Retailers, You’re Doing it Wrong!

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 line. They are being encouraged to “think like publishers” by a chorus of data, tech, and media companies who feed off the media ecosystem. But before we are treated to banner ads on Walmart 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 number 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% more often than even search engines. Retailers’ share of voice online is also significant; no less than 8 of the top 50 sites ranked by comScore are brands or retailers.

Why Adopt a Broken Model?

Online publishers 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, in 2006, 32% of internet users clicked on a display ad. By 2008 that number had dropped to 16%. Today less than 10% of internet users will click on any display ad during the year. Despite ever-larger 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%.

 Online publishers 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.

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 is also telling. In the publishing world, visitors are an audience. Retailers have shoppers. The former is passive, the later is active. Twenty years into the Internet Age the shopper has seized control of her path to purchase. She has taught herself banner blindness and instead employs multiple tools and information sources to focus on and facilitate informed purchase decisions.

The difference between “consumer” and “shopper” is also somewhat arbitrary — the idea behind the distinction being that the consumer magically transformed into a shopper the moment she crossed the threshold of a store. This misses a powerful marketing opportunity that Google has coined The Zero Moment of Truth (ZMOT). ZMOT is the moment a shopper makes a purchase decision and increasingly it happens long before she ever reaches the shelf.

Fifteen years ago, making informed purchase decisions required a visit to the public library and flipping through Consumer. Today, it’s as easy as visiting a trusted retail site or scanning a bar code with a smartphone. For the shopper the effort required to make an informed purchase decision is so low that now she is researching even the most mundane, everyday expenditures. In fact, according to Kantar Media’s “Online Shopper Intelligence Study,” 79% 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 ecommerce media. While advertisers are keen to ensure that their brand is present in the digital aisle where purchase decisions are being made, retailers need to maintain the trust they’ve earned from the shopper. Retailers need to think like retailers and to develop innovative ad formats that bring value to the shopper without interrupting what she is doing. Equally important is providing advertisers ZMOT influence points along the path-to-purchase. This requires allotting prime real estate for ads and offering preferred placements in site search and category pages, and not poisoning the well with dancing mortgage ads.

John Haake is a recovering banner man. He is currently the vice president of marketing for HookLogic, an ecommerce media company. He lolls himself to sleep at night whispering the mantra “serve the shopper, serve the shopper, serve the shopper.”