Retail media: opportunity rises for online retail media

Debate is raging as to whether online retailers should build their websites around point-of-sale presence for partner brands or focus on their own communications.

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The number of online shoppers in Western Europe will rise from 140 million today to 190 million in 2014, according to research consultancy Forrester. And as consumers continue to gravitate to the web, online developments in retail merchandising are opening up more opportunities for brands to communicate with them.

Internet Advertising Bureau chief executive Guy Phillipson anticipates that as major retailers attract more traffic to their websites, they will enhance the media opportunities on offer to brands through a blend of traditional point-of-purchase tactics translated to online environments and innovations driven by technology.

“Online retailers are beginning to treat their sites as media owners,” Phillipson explains. He gives the example of Tesco, which is attracting an increasing number of online shoppers. In-store media inventory such as shelf and aisle-based promotions are becoming more common features on its website, encouraging brands to pay a premium for priority positioning.

“Where there are mechanisms to prompt you to put more things in your basket, then that is Tesco acting like a media owner,” says Phillipson.

The opportunity to host more brand-led communications on their sites are most obvious for grocery and department stores, Phillipson notes. He adds that retailers will have to decide how to balance building their website around point-of-purchase opportunities for partner brands with their own communications agenda.

As noted in eBay Advertising’s recent guide to online retail media From the High Street to the I-Street, shops that offer the type of online merchandising found in-store are beginning to bundle their online and offline retail media opportunities, signalling their move to becoming media owners in their own right.

“Online shopping sites are offering an increasingly diverse range of opportunities for brands to communicate with customers at the point of sale. There is now further imperative for media spend and sales-related activity to come together more constructively at both a client and agency level,” the guide reports.

Argos, House of Fraser and Ted Baker all have branded concessions within the eBay Fashion Outlet online, and eBay claims that this concept will become more widespread.

For example, Boots could open web concessions to non-rival external brands such as Asos; or a retailer such as Argos could adopt a concessionary offering for the key brands it sells.

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“Brands are displaying a new willingness to operate outside their own walled garden,” claims Phuong Nguyen, head of UK display at eBay Advertising. He points to the increasing appeal of eBay concessions to premium brands, including Karen Millen, Superdry, Bench and BMW.

“The notion of the concessionary stand – a staple of offline retail – is becoming significant in the online space. It’s about having a presence wherever buyers are,” he says.

EBay has bolstered its media offering by allowing the brands it works with to purchase display advertising on its site, which drives shoppers outside eBay to a brand’s direct site.

For example, fashion brand Bench complements its eBay concession with display advertising. When a user searches for Bench on eBay, they are served up display advertising that enables Bench to communicate its own brand message.

This may seem self-defeating when eBay’s own business revolves around ecommerce, but Nguyen insists that taking a balanced approach makes it worthwhile.

“There’s this notion of being comfortable with a brand existing on your website when it might not be actually selling on your site. We think we have given a buyer a good experience if they have clicked on a piece of online retail media and ended up buying on another site,” he explains.

Rather than running its own ecommerce operation in the UK, BMW runs concessions on eBay and Amazon. BMW UK aftersales marketing manager Martin Sloan says the online stores have the aim of opening the brand out to people who wouldn’t go to a dealership to buy BMW-branded merchandise which would be available at the point of purchase (see Viewpoint, below).

“We wanted to see if there were people out there who don’t deal with us in any capacity who would be happy to do so via ecommerce,” says Sloan. “Having the stores on eBay and Amazon gives us the opportunity to compare and contrast customer bases and the success we are having.”

Sloan agrees that more brands will pick up on the online concession trend as ecommerce growth continues to rise.

However, upmarket online menswear retailer Oki-Ni prefers to operate within the “walled garden” that Nguyen is critical of. It sells brands such as Lee, Dr Martens, Marc Jacobs, Alexander McQueen and Jil Sander and its promotional opportunities take the form of magazine-style content, which lends itself to its email marketing strategy, fuelled by provider Silver Pop.

Brands are displaying a new willingness to operate outside their own walled gardens

Phuong Nguyen, eBay Advertising

Oki-Ni marketing manager James Nuttall says: “Content plays a big role but it’s always done so it is part of a smooth shopping experience. You might have a nice looking photo shoot but we have to combine it with being able to purchase the piece. Other benefits of content are that it becomes material you can use on social media and email. The press likes it too and it’s something we can even use in ads.” (see Q&A, below)

Oki-Ni’s in-house features editor plans weekly features and collaborates with brands to seek out unique and interesting angles. “We want to reflect the character of the brand and what makes it special. For some it’s how items are made and for others it’s the designer and inspiration. We find a point of interest to find a subject for the feature,” Nuttall explains.

