Myths About Online Retail Marketing

Kelly Mooney Debunks the Overheard and Overused

Posted by Kelly Mooney on 02.17.09 @ 10:40 AM

Kelly Mooney

It's never been more important for stores and web teams to work together, driving growth and opportunity for the total brand. I spent the first 10 years of my career in retail planning and design and the last 15 in digital marketing and e-commerce. And I am surprised to still overhear oft-outdated assumptions being made about the web -- so here goes my attempt to debunk them.

Overheard: Web sales remain too small to matter.
Many retailers downplay the significance of the web because it's just 2%, 5%, even 15% of sales. Might not seem like much until you consider that it's a snapshot in time. While retail growth is relatively flat overall, the web is growing five times faster than stores -- with a projected growth of 14% by 2012 (per Forrester) driving a disproportionate amount of retail growth.

Still think it's too insignificant to matter? Ask retailers like Talbots and Staples. These are just two examples where the web represented a smaller piece of total sales but the largest percent of total sales growth. In fact, in was the web that rescued both brands this holiday season.

Overheard: The web is primarily an e-commerce channel.
Maybe you think of the web as e-commerce. Well, that's only partly true. The web also impacts cross-channel shopping. In our research with Sterling Commerce we found that in some categories, such as home electronics, the web has begun to rival stores for decision making, and, in turn, rivals offline in importance. For home electronics, buyers rated stores and online equally in terms of importance, while 7% of respondents felt online was "absolutely essential" when making an apparel purchase decision.

Overheard: Advertising dollars are being judiciously shifted to the web.
With evidence mounting about the importance of the web as both a growth channel and an influencer, it would be a small leap to assume that more dollars are shifting to the web. Shifting, yes. Judiciously, no. And why not? Let's look at where we spend our time -- shouldn't the dollars follow? Consumers' time spent online is outpacing web advertising. Sure, we're still fond of watching television, but skipping through commercials. Viewing time has shrunk 20% in the last 10 years, while time on the web has grown eight-fold in the same time period (Forrester).

Gap made headlines last summer when it cut advertising costs by 18% and watched profits soar by 40%. Why should we all take note? It made a data-smart spending move, by reducing ad spending where customers weren't paying attention. Even P&G continues to experiment, dropping traditional media by 19% and increasing digital as much as 10%. It's a spending shift. Brands need to re-assess media spending to align more with consumers.

The web is no longer for extending campaigns when (and if) there's leftover budget. Consumers start with the web or end with the web -- and increasingly do both. Maybe your company is making traction with the digital channel, or maybe you have a merchant prince at the helm and stores are still the king of the retail kingdom. Do you think the power of the digital channel is known, embraced and leveraged inside your organization? Or do you sometimes find yourself surprised at the way your organization still views the web?

The internet is already working on your new strategic imperatives, whether you realize it or not. But maximizing its potential might call for a business realignment. Brands need to move the digital channel toward their internal center of gravity, where it can radiate out to integrate and improve all consumer touchpoints, including the in-store experience.

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Kelly Mooney is president of digital-marketing agency Resource Interactive and author of "The Open Brand."

8 Comments

By lglispy | Lancaster, FL February 17, 2009 12:21:33 pm:

Kelly - Insightful article, as usual. Your book, The Open Brand, is an organizational must read.

Companies, particularly manufacturers, need to understand and begin to utilize their internal eCommerce sites and the social networks to influence the decision, get the (high margin) sale, and build customer evangelists. The customer will demand transparency and will control the conversation, be a part of it!

Leisa Glispy
Director of eCommerce Marketing
Waterford Wedgwood

Follow our brands on Twitter
http://twitter.com/waterford
http://twitter.com/wedgwood

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By markferdman | Brooklyn, NY February 17, 2009 12:24:48 pm:

right on sister. great piece.

"Q: What is your vision of what the next phase of our industry is going to look like?

The next phase is bringing point-of-purchase to most, if not all, brand experiences. See a product in a TV show? Buy it. Like Debra Messing's skirt? Buy it. Isn't this a cool digital ad for Doritos on a subway train? Buy some.

I don't think electronic commerce has even scratched the surface. Brick and mortar got killed this past holiday season, but Amazon rocked. And of course Amazon still looks like a disaster, a giant flea market. Which is where we'd like to come in.

I hope brands will start worrying more about form, what I call online retail merchandising. Instead of the typical e-commerce experience, I hope brands will become as interested in the design, experience, and how things look and move aspects of their online commerce platforms as they are when it comes to designing their presence in stores."

http://iproblog.blogspot.com/2009/02/first-things-first.html

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By pblackshaw | COVINGTON, KY February 18, 2009 09:08:03 am:

Spot-on, Kelly -- as always!

Might I add an 11th Demandment to your famous list: thou shalt not swim too far ashore in bad assumptions.

- Pete Blackshaw

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By schmults | Boston, MA February 18, 2009 04:19:30 pm:

The relatively slow rate of ad dollars shifting to the web is truly astounding. Maybe it is going to take a generational shift in retain and brand CEO/CMO's to effect real change here. Or perhaps we have a systemic problem where too many people and processes are hard wired to keep cranking out traditional ad formats based on budgets instead of results.

Because the data is there -- even beyond the Gap example and the upside down ratio of ad spend vs. time spent by consumers Kelly cites. Not to mention the fact that online media is so much more accountable. Even CPM advertising -- the bane of online ad buyers -- is far more accountable than offline. "You mean I only pay when someone actually sees my ad?" was the comment an offline marketer made to me when I explained CPM. Imagine his reaction to CPC and PFP.

One silver lining of the current downturn might be to force more companies into ROI driven marketing as opposed to traditional budget driven marketing spending. And perhaps in the process put a bullet in the off cited cop-out that "50% of all advertising is useless. We just don't know which 50%."

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By adexchanger | New york, NY February 19, 2009 09:48:38 am:

Thanks for this article, Kelly. Tracking remains a key lever for going digital - there is no other opportunity in media to potentially track from ad buy straight through to fulfillment. P&G, Gap and other big brands can spend more wisely because they know their ROI is quantifiable for their digital ad budget.

www.adexchanger.com -

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By statiktv | STAMFORD, CT February 19, 2009 04:31:56 pm:

Great article, really pulls together a nice topline of what big spenders are doing and how they're getting smarter. Unfortunately, some economical Darwinism may happen to those less willing to move their ad budgets to the digital space.

http://keaneangle.com

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By rrawat02 | Chicago, IL February 20, 2009 07:20:28 am:

Awesome article Kelly. I realize Resource works with the biggest consumer brands but I would extend your article to the middle and long tail of retail too. Smaller retailers with a few stores and extremely promising products are totally missing out on the web, partly because of poor advice/understanding but also because when they read stories about the trailblazing results of companies like Talbots and P&G they immediately assume this is a 'big company' phenomena. While the Gap stories are well documented stories of small companies like Woot.com that have architected a web only retail model and Shoeline.com that has taken the bold step of telling shoppers the return rates for their products (and seen sales surge 26%) are the kinds of stories smaller retailers can relate to. I'm simply amazed at how poorly smaller retailers use their online channel.

http://betterretail.wordpress.com/

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By promotion123 | Arana HIills August 26, 2009 03:37:05 am:

This statement: Advertising dollars are being judiciously shifted to the web. can't be more true. If there are possibly those out there that believe there is no huge shift to the web then they have their heads in the sands. Great article, giving a lot of coverage of the points business owners and marketing professionals should take notice of.

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