RichRelevance to Buy Searchandise to Create Online-Shopper Marketing Juggernaut

RichRelevance, which offers personalized product recommendations and sells advertising around them on websites for such retailers as Walmart Stores and Target , plans to acquire Searchandise Commerce, which sells the equivalent of search ads and creates virtual end-cap displays on e-commerce sites. The deal is intended to create a more comprehensive offering for online-shopper marketing. Neither the terms of the deal, expected to close this month, nor the companies' sales were disclosed. But RichRelevance said the combined companies will serve 10 of the 25 biggest retailers on the web, also including Sears. The company also said its Shopping Media platform serves personalized recommendations and advertising with more than 1.4 billion page views monthly and has delivered more than $3 billion in attributable sales for retail clients since its launch a year ago. The deal combines companies in two of the fastest-growing segments of media and marketing in recent years: digital and shopper marketing. Drawing offline dollars RichRelevance isn't just going after digital media or measuring impact by looking at e-commerce sales, according to CEO David Selinger. He also expects to increasingly draw dollars from offline shopper-marketing budgets and to invest money in consumer panels to measure effects on offline sales, he said. Packaged-goods clients in particular expect advertising around product research at retailer websites to generate offline sales, he added. Advertisers that have used the Shopping Media platform include Procter & Gamble Co., Colgate -Palmolive Co., 3M, Toyota, Cisco, AT&T and Verizon Communications, according to RichRelevance. A 3M executive said the company has been moving its spending from Google search to RichRelevance and that acquiring Searchandise would enable keyword buys against searches on retail websites, creating the online equivalent of end-cap displays. Geo-targeting and other mobile advertising around e-commerce should accelerate that process. 3M has found that RichRelevance's recommendation-based and behaviorally targeted advertising platform delivers considerably better return on investment than buying banner display ads on retailer websites, said Raj Rao, 3M's global director-e-commerce and e-marketing. He noted a sixfold sales increase, without coupons or other offers, at some retailer websites during a summer campaign with RichRelevance. "We have seen several instances, where people were taking online ads and offers into the physical store and making purchases there, even though that was not what we were testing," Mr. Rao said. The 3M products in question are priced at $10 and up, he said, adding that display ads on e-commerce sites may work better for lower-ticket items. Diverting budget from Google"We spend several million a year on Google," Mr. Rao said. "We've started to divert a good chunk of that into retail channels, because that 's where we're really seeing stronger returns, down in the sales funnel." Mr. Rao expects online advertising through RichRelevance to get a growing share of what has been spent in offline shopper marketing. "The merchants want us to help determine the best ways to spend trade dollars," he said. "So they're asking us to come up with ways to increase our presence online, and I think that 's a trend that 's gaining momentum now." 3M is also using RichRelevance's software in-house, to make its call centers be more like online shopping, Mr. Rao said. Agents put caller-inquiry information into the RichRelevance system for suggestive-selling ideas. Mr. Selinger at RichRelevance said that his company primarily addresses the 25% to 35% of the shopping experience centered on personalized recommendations. The rest -- searching and browsing -- "we've been able to support a little bit over the years, but it hasn't been a strong point," he said. "Now we've recognized how important it is ." Searchandise aims at covering advertising search and browsing on retailer websites, via ad buys against keywords or virtual end caps that shoppers see while browsing a site, according to Mr. Selinger. Triad Retail Media, the biggest player selling online display ads at such sites as Walmart .com and CVS.com, expects $120 million in revenue this year and projects that the market will expand to $500 million within a few years. The packaged-goods industry sells $15 billion worth of produces online annually. The number is growing 10% a year, according to ComScore, but the total represents less than 5% of sales. Marketers such as L'Oreal have noted that consumers are increasingly using retailer websites to research products they buy offline. The biggest payoff awaiting RichRelevance may come from tapping the vast amount spent on offline-shopper marketing rather than the relatively small portion of media budgets devoted to digital. "I believe that in the next five years there needs to be a 300% increase [in online-shopper-marketing budgets] for consumer packaged goods to be competitive," Mr. Selinger said.

RichRelevance to Buy Searchandise to Create Online-Shopper Marketing Juggernaut

Featured Stories