Brand Awareness is Replacing E-Commerce

By Jeff Campbell, Vice President

Major retailers have always struggled to define the role of their website(s) since they became e-commerce capable in the late 1990s. With the majority of top U.S. retailer’s (pdf) transactions occurring in their brick & mortar (B&M) store locations, it has been difficult to pinpoint if the website is just another store in the chain or if it has greater marketing influence on B&M purchases. Even given a 10+ year runway for growth, e-commerce is still only ~4% of total retail sales. Further, studies showing anywhere from 51-87% of consumers research online before purchasing in-store (BigResearch, Nielsen, Yahoo!, Macy’s, Pier 1); the website is certainly a part of a buyer’s purchase funnel.

It is time for retailer websites to make a decision on their role within their organizations and more importantly in how they interact with the end consumer. Online marketing has come into it’s own and can roll with the big boys of TV, print, magazine, radio and more…but should it be measured in the same way? Yes, it’s time.

Unfortunately, it won’t be easy to move away from the e-commerce silo that websites, online marketing, and specifically paid search has been operating in for the past decade. But there are several solutions – all with their pros and cons – to bridge the two ends of the e-comm/branding spectrum:

Separate Brand Awareness & E-Commerce Campaigns (and budgets!)

Pros:

• Allows multiple groups to “own” paid search budget & strategy
• Differing strategies & goals do not conflict when separated
• Copy messaging, promotions, landing pages, sources can be customized to separate goals

Cons:

• Holistic reporting and measurement of your paid search campaign is difficult
• Does not reflect searcher behavior: Challenge to manage keyword crossover, multi-visit attribution, match types & keyword assists across campaigns

Choose different KPIs by Product Division

Pros:

• Allows sub-par online categories an opportunity to gain funding/exposure
• Grants permission to the execution team to settle for lower ROI where directed

Cons:

• Every product category will have keywords that convert online and others that don’t – but both will be measured by the same KPI

Break Even Online Before Supporting Offline

Pros:

• Many times the top online performing groups will make up for the loss of the non-performing groups
• Paid Search is a profitable (or break even) medium when judging in an online vacuum

Cons:

• Many retailers may not need to break even online due to strong offline influence – and may be missing a bigger opportunity with store sales by treating online as a silo
• Non-converting online categories may not be funded since they can’t break even online

Optimize to an Offline Multiplier

Pros:

• Media dollars are spent on what drives sales lift and profit margins for the total company and typically will have a much greater return overall
• Compare apples-to-apples with other advertising mediums that have undergone similar market hold-out testing (leading to media mix modeling)

Cons:

• Requires granular online to offline testing (by merchandise group by season, at minimum)
• Utilizes historic data; limits ability to react in a dynamic online atmosphere

One word of caution with these models: stick to your KPI’s (one efficiency metric and one volume metric); it’s easy to regress back to online ROI metrics. Just because you can measure it, doesn’t mean you should. And as Pete Drucker said “what gets measured gets managed.”

What is clear is that most B&M retailers are no longer treating their website as an e-commerce silo. That said, I haven’t seen them jump to the opposite end of the spectrum yet, despite the data, research and testing. For now, the above solutions (or a hybrid of these) are all progress toward the trend of online marketing and paid search moving away from e-commerce/ROI management goals for B&M retailers.