar retail led to record-breaking numbers in March-May, followed by an inverted mirror of CPMs in June:

ROAS change data

Looking strictly at week-over-week comparisons, ecommerce’s bubble exploded …

Weekly average sales of $353k in April-May down to $229k over the last three weeks.

Rev. change data

Off a cliff, indeed

There’s just one problem.

Truth be told, our own data was a big part of it …

What’s Happening Now? The Problem with the ‘Cliff’

With Jamie’s words ringing in my ears, we held an impromptu meeting late last Friday with Taylor Holiday (CTC’s CEO), Andrew Faris (President of 4x400, CTC’s holding company for DTC brands), and Trend Kerth (CTC’s Senior Paid-Media Manager).

This is the Slack message that framed it the day before:

Slack messages between the team on the state of accounts due to COVID

For the first ten minutes, I stumbled my way through anecdotal evidence and the declines shown above. Categorical trends had been especially manic. Sectors like online cosmetics, health and wellness marketing, alongside pet ecommerce showed signs of growth; others — like fashion — seemed

“Trent, didn’t you pull the data?” asked Taylor.

“Yeah, wait. Okay. Here we go,” replied Trent, pasting two images into Slack.

They hung for a moment. And then …

Drawn from 49 accounts in CTC’s portfolio, the data contained 2020 vs 2019 comparisons …
  • Revenue: +173.80%
  • Spend: +117.22%
  • ROAS: +26.05%
  • CPM: -32.13%

Website purchase conversion value data

Note: All data has been standardized for 1 day click + 1 day view

Amount spent data

Return on Ad Spend data

CPMs data

2018 CPMs shown in light green; for more on why ad costs are decreasing, Ecommerce Holiday Marketing Strategy: Planning for Profit & Peace This Black Friday, Cyber Monday (2020 Edition)

Cliff? Hardly.

What’s the Problem? You Know, the ‘Real’ Problem

Far more than an interim report of the state of ecommerce amidst COVID-19, the zoomed out data reveals not one problem, but three:

  1. Efficiency
  2. Seasonality
  3. Recency

First, efficiency is relative. As marketing efforts increase returns diminish. Not linearly — to be sure. Still, ROAS and ROI aren’t absolute markers of success.

Instead, returns are disproportionately valuable based on investment, unit economics of SKUs (profitability), and payback windows — i.e., LTV.

While agency-wide ROAS has increased by 22.03% YoY in total, month-over-month changes show a slight decline …

  • April: 2.33
  • May: 2.30
  • June: 2.14

Your own numbers must likewise be tempered in relation to spend as well as their historical context. For CTC clients, that’s been a 174.65% YoY increase in ad dollars alongside a 237.03% lift in sales.

And yet, growth itself can be deceptive:

Second, seasonality is real. June isn’t June in relation to May. June is June; full stop.

Coupled with ecommerce’s quasi-monopoly during March-May, Spring ends with a rapid succession of shopping events: Easter, Father’s Day, Mother’s Day, and Memorial Day.

This doesn’t negate the need to drive new growth during off-seasons, but it does necessitate the right investments of our time, energy, and money.

While common knowledge, pressing the traditional Summer lull to the forefront of our minds is imperative to level-set expectations and planning.

Third, recency bias is a motherf****** …

COVID-19 did create a new normal: simultaneously true and false.

Not a Cliff, But Definitely a Slope

The slope that we’re on is just that — a slope that historically changes based on seasonality and efficiency.

As humans, new normal becomes old normal so fast.

We react with volatility to natural changes. That reality must drive us toward clearly defining the problem. Likewise, it serves as a testament to why Facebook is so good at the very thing we’re so bad at — data-backed learnings driving optimizations, not emotions.

Even though the health of your business may vary, by zooming out on the holistic data, you may realize that instead of falling off a cliff … you’re seated comfortably at the top.

Enjoying the view of the sun setting on today’s “problem.” And at peace knowing that when it rises again, tomorrow holds the solution. 

Last, if you’d like to watch the full version of everything covered above, you can check it out right here …

How to become ‘essential’ in the online age of coronavirus

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    Aaron Orendorff

    Aaron is the VP of Marketing at CTC. Previously the Editor in Chief of Shopify Plus, his content has appeared on Forbes, Mashable, Entrepreneur, Business Insider, The New York Times, and more. Connect with Aaron on Twitter or LinkedIn (especially if you want to talk about bunnies or #LetsGetRejected).