Asos to take an ‘always-on’ approach to global marketing
Asos’s pre-tax profits plunged 87% for the first half of the year, to £14.8m. In addition to a new brand-led structure, it is planning to up ad investments and go ‘always-on’ with its global marketing in an attempt to recover losses.
Asos / Asos
Online fashion retailer Asos had previously warned investors they were in for a bumpy ride. Back in October, its then chief executive, Nick Beighton, said it was lagging from the pandemic, suffering from stock issues amid the supply chain crisis and ultimately struggling to replenish its website, which lives and dies by a breadth of new items being revealed daily.
Despite assurances, it had not anticipated Vladimir Putin’s invasion of Ukraine. Asos was among the brands to retreat from Russia, which it has calculated will have cost the business some £14m by the end of the year.
The company says sales grew just 4% globally, to £2bn, in the first six months of its financial year to February 28.
Mat Dunn, chief operating officer, says he was mindful that the rise in taxes and cost-of-living will hit its core demographic. “We remain mindful of the potential impact on demand from the growing pressures on consumer spend and will continue to be responsive to any changes in market conditions,” he adds.
To help recover losses, Asos says it will shift its marketing strategy to take an “always-on” approach – especially in its core markets outside of the UK.
It upped marketing spend to £119.7m for the first half of the year, which as a percentage of sales tallied at 6% versus 5.5% for the same period last year, and shone a spotlight on a campaigns to build awareness and consideration among female shoppers aged 18 to 34 in the UK, US and France.
Describing it as a “test and learn” phase of broad reach marketing, it invested spend into TikTok, YouTube, Snapchat, Hulu and Roku for a 90-day period, and Dunn says it has received both “positive feedback and constructive criticism” ahead of a planned “scale-up” in the later half of the year.
“There were a number of key takeaways, but we learned how we activate the creative. We saw a much better pick up from customers who were already aware of Asos, so we need to be more direct [in targeting them] and have more actionability on the creative. We need to get them quicker to what Asos stands for.
“We’re optimizing the media mix. We will go for an ’always-on’ approach. We’ve seen ’controlled and consistent’ is better than bursts. That approach works better.”
Marketing spend in the UK will remain largely flat, he says. The problem in the UK wasn’t consumer awareness or propensity to purchase, it was simply product availability.
But it will up investment outside of the UK – specifically in the US, where it will ramp up activity in Q4. This will be supported by a new brand-led commercial structure.
Previously, the organization was split into men’s and women’s wear, with two teams dedicated to each. Moving forward, teams will instead be dedicated to its owned brands – for example, Asos and Topshop – with an additional team leading the partner brands strategy.
They will be given more autonomy over strategy and taking product to market, which Dunn describes as one its most significant structural overhauls to date. It remains to be seen how it will be received by investors, however. Shares in the group have fallen 70% alone. Its stock was down 1.6% on its earnings update.
Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, says: “It’s vital Asos maintains healthy stock inventory, as consumers have grown tired of Covid being used as the excuse for lack of availability. It must also make sure it’s meeting customers’ need for convenience and speed. In fact, inventory and availability are likely to be at the forefront of its strategy this year as it looks to overturn reputational damage caused by delayed Christmas orders.
“Looking forward, it will be interesting to see who Asos appoints as its CEO and how it looks to re-establish itself as a pure player not to be reckoned with. With 3,000 Asos-ers delivering to the 26 million loyal shoppers in 200 markets around the world, and two-thirds (64%) of consumers excited by the prospect of buying everything through one retailer, if anyone can bounce back, Asos can.”