Asos to slow digital marketing spend

Asos has invested heavily in marketing activities over the past year, particularly digital, with marketing spend almost doubling in its latest fiscal year to £40.93m. That has helped boost Asos sales, which were up 38 per cent to £335.7m for the 4 months to the end of December.

Speaking on a call with analysts yesterday (14 January), CEO Nick Robertson said that while spend on digital marketing will continue to rise, there will not be the same “step-change” increase this year as the online retailer focuses on ensuring it spends effectively.

“We want to pause and reflect to understand the numbers. We need to understand what we have done, understand customer behaviours and redeploy spend more effectively,” he added.

Robertson said Asos will continue to focus on “strategically important” countries with plans to “dial up” marketing spend in the US. This includes investing in social media and its CRM strategy in the US, particularly once its new fulfilment centre in Ohio is fully operational.

“We are investing in the proposition first then we will dial up marketing accordingly,” he added.

Asos has also evaluated its product range to ensure that the brands and clothing it offers are consistent with the firm’s demographic. Robertson said that over the past 18 months Asos has reduced the amount of premium brands available and redeployed into lower-priced high street brands.

This includes New Look, which launched on Asos in 2012 and which Robertson said was a “real star” on the website.

“We have moved the prices points in Asos own-label and third-party brands. We continue to make sure that our prices stay sharp and relevant and that we don’t get carried away with premium products on our sites.

“We are clear on our customer base and what our customer responds to. We are on a journey to take off stock that we don’t think is appropriate and add lower priced brands as we see fit,” he said.

Robertson said this move to lower price brands was having an effect on its profit margin but that the firm had offset that through tighter stock management. Its profit margins for the four months were up 90 basis points but he doesn’t expect that to last and said for the full year the figure will be closer to 40.