As the global economy gradually stabilizes and political competition for advertising space slows, now is the perfect time for retailers to go from stagnant spending to accelerated ad performance. ECOM DEPARTMENT have teamed up with Style Arcade to unpack how aligning merchandising with e-commerce is set to be the catalyst for profitable retail growth in 2025.
E-commerce and digital marketing in 2025
With no signs of slowing down, e-commerce and brand marketing are evolving fast to seamlessly blend the online and in-store shopping experience. While the competition for ad space will remain fierce, brands that can deeply understand how their products are performing, and continually adapt to the shifting digital landscape will have the best chance of cutting through.
The growth benefits of understanding product performance
Hyper-personalized ads and targeted shopping feeds are all part of the forecast, however, the ROAS won’t amount to much if brands don’t know exactly how their products are tracking.
“A deep understanding of product performance is crucial for digital teams in 2025 to efficiently allocate ad spend and aid planning teams in controlling inventory,” says Brogan Hembrow, Head of Brand at Style Arcade. “Retail marketers that have fallen victim to heavily relying on automation to drive their spending, can start plugging those budget leaks by simply utilizing their own product data in their advertising.”
Digital teams need to be across the following merchandising metrics to create impactful campaigns across all channels:
Size availability %: The percentage of sizes still in stock against the sizes you bought.
Sell-through %: The percentage of inventory sold within a specific period compared to the total inventory received.
Weeks cover: The number of weeks the current inventory will last based on the average weekly sales rate.
Profitability: (Gross Margin % or Profit Margin) The percentage of revenue left after subtracting the cost of goods sold (COGS).
Return rate %: The percentage of sold items that customers returned.
By grasping the implications of these product metrics, digital teams will be able to:
-
Save wasted budget on poor performers: Improve conversion rates by ensuring products have high-size availability and stock cover.
-
Decrease costs associated with high RR%: Exclude high-return products from shopping campaigns to lower unit costs for logistics and warehousing.
-
Improve profitability with the right products: Prioritize products with high margins to ensure first-order profitability.
-
Lower CAC and increase LTV: Improve CTR% with best-selling or high-acquisition products for first-time customers.
“Aligning your paid media and merchandising teams on the same data set, with access to real-time metrics, is going to enable the entire business to work proactively in achieving the perfect trifecta: right product, right customer, right time”, says Brogan.
How to avoid advertising low-conversion products
In 2024, many brands leaned on Google Performance Max (pMax), where Google uses AI to run shopping campaigns using its own algorithms to select which products to show customers. The problem is that marketers don’t have control over what products are displayed first in the shopping feed—the higher the click-through rate, the more likely the product holds low stock due to its popularity. This clincher is, PmAx charges you based on the clicks, not from the sale.
"Few things frustrate shoppers more than clicking on an ad, only to find their size is sold out. And for brands, it’s not just a bad experience—it’s wasted ad spend. Smart merchandising isn’t just about what’s in stock; it’s about making sure you’re only promoting what’s actually available and primed to sell,” says Dominic Hill, VP Digital at ECOM DEPARTMENT.
“With Style Arcade’s dynamic product tagging, brands can automate product feeds using real-time metrics, eliminating wasted spend on unavailable inventory and ensuring every ad dollar works harder. It’s a simple shift that leads to better customer experiences and stronger, more profitable campaigns," Dominic said.
Here are a few ways retailers can leverage smart, high-converting product feeds to fuel growth:
-
Reduce customer disappointment
Automatically remove products from your Google pMax shopping campaign that have a low size availability to drive conversion and reduce customer bounce. -
Create high-converting email campaigns
Klaviyo users can send an email campaigns to new customers with a feed of products that have an above-average new customer acquisition %.
-
Personalize the in-store experience
Send an in-store welcome campaign to first-time shoppers in a particular retail store, with a product feed of that store’s best sellers that have high stock. This encourages customers to return in-store based on what's popular in that location.
-
Avoid low-profit acquisitions
Automatically remove products from your Google pMax shopping campaign or DPA campaigns for new customers that have low profitability to drive profit contribution margin from advertising campaigns.
-
Lower your RR%
Automatically remove products with a high return rate from pMax or DPA campaigns to ensure first-time customers aren't going to return their first purchase with you.
By simply adding critical merchandising metrics into shopping feeds with Style Arcade metrics, retailers can take back control of their product marketing and ad spend. This will positively impact the performance of products in campaigns, increase conversions and reduce ad spend wastage.
Learn more about Style Arcade here www.stylearcade.com, or access more resources below:
How to drive profitability in 2025
How to reduce your return rate
How to break the discount cycle
Do you have additional questions about running successful ads in 2025? Reach out to the ECOM DEPARTMENT team now >>> dominic@ecomdepartment.com
