Maplin’s AI-powered ad strategy fuels 17% profit surge online

Maplin is reporting a resurgence with profit growth outpacing the average online retailer, attributed in part to its targeted use of artificial intelligence in advertising.

Maplin Electronics, once a prominent electronics retailer across the United Kingdom, entered administration in 2018, resulting in the closure of 200 stores and the loss of 2,500 jobs after efforts to find a buyer were unsuccessful. The brand was later acquired, and since 2019 it has traded exclusively online, gradually regaining position in the market.

According to recent performance data, Maplin has achieved a gross profit increase of 17% and a revenue rise of 14.2% in the past 12 months, a notable improvement when compared to the previous year's 16% decline in revenue. This growth far exceeds the 3.2% revenue increase recorded across all online retailers during the same timeframe, or 6.1% when excluding food shops, according to figures from the Office for National Statistics.

The company credits much of this turnaround to a revised digital advertising approach that utilises proprietary pay-per-click (PPC) technology, developed in collaboration with growth consultancy Jack.tm. This method has reportedly resulted in a 139% increase in online ad conversions and a 29% reduction in the cost of customer conversion during the last year.

Jack.tm's tool uses AI and takes a different approach from standard automated ad campaigns, particularly by identifying and excluding returning customers from paid advertising. The goal is to avoid paying for repeat visits from existing loyal customers, focusing instead on attracting new shoppers.

Jack Felstead, Chief Executive Officer of Jack.tm, said: "The online advertising giants love to keep control of your spending and don't always do what's in your best interests. Paying to attract the same customer over and over again is a prime example, and the financial impact of circumventing this investment black hole is pretty dramatic. If you can stop paying for the same leads, and track the profitability of every advert and every person who visits a website, you're suddenly in a different field. You've got another layer of intelligence that means, for every £1 you spend, you know you'll be making £1.50 in return. Data really is the new gold and, by optimising ads in this way, investment decisions become very low risk and high reward. To achieve that, we've had to go completely against what Google considers best practice. Google's Performance Max ad campaign engine is the epitome of AI and automation gone wrong. It's the equivalent of leaving your bank vault unlocked and inviting Google to help themselves. This is a huge problem in retail. The bigger the business, the more existing customers they're going to have and the higher the risk that, by targeting those most likely to buy, more of their ad spend goes on retargeting and retaining existing customers. That's why retailers can realistically reduce ad spend by up to 40% without affecting sales."

The PPC platform developed by Jack.tm was recognised with a 'Stand Out Use of AI' award at the UK Digital Excellence Awards in April. Alongside customer segmentation, the technology includes a tiering system that reallocates advertising budgets in real time according to each campaign's performance, which Jack.tm states has delivered superior results compared to standard Google tools.

Ollie Marshall, Maplin's Managing Director, outlined the impact on the company's trajectory and competition within the sector.

Ollie Marshall said: "Maplin is back, and getting stronger by the day. Jack's secret sauce in the battle for ad revenue has helped to transform the trajectory of the business. He's a retailing midas. We know everyone else on the High St will be trying desperately to catch up but, for now, we've got a real edge that is helping us grow our bottom line far quicker than we'd thought possible. The level of automation we've got from an AI-built tool is so complex it's way beyond anything we could have built ourselves. All the ad platforms are a tax on businesses but they are so good at what they do that you have no choice but to spend with them. They will take as much money as you're prepared to give them so what we've learned is that it's your responsibility, as a retailer, to put guardrails in place. We now know how much we were wasting before. We even made a loss on many of our campaigns but didn't realise it at the time. We don't squander a penny now. We're making Maplin a sustainably profitable business that can last for another 100 years."

Founded in Rayleigh, Essex, in 1972, Maplin initially operated as a mail-order business for electronics enthusiasts before establishing retail premises in Essex in the mid-1970s. Today, it operates entirely online, offering 600 own brand product lines and recently became the 63rd most popular UK retailer, ranking ahead of players like CeX and Euronics.

In April, Maplin expanded its reach by joining Deliveroo's roster of virtual storefronts, making selected products available to consumers in London and Cambridge.