E-Commerce Sites Experiment With 'In-store' Ads

Target, Overstock Are Selling Ads to Suppliers to Win More Sales

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NEW YORK (AdAge.com) -- Online retailers rarely accept third-party ads for products on their own websites for a pretty simple reason: If the goal is a purchase, then a click-through would lose a potential customer.

But some vendors and retailers -- including Target and Overstock -- are experimenting with a new advertising unit that recommends a product within the site. Think of it as the equivalent of an end cap or an aisle display in a bricks-and-mortar store.

Universal studios recently paid for ad placement within Target 's website to promote its "Despicable Me" DVD and Blu-ray release. For any user searching for DVDs of the latest "Shrek" movie or "Toy Story 3," a unit at the bottom of the page showed Universal's "Despicable Me," which takes the user to Target 's buying page, thus keeping the consumer within the retailer's site.

Despicable Me

'Despicable Me' ad
"It made a lot of sense, not only because it's a really low-funnel environment, it's the place where people are making purchase decisions," said Yvonne Ip, digital-media supervisor for Universal's media-buying agency Ignited USA, citing the term for when a consumer will make a purchase. Ms. Ip said this new ad unit allowed Universal to get in front of consumers looking for products similar to what they are already searching for, akin to Amazon's model of showing people what others have bought after viewing a particular item.

The company behind the ad unit, Rich Relevance, is headed up by former Amazon executive David Selinger, who pioneered its recommendation engine. "This is a new way to advertise on e-commerce," Mr. Selinger said. "And it's not just some banner ad -- it's an integrated unit that fits into the site, and it's entirely relevant to the consumer." Aside from Target , the company has also been working with Overstock.

Retailers such as Walmart and Target have already experimented with advertising in the past. They saw it as a way to make some money on the millions of people who already visit their sites daily, especially during the crippling recessionary downturn of the last few years. Most of the ads were driven by Google AdSense and showed customers similar products on other sites. They also saw it as a way to offer a service to customers, much the way that an in-store sales person would recommend other stores to people if the item they were looking for wasn't available.

But this unit allows online retailers to retain users on its own sites. "It's inevitable that retailers would be trying to monetize or seek financial assistance from their vendors to drive their site experience," said Patti Freeman Evans, VP and research director at Forrester. "They've been doing in stores and catalogs for years. It's a branded environment."

Online advertising can seem like a choose-your-own-adventure of links and banner ads that typically ends in a dreaded array of microsites or surveys. Where online advertising seems most vital, however, is when it takes people to an e-commerce site, which often seems like the end-goal of online advertising in general. It would follow, then, that e-commerce sites could allow marketers to advertise -- as long as users were encourage to stick around.

Ms. Evans, though, cautioned that it's still early and it remains to be seen how well these recommendation units will work. "It doesn't necessarily mean it'll translate into incremental sales," she said, citing the fact that a paid-for recommendation may turn off customers. "You have to wait and see how they'll react to it," she said.

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