Moonpig’s revenue and profits have slipped as lockdown-induced demand for online card and gifting services has tailed off and despite significant marketing investment in the spring.
The business, however, still praised its “strong marketing performance” in its statement to the City detailing its performance in the first half of its financial year, crediting it with driving increased brand awareness and the continued acquisition of new customers at a faster rate than before the pandemic.
In April, Moonpig launched its new brand platform, bringing back the company’s pig mascot which had been put to the chop four years earlier. Now in animated form, the pig fronted a multichannel campaign spanning TV, outdoor and digital.
The brand also introduced an “always on” approach to above the line marketing in the UK, in contrast to the previous concentration of marketing activity during peak trading periods.
“We are delighted we have been able to scale our marketing efforts significantly compared to pre-pandemic levels while maintaining the efficiency of this spend,” Moonpig’s CEO Nickyl Raithatha said on an investor webcast today (9 December).
The business’ always on strategy has driven a 7% increase in brand awareness from March 2021 to September, Raithatha added, bringing the brand’s awareness to an all time high and improving the quality of the online retailer’s traffic.
Over 80% of the business’ visitors are now arriving through its brands, Moonpig and Greetz, with an increasing amount of unpaid traffic, up 14 points compared to pre-pandemic levels.
“One of our key focuses now that we have expanded our card range so significantly is to drive awareness of the breadth of our offering,” Raithatha said, with non-core missions such as Diwali and Easter seen as prime opportunities to bring in new customer segments and increase frequency among existing customers.
However, with the market opportunity for new customer acquisition “normalised” post-lockdown, Moonpig’s marketing investment over the six months to 31 October was “lower” than the previous period.
Despite praising its marketing efforts, the business’ revenue sunk 8.5% from £155.9m to £142.6m in its first-half, as the reopening of non-essential retail in April brought with it further competition for Moonpig’s online service.
Pre-tax profit dropped to £18.7m from £33m the same period a year earlier. However, on a two-year basis revenue was up 115%.
Becoming an app-first business
But while revenue might have slipped overall, Moonpig is now looking at its app as the future of its business, with ambitions to become an “app-first business”.
In February, the Moonpig app reached number one on the app store for both iOS and Android, the same month as the company’s £1.2bn IPO.
The app now accounts for more than 42% of the store’s orders, it says in the results, and has helped drive an increase in orders from 9.5 million in the first half of 2020 to 19.5m in 2021. Some 60 million event reminders have been set in the app as of the end of October, an additional 10 million since April.
Buying frequency also increases by 15% if a customer is using the app, Raithatha claims.
Moving forward, Moonpig suggests that further investment may be made into additional marketing investment to drive customer acquisition or further strengthen its brands, promotional activity around its app, and an increase to the rate of investment in its technology and data platform.
The company said it is confident of ending the financial year with an uplift in UK customer purchase frequency of around 15% compared to pre-Covid levels, with revenue expected to be at the upper end of the previous guidance range, up to £285m.
“Our new technology and data platform continues to make it easier for customers to remember, find, create and send the perfect greeting card and the perfect gift to their loved ones. As a result, our half year results demonstrated even stronger customer retention and our highest-ever proportion of revenue from gifting,” Raithatha said.
“The long-term opportunity remains vast, and we have never been in a better position to capture this growth.”