Rather than fill the home page with promotional opportunities for its brands, Oki-Ni also features DJ mixes that Nuttall claims gives shoppers a reason to return to the site weekly and attracts new users. “It gives something of value to people who choose to come to us, which is really important,” he says. “We try and present it so it doesn’t distract people from the products – a player opens up that people can browse around.”

Oki-Ni is also experimenting with technology that will serve up a different home page to different users, and is looking to build on a video initiative it ran this year where users could click on products in it to purchase them.

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BMW: Runs ecommerce operation in the UK through eBay and Amazon

But Nuttall offers a note of caution about new technologies that brands might want to use as online POP. “They offer so many opportunities that are amazing but you can foolishly go too aggressively into areas that can double your resource input and don’t offer you a full return.”

Concessions
He is sceptical of online concessionary outlets and of offering display ads in the style of eBay that lead to external sites. “I can see the benefit of online concessions in terms of growing your audience. But for us, controlling the user experience is so important and it would need to allow for the content and tailoring we are focusing on,” he argues.

“I wouldn’t want our site to start running display ads that lead to other sites, but if the option presents itself where ecommerce isn’t a focus for that site, then we would happily explore it because it could be a source of relevant traffic.”

Despite Nuttall’s reservations, eBay’s Nguyen contends that online retail media has the potential to command the attention of marketers in the same way that Facebook and Twitter have become legitimate media channels for brands. “If you think back to a couple of years ago, nobody really knew what social media was and now Facebook and Twitter have created a new advertising medium that most agencies would now not leave off their schedules,” he says.

“There’s an open opportunity for retailers to come together to build an interesting new form of marketing to tap into. But we’re in the early stages of innovating from a technology standpoint to find out what are the right kinds of advertising products and placements that drive the best results. I have no doubt that two or three years down the line there will be a big push regarding online retail media.”

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Viewpoint

Martin Sloan
Aftersales and marketing manager
BMW UK

The motor industry can be very set in its ways and historically, our products have been sold by our dealer network.
That might be right for buying a new car or having it worked on, where you could argue the prolonged interaction with the dealership is part of the experience. But it might not be right if you’re just looking for a small item that you could fit yourself, merchandise or an accessory.

That philosophy led our German parent company to think that perhaps we were missing a trick and that we ought to experiment in ecommerce to see how successful it would be compared with our traditional sales route. The UK is the only market where we have gone with a third party – in the US we operate a BMW website for customers to order from.

As a premium brand, we are very protective of anything we do and there were a few questions around moving onto eBay, but what we are delivering is on brand and progressive. We are so protective about our brand that if we were to partner with someone that couldn’t accommodate our requirements, then it wouldn’t go very far.

We are also active on Amazon. The Amazon offering is less mature as we are still building the store’s product portfolio. We found from the eBay experience that we started marketing it and the shop wasn’t quite ready for all the people that were coming to it. We have overcome that now.

But 95% of our business is still done by our dealer network and we think that will remain the case for some time. We have not only legal but ethical obligations to our dealers to strike a balance between working productively with them but still being open-minded to other retail opportunities.

 

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Q&A

James Nuttall
Marketing manager
Online menswear retailer Oki-Ni

Marketing Week (MW): You use a lot of content to promote the products on your site at or before the point of purchase. Can you explain this strategy?

James Nuttall (JN): We put content at the forefront of what we do for many reasons. There is a skew where people view new products in the first two weeks of them going live, which is great for the initial hits but you aren’t always going to sell out of everything within the first two weeks.

Where content is strong on-site, it allows us to show a product in different ways and for it to be seen again and again throughout a season.

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MW: How are you using technology to better promote your products using online point of purchase?

JN: We are beginning to serve different content to different user groups. Some sets of our users respond well to certain pieces of content and certain brands so that will be prioritised when they visit.

You might have a high-end home page and a streetwear homepage and if the technology recognises what kind of user is coming in then they can serve them a slightly altered version.

I think this is the next opportunity, but in theory you might also be excluding features and products unnecessarily and you might be creating double the amount of homepage work so we are still looking into it.

MW: How do you use visuals to encourage people to buy?

JN: We made a video where people could click on an item a model is wearing and that could be matched with more content or just sent straight to the product page to purchase. Moves that make the shopping experience more dynamic are always really interesting to us.

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