Online pet supplements retailer uses AI
Facebook and Instagram ads help online pet supplement retailer Finn Wellness LLC reach new customers. But options are limited, says Randall Stainton, director of growth.
Facebook pixels traffic off existing customers, he says. Finn turned to artificial intelligence software vendor Proxima to help identify consumers beyond its customers based who are most likely to be interested in purchasing Finn’s dog supplements. There are two categories Finn wanted to reach: interest-based and existing customer/lookalike-based audiences. Interest-based groups are dog owners. They might be interested in a specific breed, or category, such as dog food or dog toys. Lookalike-based audiences are repeat/existing Finn customers.
How does AI impact digital marketing?
Over time, the machine-learning technology identifies purchase behaviors. Finn wants to advertise to consumers likely to buy pet products. Proxima’s software maps out consumer purchasing behaviors. The algorithm takes into account the different categories consumers purchase from — consumers who also buy pet items, such as clothing or home goods. It incorporates where they live, whether West Coast, East Coast, etc., and pulls together separate audiences, which are consumers that share similar traits.
Finn runs these groups inside Facebook’s application programming interface (API). Finn can decide how much to spend on an ad and adjust the budget for the different audiences within Finn’s Facebook ad manager account. Proxima runs a “feedback loop” to track ad performance. This includes tracking where the cost of acquisition (CPA) — the fee a retailer pays for an advertisement that results in a sale — is lowest, for example. The algorithm adjusts in real-time, reconstructing, or fine-tuning, the audiences based on successful periods to better reach potential customers.
Proxima recommends merchants spend a few hundred dollars a day driving traffic to these audiences to see who responds and what traits these consumers have. By using the same advertising, the algorithm can remove some of the variables to see what resonates and what does not.
“Think of it as an intelligent game of Battleship,” says Alex Song, CEO and founder of the AI marketing software vendor.
Finn invests more of its marketing budget to attract new customers
The online brand launched in the midst of COVID-19 in Sept. 2020. At that time, Finn focused mainly on its Amazon store. In mid-2022, the online retailer wanted to shift focus to petfinn.com, Stainton says.
Currently, 60% of Finn’s overall online sales come from its Amazon store. 40% of online sales come through its website, Stainton says. A direct-to-consumer (DTC) average order value is about $43, compared with Amazon orders at $37. These haven’t shifted much since launching the brand in Sept. 2020, Stainton says. What has changed is that Finn decreased spending for customer acquisition on Amazon and, instead, is investing more in paid social marketing for its DTC website.
In January 2022, 80% of Finn’s total advertising budget went toward promoting on Amazon and 20% toward promoting the DTC website. In January 2023, they reversed the ratio, Stainton says.