How do you increase e-commerce revenue without spending more on ads?

What actually drives e-commerce revenue?

There’s really a finite number of levers you can pull to drive a business. Revenue is traffic, times conversion rate, times average order value. That’s it. You can get more people to the site, get more of them to buy, or get them to buy more.

The number I like to watch is revenue per session: total revenue divided by the number of visits. It wraps conversion rate and AOV into one figure. If revenue per session is going up, your marketing is getting more effective. If it’s flat, you’re just buying more of the same result.

Why doesn’t more ad spend fix it?

A lot of people think they need to run more ads and get more traffic. All that does is increase your costs at the same rate as your revenue. You’re bigger, but you’re not better.

Here’s a quick check you can run today. Put your revenue growth next to your traffic growth for the year. One business we work with had both up by almost exactly the same amount. On the surface that looked like a great year. Underneath, it meant we hadn’t had much of an increase in marketing effectiveness, which is why we’re building them a new website.

If your revenue only moves when your traffic moves, look at the site and the basket before you touch the ad account.

How do small lifts add up?

They multiply, because each lever sits on top of the one before it.

Take a simple example. Lift your conversion rate by 10% and your AOV by 10%, and keep traffic exactly where it is. Revenue goes up by 21%, because 1.1 times 1.1 is 1.21. That’s more than either change on its own.

Push both to 30% and you get about 69% more revenue, because 1.3 times 1.3 is 1.69. Same visitors, same ad spend. Add cheaper clicks and stronger email on top and you’re heading towards double.

The bit people miss is the effort. The effort to get a 10% lift in conversion rate and a 10% lift in average order value is actually less than the effort to get a 20% lift in conversion rate. Chasing one heroic number is hard. Nudging four of them is just good, steady work.

Where do you find 10 to 15% on each lever?

Think of the whole business as one pipeline, and look for the easy wins at each stage.

Ads: you want cheaper clicks. The way we make the ads cost less is better creative: more engaging, more fun, more exciting, with better offers. Better content gets shown for less, and more people tap it.
Website: there are usually ten things on a site that would lift conversion before you spend another cent on ads. Go through it like a customer would and fix what slows them down.
Average order value: give people a reason to add one more thing to the cart, and make it easy to do.
Email: build out your flows in Klaviyo and keep sending. Every extra sale from someone already on your list costs you almost nothing.

None of these need to be dramatic. If you optimise your ads by 10 to 15%, your website by 10 to 15%, your AOV by 10 to 15% and your email by 10 to 15%, the effects stack downstream and the business grows a lot.

Why does this grow profit and not just revenue?

Because most of these gains don’t add cost.

Cheaper clicks are the clearest example. If better creative cuts your cost per click by a quarter, you’re paying a quarter less for exactly the same clicks, on exactly the same revenue. That saving is pure profit.

The same goes for conversion and AOV. The way we make more money is more of them buy, and when they buy, they spend more. You’re getting more out of traffic you’ve already paid for.

This is also how you step off the discount treadmill. One founder I worked with set a goal for their first month with us: profit up, revenue stable, less promotional discounting. Revenue per session is the lever that makes that possible. If your site converts better and baskets are bigger, you don’t need to slash prices to hit your numbers, and you keep a bigger slice of every sale.

Where should you start?

Work through the levers one after the other, so each gain lands on top of the last.

Pull your numbers: sessions, conversion rate, AOV, revenue per session and cost per click for the last 12 months.
Compare revenue growth to traffic growth so you know whether you’ve been getting more effective or just bigger.
Pick the lever with the most obvious low-hanging fruit and fix that first. For most stores it’s the website.
Move to the next one, and keep going. Measure revenue per session every month so you can see the compounding happen.

Nathan Frater

Founder and MD of Backbone, a performance creative agency based in Wānaka. I've spent 20 years building businesses and more than a decade running ads, and I write up what works from the calls I'm on every week.