Digital Shelf Space About-Face
ADOTAS – Shelf space. It’s a common term in the retail industry and it’s a subject that most retailers obsess on how to most effectively optimize and monetize.
Dozens among the eTail Top 500 online retailers have started these programs but almost all participants run these programs manually, making these programs extremely difficult to manage and scale. Therefore, online retailers are not effectively monetizing this digital shelf space.
In the following column, I will share my tips on how retailers should “about face” with respect to their online retail shelf strategies.
Grow Revenue (not just by conversion rate improvement)
E-retailers – both large and small – have been so fixated on the conversion rate and price war challenge to increase sales (promotions, free shipping, instant coupons, etc.) that they have overlooked their digital shelf space asset to grow revenue. Depending on the size of the retailer the reasons will vary for this lack of attention.
So what can retailers do today to start them down the path of increasing revenue generation without impacting conversion rates (and I don’t mean simple banner advertisements)? It’s actually fairly easy – start by relooking at your digital shopper marketing strategy and make sure it includes a scalable paid product placement program for your brands.
And if you’re like a majority of retailers with more manual processes as opposed to having the right technology and systems in place, you need to do “an about-face” before it’s too late and you’re left behind.
Digital Shopper Marketing Defined
Digital shopper marketing is about targeting shoppers at the point-of-purchase and connecting brand marketing dollars with existing digital shelf space. This can include online, mobile, applications, television, and in-store signage. This space is in its infancy right now and all indicators are showing that by the end of 2011, retailers will be in a much better position to deliver on the digital shopper marketing proposition. Retailers who don’t address this in the coming year will run the risk of brands taking their business (and their increasing budgets) to those that do.
In fact, brands are the ones who are asking their trusted e-commerce teams about digital shopper marketing initiatives. In most cases, they are spending these funds on SEM and banner ads. In some cases, eRetailers are passing on these opportunities leaving money on the table, The issues that I’m seeing are that the retailers are ill prepared to address given all the false perceptions about implementation cycles and work required to superficial internal politics.
WWAD (What Would Amazon Do?)
The simple answer is that Amazon “does” advertising. Did you know that the company that claims to offer “Earth’s Biggest Selection” is so advanced with its advertising and digital shopper marketing models that its advertising segment is likely the biggest contributor to “nonretail” operating margins – part of Amazon.com’s non-retail revenue contributing 30% to 40% of operating profits on just 10% of total company revenues .
Amazon and its leadership team have grown to be where they are today by not being hampered with tunnel vision and worrying solely about conversion rates, but implementing alternative ways to grow revenue specifically offering premium memberships to consumers and brand advertising programs to partners.
On a much smaller scale, I’m aware of a case of a pure play ecommerce retailer that sold into a niche market of products, which went out of business because they could not sustain product sales. Had they employed the Amazon approach, leveraging existing digital real estate for high-margin revenue, perhaps the retailer would still be in business today.
Safe and Successful
Incorporating advertising programs into overall digital shopper marketing initiatives is a safe and sensible solution to build profitability. And early indicators with several clients are proving quickly successful as well. We are seeing upwards of 70 percent increase in click through rates versus typical banner advertisements, leading to double-digit increases in sales.
Offline retailers execute shopper marketing activities each and every day so why would they not replicate online as well?
It’s All About Selecting Scalability
I understand many retailers are resource constrained especially when it comes to people. But I hear, too often than not, “We just don’t have the back-end technology to execute on digital shopper marketing initiatives.”
Development resources and time are critical to optimize, so it’s important that the shopper marketing program you implement is scalable and can make you the most money. The good news is that a shopper marketing technology platform requires very little development effort, and can start making you money with your first campaign.
To sum up, there’s no better time than now to start making a change and reevaluating your shopper marketing program. It may be the best and most profitable ecommerce decision you will make in 2010.
Top signs that your shopper marketing program needs a makeover:
- Brands ask me for programs, but I say no because it’s too much work (manual process).
- Takes me weeks to months to implement (no speed to market).
- Effort to implement requires work from multiple teams (competing priorities).
- No reporting (I don’t see the ROI).
- Can only run less than 20 campaigns in a month (effort is more than the payout).
Bio:
Ji has been in the digital advertising space for 15 years and has been an advertising network guy for most of his career. Ji has managed multiple sales teams and has individually sold nearly $60 million in advertising sales working for CLIQNOW! Sales Group, 24/7 Media, Go2Net (now Infospace), DealTime (now Shopping.com/eBay), and 24/7 Real Media (WPP). Ji started his career as a Research Associate at Modem Media in 1995.
Ji’s role as the founder and CEO of DiJiPOP is to steer the development of the company and lead an experienced and passionate team squarely at the forefront of the digital shopper marketing space. His vision of this space and the need for an efficient and scalable solution bringing retailers and advertisers together started six years ago, and this fervor continues to set the pulse of the company today.
Ji holds a BS in Business Administration from the University of Vermont and is one lucky guy; partly because he won the lottery, but mainly because he has an amazing family supporting him, including his wife and two sons. Ji resides in East Greenwich, Rhode Island.
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