Asos reduces ad spend – here’s where it’s investing instead
Asos has reduced its advertising spend from 6% of revenue to 4%, with no plans to resume it in the short to medium term. Instead, it’s taking a different approach to marketing – working with ad agencies like Uncommon to develop new brands and investing heavily in voice tech and AI to convert browsers to buyers.
Asos reduced its ad spend as part of a wider efficiency drive after missing targets set earlier this year. Updating on its performance for the year to 31 August, the online fashion giant revealed that sales had soared 26% (or £500m) to £2.4bn. Profits similarly jumped 28% to a better than expected £102m.
Despite the improvement, it said that it doesn’t plan on resuming its advertising spend and that in the short-term, more cuts might be on the way. Instead, it’s shaking up how it approaches marketing.
Take its work with Uncommon – founded by ex-Grey trio Nils Leonard, Lucy Jameson and Natalie Graeme – which it tapped to co-create a clothing brand specifically for the 16-20 year-old market. Called ‘Collusion’, Uncommon developed the brand positioning, aesthetic and creative ahead of the launch just two weeks ago (8 October).
“The customer reaction has surpassed all expectations,” claimed Asos chief executive Nick Beighton.
Beighton declined to give specific numbers on performance but said that in its first week of trading, the brand went in at “number four” on sales.
Then there’s its tech investments. Asos had nearly 50 million active installs of its app last year, with visits an average of almost seven times a month with 9.5 minutes of dwell using it.
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Beighton said it has continued to invest “hard” in improving the services around it, including the rollout of its first ever chatbot, dubbed Enki, followed by the launch of a voice shopping tool on Google Home, its first move into voice search.
“I said 12 months ago that the way customers interact with Asos will change. The tech guys call these conversational interfaces. If I give you the language of the customer, what does this mean? It means being able to talk to Asos anytime you like, 24/7, in any way you like. For visual search, which we launched with Style Match [which allows users to find items similar to ones they already like by uploading a picture] during the year through Enki, and now, voice,” he said.
“[It’s] just a different way to interact with our experience, our brand, our product, using technology that customers will be very comfortable doing, talking through chat, through visual search and, now, voice.”
Beighton also revealed that 35% of its app customers have somewhere between 50 and 500 saved items any one time – improving conversion from browser-to-buyer is a key area of focus.
In one market, it’s trailing a product called ‘Asos Board’ which uses artificial intelligence to segments products by occasion and then suggest product or ‘new’ boards for people to look at.
“What we'll do from here is, using AI, recommend new boards. We'll send push notifications when the things on their boards are low in stock, and any of the price alerts and messages to help,” he said. “So that's coming – it’s currently being rolled out across all territories now.”