This year presents the retail and advertising industries with their biggest challenge for decades – e-commerce – with the potential to provide that holy grail never achieved by the mail order industry in the UK: an upscale demographic profile.
Christmas has been an important milestone for e-commerce in the US, with all eyes on The Gap – estimated to be making $60m (36.4m) from the Net, making it its biggest outlet.
For UK retailers and advertisers, an expectation that the UK will follow the US e-commerce growth curve presents both a threat and opportunity.
Make no mistake, UK brands are under assault from powerful US-based e-commerce brands. Waterstone’s, for instance, doesn’t just have to compete with UK online book retailers, it now has to take on Amazon.
The role of traditional media and service agencies, which compete to serve advertising clients, is also coming under the spotlight as the online industry develops.
The key to e-commerce success is online branding. But it is hard to see how the traditional advertising agency role in creating a brand persona applies directly to the Net. Companies are being forced to think hard about the differences online. Is the brand the same online as it is offline? Is it completely different or a brand extension? How is the brand related to the URL? And how do you go about establishing your brand in the radically different online landscape?
Ad agencies are taking a step in the right direction by setting up new media departments. But the issues are so broad that it will be interesting to see how they develop.
No one has all the answers to the questions of how to tackle the online market in general, and to deliver effective online branding and e-commerce solutions to clients in particular. But media owners have generally emerged ahead of the field in the short term, not least because their grasp of the issues is so critical to the long-term success of their businesses.
However uneven the skills and commitment among service agencies to tackling this new sector, many media owners are making huge investments in research and development and human resources to build traffic, advertising and e-commerce opportunities on their sites.
It is, perhaps, the media owners which are in the best position to provide the “expert partnership” advertisers require.