Faced with an anemic economy, lower margins, and pressure from Amazon, retailers are beginning to experiment with opening up their online real estate to paid media in an attempt to boost their bottom lines. They are being encouraged to "think like publishers" by a chorus of data, tech, and media companies that feed off the media ecosystem. But before we are treated to banner ads on Walmart.com featuring dancing mortgage girls, let's ponder better ways to align the goals of retailers with the needs of the advertisers without alienating their shared shopper.
It's true -- retailers have done a superb job of attracting audiences that advertisers would give their right arm to reach. The curated environment and rich product content of retail websites have emerged as the go-to source of information for huge numbers of consumers seeking to make informed purchase decisions. In fact, two-thirds of consumers begin their path to purchase online with retail sites being their first step -- 25 percent more often than even search engines. Retailers' share of voice online is also significant. In Q4 of 2011, no fewer than eight of the top 50 trafficked sites ranked by comScore were brands or retailers.
Why adopt a broken model?
This is not to say that retailers should look to publishers for a successful revenue model. Online publishers and the IAB certainly haven't cracked the code on how to deliver advertising in a way that consumers find valuable, or even tolerable. Take, for instance, their inexplicable reliance on the banner. It simply doesn't work. According to comScore data, in 2006, 32 percent of internet users said they'd clicked on a display ad in the last year. By 2008, that number had shrunk to 16 percent. Today less than 10 percent of internet users will click on any display ad during the year. Despite ever-growing ad units, greater use of video, and leveraging "big data" to power sophisticated audience targeting, the fact is that for the past several years the average click-through rate of display advertising hasn't managed to push past 0.1 percent.
Moreover, consumers are telling advertisers through their online behaviors exactly where, when, and how they prefer to be engaged. For instance, though they are increasingly immune to traditional advertising models elsewhere, consumers are exceptionally receptive to brand messages on retailer sites because of the state of mind they are in when they visit one. It's safe to say that consumers seldom find themselves visiting online retails site unless they have already entered the sales funnel. They go with purpose. Consequently, they are more available to relevant brand messaging -- they are actively seeking it out. This behavior is unique to retail sites and places retailers at an immensely influential point on today's muddled path-to-purchase.
The shopper's moment of truth
The wildly different words that retailers and publishers use to describe their site traffic are also telling. In the publishing world, visitors are an audience. Retailers have shoppers. The former is passive; the latter is active. More than two decades into the Internet Age, shoppers have successfully seized control of their paths-to-purchase. They have taught themselves to ignore banner ads and instead employ multiple tools and information sources to research their purchase decisions. Google has coined this marketing opportunity The Zero Moment of Truth (ZMOT). It's the moment a shopper makes a purchase decision, and increasingly it happens long before that person ever reaches the shelf.
Fifteen years ago, making informed purchase decisions required a visit to the public library and flipping through Consumer Reports. Today, it's as easy as visiting a trusted retail site or scanning a bar code with a smartphone. For shoppers, the effort required to make an informed purchase decision is so low that now they are researching even the most mundane everyday expenditures. In fact, according to Kantar Media's "Online Shopper Intelligence Study," 79 percent of shoppers research products online for more than half of their shopping occasions.
Saddling ZMOT and this new path-to-purchase, rather than interrupting it, is the real opportunity of e-commerce media. While advertisers are keen to ensure that their brands are present in the digital aisle where purchase decisions are being made, retailers need to nurture the trust they've earned from their shoppers. They need to continue to think like retailers and to develop innovative ad formats that bring value to the shopper without interrupting what that person is doing. Retailers must provide advertisers ZMOT influence points along the path-to-purchase. This requires allotting prime, above-the-fold real estate for ads, and offering preferred placements in site search and category pages. Most importantly, they mustn't poison the well with dancing mortgage ads.
John Haake is vice president of marketing for HookLogic.
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"Shopping-cart over a laptop" image via Shutterstock.