Market Summary - Online Retail Marketing

Media Update:

Online Retail Marketing

Date:

QTR 2 2012

Sponsor:

eBay

At a Glance

Online Retail Marketing

Online advertising spend in the UK has been growing at a rapid rate. From a 3.6% share in 2004 to 23% by the first half of 2009, it has now surpassed TV as the top advertising media. Of this revenue, around 40% goes to portals and ad networks, 45% to social networks and just under 15% to mainstream publishers. Less than 1% goes to e-commerce businesses.

There is a real opportunity for brands to start looking at online shops as a place to promote their goods and services. And an opportunity for online retailers to develop new formats for advertisers.

Online shopping is on the increase!

This may seem like an obvious point; however it's one worth clarifying. According to eBay statistics 80% of respondents across all countries stated that they were looking to spend more online. This figure increased across vertical sectors when it came to the festive season, with both entertainment and grocery shopping showing a 90%+ intention of increased spending online.

Evident Patterning

There are clear patterns that emerge which, in many respects parallel how we behave in the offline world. In the case of goods and services that are bought frequently (such as groceries), or those that have an element of emotional attached to them (such as clothing or entertainment goods), consumers are more likely to pick a favourite supplier- a place they have affinity and trust with- rather than search for them.

On the flipside, for items that are purchased more infrequently such as household goods or items that warrant a more logical decision making process- such as electronics- then a search is the preferred channel of discovery.

Case Study:

www.getmemedia.com/ideas/CompOpps.aspx?id=902

Email Contact:

slam@ebay.com

Website:

http://www.ebayadvertising.com/en/

Hot Topics

Above-the-line media spend in the UK is around £19 billion, this is a considerable amount though is still far less than in-store marketing.

There is a real art to retail in the high street. Location, merchandising, store layout and even smell are employed in almost an exact science when it comes to selling. The purpose of this summary therefore, is to highlight the opportunity for marketers, advertisers and brands in retail media online, and examine consumer purchase patterns to outline the potential for advertisers.

There are easy conclusions to draw as to why this might be so. Firstly, there's the evident impact of the recession. In the current economic climate people go online to find value for money. Just as importantly there is also the increased acceptance of online as being a bona fide channel on which to shop. This is down to growth in access, trust and selection.

Looking at the areas of strongest growth over the last year, we find that they are in goods that have both tactile and emotional components in the decision making process. Online is not supposed to do this very well but purchasers of categories such as clothing, shoes and accessories, and groceries would beg to differ.

"I compared all the prices that came up on my google search, and clicked on the cheapest price for the same product, only after making sure that the website was secure."
Online shopper- France

The prominence of trust as the key motivating factor when choosing where to shop online can be correlated with the strong belief that branded goods are better quality. Some might say that the democratic process of the internet has diminished brand value. Yet, our findings, whilst supporting the notion that price has become less impactful on brand value, suggesting that branded goods still occupy a higher status than non-branded goods.
It therefore seems that online shopping is no-longer simply utilised as a tool for bargain hunting, but rather that trust, selection and convenience are now just as important. The idea of getting a bargain has been replaced with 'value' and that is an important distinction as the variety of goods gets even wider.

How Online Retail Marketing Works

In order to market effectively to consumers, brands have to understand the market. Not just who your customers are or even what they do, but more importantly, why they do it. Whatever sectors your business is in, there are advantages to be gained by better understanding how your customers select you online.

As we have discussed above, the type of purchase being made impacts not only what motivates people to buy a product or service online, but also who they choose to buy it from. This insight should have significant influence on your marketing mix. Is it about generating familiarity, or focusing on a search led strategy?

If you are a retailer of groceries or entertainment then it's very much about the brand. That sounds simple to day but of course it comprises many things. Service is arguably the most important, but selection of goods trust and familiarity are just as important in an online context. Online is actually a great channel at building brands once we start thinking about it in pure advertising terms.

Discovery

If however you goods are more price led, infrequently purchased, or require a more rational decision making process then a focus on your discoverability through search is more important. This doesn't mean ensuring you buy the right keywords but that you consider a range of search options available to you. Google may be the most important player and arguably the most important base of any successful search activity, but there are a range of other options to ad to this. Consider other broad range search engines such as Bing, Yahoo and Ask. Vertical search engine and comparison sites such as mySupermarket, comparethemarket and Blinkx represent a fast growing trend that offers consumers more specific searching and advertisers’ better quality leads.

Guidance for online advertisers

Location, location, location is the oft repeated mantra for retailers and it's no less important online. It is not enough to build a shop then expect people to find you. Of course there are ways for brands to improve visibility, with search being perhaps the most obvious one. However if you really want to build trust and familiarity to your business you need to be not just easily found, but a regular feature of the landscape.

There is much to be written about the success of markets, retail parks and retail destinations. Consumers will visit places like these because they can find everything in one place. Shops will locate themselves there because they benefit from the enormous footfall of people out to do just one activity- shopping.

So, when you build your retail outlet think about where you can put it, not just how to advertise it. Put it where millions of potential customers pass every day, doing everyday activities.

Online Retail Marketing - Top Tips

The following are our top tips to help you make the most of your Online Retail Marketing opportunity:

1. Think about your online retail store the same as you would do offline. Location is key to optimise visibility and reach: there is no point in having the most user-friendly store on the internet if no-one is aware that it is there!

2. Our survey showed shoppers are most receptive to ads whilst on e-commerce sites looking to buy products. So when making key decisions about advertising placement, consider where you will be able to take full advantage of existing footfall of internet shoppers already in the purchase mind-set.

3. Clarify how people choose to buy in your vertical and modify your marketing mix appropriately. Do people use your brand for regular, logical purchases or less frequent, emotional purchases?

4. Make sure you look for content wherever you can. Don’t underestimate the power of monitoring purchase behaviour online. This can help you reach consumers with messages that are not only relevant, but are likely to influence a decision.

"As the online retail market grows, so too does the opportunity for advertisers to engage with consumers in this environment. This insight from eBay advertising reflects the growing importance of internet as a sales channel, and the growing opportunity for brands to influence those sales online just as they do in-store."
David J. Smith- Director of Operations, IMRG

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