Retailers are always looking for ways to increase their revenue stream in-store and online. If back-to-school was any indicator of how the 2011 holiday season will play out, retailers know that research, not just purchases, is happening on their sites. This leaves retailers asking, "How can I improve my site for the holiday season?" There are many answers to how retailers can optimize their sites for the holiday season, and frankly, there really isn't anything new. The familiar advice focuses on free shipping, smoother checkout, and how to reduce cart abandonment. Retailers have heard it all before.
But what if I told retailers about a way they could turn their retail site into an online profit center this holiday season with no upfront cost, minimal IT support, and by leveraging their existing site technology? What if I told retailers this could be done by monetizing the traffic that is already coming to their site? I bet it would make for a very merry Christmas.
This new opportunity is called "retail media."
Retail media is an emerging market focused on engaging shoppers in their path-to-purchase, whether they are researching, comparing products, or, ideally, purchasing. Retail sites are functioning more like traditional publishers, and once they have consumer attention, they can engage them with media. In this case, that media ranges from banners and other ad units, to brand showcases and search results. In the brick-and-mortar world, media placement runs the gamut from product placement on eye-level shelves, to signage and end-cap displays. The corollary online is to offer suppliers the opportunity to secure premium placement online.
So, are retailers ready for retail media? When evaluating whether or not to implement a retail media strategy, retailers should ask themselves the following questions:
1. What are your goals for a retail media initiative?
Part of understanding what you want is knowing what you have: What type of traffic are you receiving, where do consumers tend to bounce, and where do they tend to engage more heavily?
Retail media represents an easy-to-deploy solution to better leverage the traffic your site receives. With 3-5 percent of your traffic converting to sales, the challenge becomes how to leverage the other 95 percent. That's what retail media is designed to do, while passing on value to your suppliers by offering them a premium position that leads to better results and stronger partnerships. Retail media offers retailers an easy way to monetize virtual shelf space, helping retailers get paid when consumers browse, as well as buy.
2. How much real estate do I want to dedicate to a media effort?
There are multiple approaches to "sell" or "merchandise" online shelf space to your suppliers. Identify highly trafficked areas of the site and apply a monetization strategy, measure it, then decide whether or not to dedicate additional space. Part of the decision making is understanding how your consumers best react -- are they receptive to ads? Would they prefer something more subtle? Understanding their click-stream becomes key.
3. Who is going to sell retail media?
In general, retailers have two options: keep it within the e-commerce or merchant operation, or outsource to the vendor providing the technology. Alternately, a retailer may choose to outsource media sales to the technology provider or media service bureau whose core business is selling media programs and reporting on the effectiveness of those programs.
In most cases, relationships already exist with the product marketers, as well as their ad, branding, and search agencies. Outsourcing provides an agency with the opportunity to take a truly innovative idea to their client, all while delivering incremental revenue to the retailer.
The bottom line
This holiday season, there is an easy way for retailers to generate extra revenue from the existing resources they have invested in their site. As they delve more closely into all available solutions and the intricacies of deployment, there are some basic questions to consider. Key to the consideration is leveraging previous investments and receiving the most value from the site they have in place. In addition, user experience is always a top priority.
Once retailers have examined their sites and decided how to best monetize them, they can begin monetizing on all the holiday traffic that will be occurring this season, just as they have in-store for years.
John Federman is president and CEO of Searchandise Commerce.
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