Preaching to thenearly convertedAn Advertisers’Guide to onlineretAil MediA
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introductionDo you know what you are going to have for Much of what we read about in the marketing and There is a real art to retail in the high street. Location,lunch today? Will it be the same thing you advertising press concerns the activities that get us to merchandising, store layout and even smell are that shop door. Above-the-line media spend in the UK employed in almost an exact science when it comesalways have or is there a chance you might try is around £19bn3. This is a considerable amount but it is to selling. However, what is the equivalent in ansomething new? When you enter a shop to get still far less than in-store marketing. online situation?your food are you absolutely clear what it is you Online advertising spend in the UK has been growing at The purpose of this paper is to highlight theare going to buy? a rapid rate. From a 3.6% share in 2004 to 23% by the opportunity for marketers, advertisers and brands in first half of 2009, it has now surpassed TV as the top retail media online, and examine consumer behaviourThe answer is probably not. In fact, depending advertising media4. Of this revenue, around 40% goes and purchase patterns to outline the potential foron what you read between 20%–60% of all to portals and ad networks, 45% to social networks and advertisers. We look to draw some parallels with theour purchases are unplanned1. Every business just under 15% to mainstream publishers. Less than 1% offline world and offer advice to brands looking toknows that marketing and advertising do not goes to e-commerce businesses. Is that in the interests improve their online retail performance. of brands or simply those that act on their behalf?start and end at the shop door. As a result In order to market effectively to consumers, brandsthere is currently a £25.6bn in-store marketing On eBay alone over £100m worth of goods are bought have to understand the market. Not just who your each week, which is a huge number of purchase customers are or even what they do, but moreindustry in the UK2. decisions that could potentially have been influenced. importantly, why they do it. 1 The Wharton School, University of Pennsylvania http://knowledge.wharton.upenn.edu/article.cfm?articleid=2132 2 Institute of Sales Promotion http://www.isp.org.uk/news.php?pid=623 3 Advertising Association http://www.adassoc.org.uk/aa/index.cfm 4 BBC http://news.bbc.co.uk/1/hi/business/8280557.stm
Making retailMedia work harder:understAndinG thee-BuyinG consuMerIn 2009, eBay Advertising conducted two 1 online shopping is on the increase What products are youdetailed research surveys across UK, Germany buying more of online? This may seem like an obvious point; however, it’s one 80 ■ ■and France. Over 7,000 people were questioned worth clarifying. 80% of our respondents across all ■ Germany France ■ UK Totalabout their online retail habits, decision making countries stated that they were looking to spend more 60processes and motivations. There were a number online. This figure increased across vertical sectors when 40 it came to the festive season, with both entertainmentof significant findings: and grocery shopping showing a 90%+ intention of 20 increased spend online. 0 es / ie , tc t tc s s m d There are obvious conclusions to draw as to why this o r ng s e en rie s e nic on ile ite a n s ) s ) ss hi VD nm ph b ce TV o en e e Mo c e l ot s, ctr rd o m ro ( D ai might be so. Firstly, there’s the evident impact of the ac s, c P 3 le G rt H ,M E te oe m En Sh ga ho recession. In the current economic climate, people go VD (D online to find value for money and great deals. Just as importantly there is also continuous organic acceptance of online as a bona fide channel on which to shop. This is down to growth in access (penetration of broadband), trust (secure payments have come a long way) and selection (fulfilment infrastructure has also improved). “ i compared all the We’ll touch upon this later. prices that came up If we look at areas of strongest growth over the last on my google search, year, we find that they are in goods that have both tactile and emotional components in the decision and clicked on the making process. Online is not supposed to do this cheapest price for the very well but purchasers of categories such as same product, only clothing, shoes and accessories, and groceries would beg to differ. The breadth of goods also after making sure the continues to grow within each category, suggesting website was secure.” that online shopping is no longer confined to very specific items. online shopper France
2 Motivations for shopping value which dominates whilst in groceries it is much more What are key motivations foronline vary by category about convenience. increase in online shopping? 81% This behaviour suggests that online shopping has 69% 66%Some of the reasons behind the growth in online become a familiar and regular behaviour governed by % agree/strongly agreeshopping lie in the changing motivations for doing so. similar motivations found on the high street.Historically, online shopping was about getting a bargainsuch as finding the cheapest CD player you could. It is If we dig further into consumer motivations we findnot like that anymore. Trust, selection, and convenience interesting differences in how we both look for andare now just as important. The idea of getting a bargain choose a supplier. I always get I choose sites I alwayshas been replaced with ‘value’ and that is an important the best deal I can with the best selection buy from sites I trust There are clear patterns that emerge which, in manydistinction as the variety of goods gets ever wider. respects, parallel how we behave in the offline world. InThe prominence of trust as the key motivating factor the case of goods and services that are bought frequently Why do you buy morewhen choosing where to shop online can be correlated (such as groceries), or those that have an element of of these online? 