The web has empowered consumers: they go online to find better deals than on the high street and have access to an increasing number of tools to locate bargains. Therefore, vendors can no longer rely on shoppers' loyalty to a preferred retail brand since consumers actively seek the best prices instead. This means brands need to rethink how they are using online marketing to ensure shoppers are directed to their store rather than to that of a rival.
Research into European online shopping habits conducted by Ipsos MORI for Sterling Commerce in April 2009 revealed that 54 per cent of consumers polled research products online before making a purchase.
It is clear that price is the defining factor in the purchasing behaviour for the majority of e-shoppers. Therefore, brands need to put the consumer first and consider how they can tailor marketing efforts to fit user behaviour at each stage of the buying process.
The decline of branding as an incentive in advertising will necessitate a sea change to the way brand owners use the internet, and now is the time to ask what advertising can and should be for this growing segment of savvy consumers. What we know is that eyeballs are no longer enough: web users have developed banner blindness and will actively ignore anything that looks like an ad unless it is directly relevant to them. Therefore, the established CPM business model needs to be radically rebuilt and advertisers should demand measurable actions or click-throughs from digital sales houses.
Whilst a performance-based model suits advertisers they will need to be realistic about what incentives can successfully drive conversions. Regardless of how targeted and contextual the ad served may be, a branding exercise simply isn't enough. Consumers are now much less likely to care where they make a purchase online As long as shoppers can verify that a vendor is trustworthy they are equally likely to buy from one of the internet giants, like Amazon, a high street brand's online store, or a small specialist retailer.
Price is a great leveller and with competitive pricing and successful targeting even the smallest online store can generate great ROI. One clear benefit internet advertising offers over offline formats is the opportunity for smaller companies to reach particular audiences more selectively. Through detailed analytics it's possible to segment consumers into niche demographics and to take advantage of 'the long tail'. Websites stocking limited numbers of more obscure items can exploit consumer demand over extended periods rather than relying on selling vast amounts of popular stock before moving on to the next mainstream product. However, when this model is extended to ads for specialist products, there's potential for niche retailers, who would previously been excluded from advertising, to vastly improve sales.
Advertisers should not limit themselves to a single digital advertising format and various channels should be used at different stages in the buying chain depending on the individual consumer's behaviour, and in particular their level of engagement. For example, even if a potential customer demonstrates enough interest in your product to visit your website on the back of a response campaign, most will still do a web search to compare your offering to that of the competition. Therefore it's worth adding a value added incentive, for example, partnering with a cashback service or voucher site, which will attract a greater number of warm leads that are more likely to convert. Contextual offers targeted to individuals at the right stage in the purchase cycle, for example at point of sale, provide further opportunities for up-sell and cross-sell. Even if the shopper doesn't follow up a contextual offer at the time, it may spur further search activity. If tracked, follow up via email marketing with an associated product or an enhanced offer can drive a conversion before the user finds a better deal elsewhere or goes cold.
Since we now know that value for money and offers are key to driving conversions, brands need to consider how to put the best deals in front of the right user at just the right time. Smart targeting makes it very feasible to reach the right shopper with relevant offers throughout the purchasing cycle to generate strong results with minimal clicks. Over time and with enough context it's even possible to predict what people will want to buy before they do.
Sylvie Stankovic is director of advertising at Aedgency.
