The Price is Right... or Not

type: embedded-entry-inline id: IxY6OECKkheAOevAJMUeq Jennifer Silverberg, CEO SmartCommerce

First - a little history. When we started the company in 2016, many brands were still skeptical about whether consumers would ever buy CPG products online, and consumers weren’t sure they would, either. At the time, that sort of made sense – the internet was seen as a demand response/fulfillment tool, a place to get more product information or to compare prices while CPG product choices were typically lower-consideration and even impulse-driven.

As our brand clients became the first to directly connect ads to carts/commerce, we watched the first consumers “play” with the novelty of shoppable Click2Cart ads. Consumers seemed to actually have fun watching products magically move from an ad to their store cart – and we were able to easily see from the data that any “heavy” consideration info like price, size, etc. acted as a barrier to carting. This has been observed before with other impulse situations: for example, publishers have seen that magazines placed at checkout actually sold better without a visible price than with one (even when it was a discount!). During this time, across almost all categories, we counseled clients to hide price on ad landing pages.

But in the intervening years, a LOT changed: the explosion of social/influencer media, Covid-driven acceleration of online CPG shopping, the rise of quick commerce, and the proliferation of commerce media. With this, the internet switched from being a demand-response tool to being a leading demand-driving platform. We watched the consumer behavior data change in tandem: landing page engagement increased, time spent with higher-consideration landing pages (like recipes) dramatically increased, and overall clicks and conversions exploded.

And after years of watching consumers stay retailer-loyal, even when another retailer had a better price, we began to see significant price-driven retailer switching. While this was also enabled by much lower barriers to switching stores (quick-pay methods, universally faster shipping, and lower shipping minimums), it definitely signaled that shopping from ads/social/etc. was no longer a novelty or purely an impulse action – it had matured into an at least partially-considered behavior, following regular shopping rules (where price matters).

And, given this, it’s not surprising that we also are clearly seeing that overall, price now has a positive impact at point-of-decision on ad landing pages and websites. On average, price being present increases decision to cart by around 27% (or put another way, if price is not present, you’ll lose about one out of five consumers who would have acted).

But of course, this is just an average, so it still “depends.” There are still notable exceptions to the rule: highly impulse-driving ads (think highly inspiring new ideas or new product announcements, particularly among lower-priced products) are still likely to follow the old rules, where price can get in the way. And, you will likely find differences by platform or product type as well. We encourage all clients to test to learn what works best for your category (ask about our new simple A:B testing functionality that helps with this), so you can keep doing more of what works, and less of what doesn’t!

What a fascinating category we get to play in – so glad to be taking this journey with you!