80 ■ Phoneswith the strong belief that branded goods are better emotional choice or ego attached to them (such as ■ Entertainmentquality. Some might say that the democratic process of clothing or entertainment goods), consumers are more 60 ■ Groceriesthe Internet has diminished brand value. Yet our findings, likely to pick a favourite supplier – a place they have 40whilst supporting the notion that price has become less affinity and trust with – rather than search for them.impactful on brand value, suggesting that branded goods 20 On the flip side, for items that are purchased morestill occupy a higher status than non-branded items. infrequently such as household goods or items that 0The importance of trust extends to the sites that online warrant a more logical decision making process – Better value for money Easier to search Better selection More convenient Spend more timeshoppers will buy from, with recognised sites being such as electronics – then search is the preferred researchingpreferable. One respondent to our survey stated: channel of discovery. How does behaviour compare“I compared all the prices that came up on my Google We can go one step further and produce a matrix (see with purchase type?search, and clicked on the cheapest price for the same bottom right graph) where we compare how behaviours Regularproduct, only after making sure the website was secure.” such as ‘comparison’ are more prevalent with purchases Compare FavouriteAcross many categories, trust, value and selection are that are frequent yet logical such as utilities, and research Logical Emotionalinterchangeably the top three considerations. However activity is more dominant with purchases that are Search Researchfor consumer electronics, phones and entertainment it is infrequent yet emotional, such as jewellery. Infrequent
3 advertising can be highly impactful What is perhaps unexpected is the poor performance When are you most likely to of both portals and social networks, both of whom pay attention to an advert? Some would say it’s no surprise that a study conducted receive the lion’s share of display advertising revenue. 61% by an e-commerce business offering advertising opportunities, should find their placements so effective. We think it can be explained thus: we generally visit 41% However, the findings of this survey continue to support portals to access information or to pick up email. We the findings of an earlier one – that advertising in an generally go to a social network to socialise and share 12% e-commerce environment is more likely to be noticed by with others. One might argue that these behaviours are 7% consumers than any other. not as open to commercial messages as when one is shopping. Think about this next time you are in the pub E-Commerce site Search Engine Portal Social Network But all things considered, this should not be surprising. and someone offers to sign you up to a credit card. We visit e-commerce sites to browse, look for This is not to say that advertising on portals or social What types of ads inspiration and to shop. Why then should advertising in networks has no value, but simply that brands may prompted you to buy? this context not be extremely powerful when advertising itself is ultimately designed to get us to make a purchase need to think differently about how they use them. 40 of one good over another? When we think about our Some brands are already adopting new ways of 30 own trips to high street stores and our response to in- engaging with consumers in these situations. Many store offers, sign-posts and on-pack promotions, this however, are not. 20 feels absolutely right. In addition, we discovered that online advertising 10 per se has a strong value in influencing purchase 0 right across the media mix. We might be considered s s d) s ks ) te te s ) s s ad ad ad ed ed ad ad ad lin te si si foolish to suggest it has more impact than TV, but et et eb eb TV e er o o e ge d in on di de rg rg ap re w w ar“ i would have liked to see some az Ra ta ta ph Vi ce ce so sp (t ag our findings show it holds its own within traditional n n er er on ile te ew o o M (n (n m m si ob Sp N eb m m te et M ads whilst searching for used media. In particular, targeted ads on e-commerce co co w si rn eb ce e- e- te w er in an an ce sites were seen as the most influential of all online m e n on th m er so cars in gumtree, this would ds n co m ad so ya m e- advertising opportunities. up ad co an la e- p sp up on Po be a great place to put some Di an p ds Po on ya ds la ya sp ads in the main web page.” Di la sp Di online shopper UK
eBay advertising’s guidancefor online AdvertisersYou may not have an online business right now: 1 think about your online distribution strategyyou will in the future. There is not a service or Location, location, location is the oft repeated mantraproduct that at some point in the future will not for retailers and it is no less important online. It is notbe sold through the retail channel of the Internet. enough to build a shop then expect people to find you.If you think this is misguided, then consider that in Of course there are ways for brands to improve visibility, with search being perhaps the most obvious one.the past few years eBay has sold everything from However, if you really want to build trust and familiarity toa $10 broken laser pointer to a $5m Lear Jet. If your business you need to be not just easily found, but ayou are in business, then you are in the business regular feature of the landscape.of selling. The opportunities to exploit the online There is much to be written about the success ofchannel through advertising are enormous but we markets, retail parks and retail destinations. Consumershave only just begun. will visit places like these because they can find everything in one place. Shops will locate themselvesSo as the e-tail world starts to open up to there because they benefit from the enormous footfall ofadvertisers, here are some guidelines to get people out to do just one activity – shopping.you started: So, when you build your retail outlet think about where you can put it, not just how to advertise it. Put it where millions of potential customers pass every day, doing everyday activities.
