A new industry survey of senior retail marketers, underwritten by Conversant Inc., reveals that the sector is at the forefront of many of the most promising trends and ideas in digital.
Retail is using its rich consumer insight and data -- and some of the newest creative engagement tools -- to create greater consumer satisfaction and maximum sales. Here are eight of the biggest findings and insights from the study -- results that reveal some of the fascinating ways retailers are thinking and acting in 2014.
They're becoming digital experts
Given the amount of spending now pouring into digital from merchants, it makes sense that retailers would be working hard to understand and master key digital strategies and trends. In fact, almost half of retail marketers rate their digital knowledge as "expert" or "high." Just 10 percent rate their knowledge as low or very low.
Digital is increasingly core to the capabilities of retail marketing leadership. It's a far cry from the time when digital was the bastard stepchild -- a time that digital pros know wasn't all that long ago.
They're spending almost $4 of $10 on digital
Respondents to the survey reported that they are spending an average of 39 percent of their total marketing budgets on digital. That share is 58 percent above the average company across all verticals, as reported by eMarketer. While retailers were among the first movers into digital -- given its power as a direct response (DR) medium -- what's interesting today is that retailers are actively unlocking the value of digital as a branding tool. In the survey, 58 percent disagreed with the idea that digital is for DR only.
That shift in perception is a big deal because it reflects the need to connect with more people at various stages of the product decision journeys -- not just the "bottom-funnel" demand fulfillment stages.
They're caring deeply about personalization and personalized marketing
While personalization is certainly a hot topic across the digital universe, it's particularly viewed as important by senior retail marketers. In fact, more than 70 percent of marketers surveyed said that personalization represented the future of marketing.
While personalized marketing may once have seemed like a pipedream to those that have heard pundits talk about the promise of it for years, most retailers know that it is possible today. Retail leads the pack in understanding and implementing personalized marketing. In fact, 70 percent of these marketers said that personalized marketing is possible.
iMedia SVP Marti Funk posits that retailers are so interested in and focused on personalization because they understand that they need to turn real-time experiences -- like 24/7 shopping -- into "me time" experiences. It's ultimately an extension of "consumer control" -- the idea that we need to tailor our brand experiences to the wants and needs of individuals in order to connect and convert.
They're increasingly concerned about partner glut
Anyone who has seen a Lumascape understands that the world of digital marketing solutions is highly complex and fragmented. Seen from the perspective of a client like a retailer, all of these point solutions mean that it's tough to identify, select, and work with vendors in digital.
Many of the retailers surveyed say they are working with a very large number of vendors. Sixty-five percent say they are working with six or more vendors. The mean number of vendors per retailer was 12.
All those vendors add to the unprecedented management complexity of retail digital marketing. In addition, almost half (48 percent) of retailers are reporting that it's increasingly difficult to select the right vendor from the many options available. In addition, many retailers say that integrating all of these vendors is a major challenge.
So how is all of this changing the market? The consequences of all of this are that retailers appear to be seeking more comprehensive solutions from vendors, so that they can work with fewer partners and do more with more comprehensive and integrated consumer data sets. This in turn appears to be driving consolidation across digital as larger companies acquire or build new service lines to bring more capabilities under one roof.
They're rethinking their approach to measurement
One of the reasons why retailers fell in love with digital in the first place is the ability to measure it in so many ways. From simple models like last click, to more complex rules-based and algorithmic ways of assigning credit for sales to certain marketing tactics, today there are a variety of different approaches to measurement.
According to the survey, last-click attribution remains the most popular among retailers, with more than two-thirds saying that they use this format for at least part of their marketing measurement.
These figures appear to be poised to change given other survey results; many retailers say they plan to deploy more advanced measurement methodologies in 2014.
They're concerned about finding alternatives to the third-party cookie
Sixty-two percent of retailers reported that they are concerned about the implications of cookie tracking and cookie deletion. Given the importance of accurate measurement to any commerce-focused company, it's natural that retailers have expressed some misgivings here.
One way retailers are addressing these challenges is by placing more importance on their existing customers -- people with whom they have first-party relationships. By refocusing resources onto growing lifetime value and leveraging rich understanding of individual product preferences, retailers are finding powerful ways to grow their businesses, despite the challenges facing the third-party cookie.
They're rightsizing retargeting spending
Retargeting is a popular marketing tactic, with 74 percent of senior level retail marketers rating it important. That said, nearly half of our respondents believe that retargeting takes too much credit for sales that would have occurred anyway -- without advertising.
Although few doubt the intrinsic value of retargeting, what this conveys is a growing recognition that at some point there is a diminishing return for retargeting an investment. And at some point it is more economical to invest at other stages of the purchase journey. What's happening isn't an abandonment of retargeting, but rather a more reasoned approach to marketing allocation across the consumer journey.
They're hungry for more knowledge
We've seen that many senior retail marketers rank themselves highly on digital knowledge. But at the same time, they also say they are anxious to learn more about many topics in digital -- especially those that appear to reflect the key trends expected over the next several years.
Specifically, when asked which topics retailers are most interested in learning more about in 2014, they gave us these results:
Perhaps not surprisingly, topics related to data, ROI, and cross-device marketing led the pack. Almost half also said they were interested in learning more about how best to integrate online and offline data. Social media marketing also showed strong interest, though it no longer dominates the list of marketer interests as it did just a few years ago.
This survey -- conducted in the first quarter and soliciting the opinions of 81 senior level marketers at leading U.S. retailers -- underscores the dynamism in today's retail environment. Since retailers often move before other business sectors in digital, these results may portend larger cross-industry trends in the months and years ahead.
What's plain to see is that merchants aren't resting on their digital laurels -- not by a long shot. As they embrace new ideas and trends, it's safe to bet that we'll be seeing radical innovation in this vertical -- just as we have in the past.
If you'd like a copy of the full study, you can get it here.
*For this study, senior-level retailer marketers were contacted via phone and email to take a 10-minute survey. Contacts were informed that the research was sponsored by Conversant (then ValueClick Inc.), Bovitz Inc., and Edelman; they were also informed they would receive a monetary incentive and a copy of the aggregated research results.
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