By Rob Schmults, firstname.lastname@example.org
Forrester Research published a report on online shopper marketing tools in which it noted that many buzz-driven technologies didn’t seem to be getting much traction, while growth in the most common approaches (brand websites, retail specific content, etc.) “has either slowed, peaked, or essentially stopped.”
What gives? Why is this happening when the rest of online marketing is in the midst of such dynamic and innovative phases?
A large driver may come down to the way most online shopper marketers are thinking about budgets. First, it appears online shopper marketing has made the oft repeated mistake of assuming the presence of analogous offline budgets so that dollars will quickly move online. Second, the coop dollars they often seek to tap have powerful stakeholders unwilling to see these dollars reallocated.
If you’re a merchant at a retailer, often a part of your bonus is tied to the coop dollars (aka MDF) you secure. And it’s not uncommon for those dollars to flow straight to the bottom line: they aren’t actually spent on anything. Having a shopper marketing vendor taking a cut AND possibly redirecting them out of your budget is simply not in your best interest. So for the organizationally powerful merchants, the claims of shopper marketing to be a more effective use of coop tend to fall on deaf ears.
One solution is for digital shopper marketers to steer clear of co-op dollars and instead look to other sources of marketing spend. But that runs into a budgeting problem on the advertiser side. Because for most brands, their online marketing dollars are about bringing traffic to their own sites, not moving traffic around inside of retail sites. All their incentives are set-up around a closed loop model where dollars spent are tracked against direct sales delivered (or some other metric where direct sales aren’t an option). When the action takes place on another web site, that loop is broken.
So where does that leave shopper marketing?
As online advertising in general found, waiting for offline budgets to migrate can be a long slog. Trying to appropriate dollars away from organizationally powerful groups like the merchants inside of most retailers only compounds the problem.
Better to align with — and ideally expand — existing online budgets. For example, providing advertisers with a closed loop would allow them to integrate shopper marketing into existing online advertising efforts. Plus doing so creates a clear separation from co-op.
Amazon is doing exactly that by moving well beyond shopper marketing with offerings like Product Ads. W.R. Baird analyst Colin Sebastian notes such efforts “should provide incremental higher-margin advertising revenues, helping to subsidize low product prices. We continue to estimate that Amazon will generate $500 million to $1 billion in advertising revenues this year.”
And disconnecting from the notion of migrating offline budgets has an added benefit. It will make it easier for shopper marketing to find the proper online model. Creating digital versions of offline end caps and stores-within-a-store resembles similar attempts in the nineties to recreate TV and print ads online. While some test budgets did flow into these offerings, models that reflected the realities of the online medium ultimately eclipsed those that sought to slavishly mimic offline marketing vehicles.
Online marketing has been successful because it created new opportunities with new budgets, like search marketing or behavioral targeting. Shopper marketing needs to do the same for it to fully hit its stride.
Rob Schmults is SVP strategic partnerships at Intent Media, which helps retailers unlock their site traffic's full value through predictive personalization and via risk-mitigated retail media. By scoring each visitor in real-time, Intent Media allows travel and retail sites to make smart decisions around what to show each visitor. He can be reached at email@example.com.