2 understand how consumers are If however your goods are more price led, infrequentlyshopping for your product purchased, or require a more rational decision making process then a focus on your discoverability throughAs we have already discovered, the type of purchase search is more important. This doesn’t just meanbeing made impacts not only what motivates people ensuring you buy the right keywords but that youto buy a product or service online, but also who they consider a range of search options available to you.choose to buy it from. Google may be the dominant player and arguably the most important base of any successful search activity,This insight should have a significant influence on your but there are a range of other options to add to this.marketing mix. Is it about generating familiarity, or Consider eBay’s AdCommerce service with arguablyfocusing on a search led strategy? the largest number of product based searches on theIf you are a retailer of groceries or entertainment then web. Other broad range search engines such as Bing,it’s very much about the brand. That sounds simple to Yahoo and Ask also add good value and vertical searchsay but of course it comprises many things. Service is engines and comparison sites such as mySupermarket,arguably the most important, but selection of goods, comparethemarket and Blinkx represent a fast growingtrust and familiarity are just as important in an online trend that offers consumers more specific searching andcontext. Online is actually a great channel at building advertisers better quality leads.brands once we stop thinking about it in pure advertising Whatever sector your business is in, there areterms. We refer you to our earlier point about distribution advantages to be gained by better understanding howas a key pillar in building familiarity. your customers select you online.
3 Make your advertising contextual None of these ideas are mutually exclusive. It’s likely that most brands can and often do consider a combination.The idea of context is not a new one, but with the But there are opportunities here that can be furtherproliferation of advertising inventory on the web and exploited, and in particular the opportunity within retailthe measure of success being much more about the media goes a step further. From the car insurer who can‘click’, one could argue that it is not held in the esteem speak to consumers who have just bought a car, to theit once was. The advertising opportunity with online pram manufacturer who can talk to the consumer whoretail media really does change the game in this respect. has just bought new-born baby clothes: by monitoringThere is little question as to why someone might be and recording purchase behaviour online (same as it is inon an e-commerce site and therefore little chance of any high street store) context can be taken to a new level.misunderstanding the opportunity for the advertiser.With so many online retailers opening their doors toadvertising, there are growing opportunities to influencethe purchase of your goods and services once inside thestore. Brands do this in the high street all the time so whynot online? An advert promoting a discount or a specialoffer or an invitation to purchase is arguably betterplaced in a retail environment than a social one.
toP tips The following are our top tips to help you make the 3 clarify how people choose to buy in your most of your online retail opportunity: vertical and modify your marketing mix appropriately. Do people use your brand 1 think about your online retail store the for regular, logical purchases or less frequent, same as you would do offline. Location is key to emotional purchases? optimise visibility and reach: there is no point in having the most user-friendly store on the Internet 4 Make sure you look for context wherever you if no-one is aware that it is there! can. Don’t underestimate the power of monitoring purchase behaviour online. This can help you 2 our survey showed shoppers are most reach consumers with messages that are not only receptive to ads whilst on e-commerce sites relevant, but are likely to influence a decision. looking to buy products. So when making key decisions about advertising placement, consider where you will be able to take full advantage of existing footfall of internet shoppers already in the purchase-mindset.“ as the online retail market grows, so too does the opportunity for advertisers to engage with consumers in this environment. this insight from eBay advertising reflects the growing importance of the internet as a sales channel, and the growing opportunity for brands to influence those sales online just as they do in-store.” david J. smith director of operations, iMrG.
For further information please visitwww.ebayadvertising.com