Analyst Says Early Catalog Tests Key to Online Holiday Sales
Steve Findley, vice-president of analytic services at Adknowledge, Palo Alto, CA, whose clients include Etoys, Santa Monica, CA and CBS Sportsline, New York, said catalogers looking to get a major boost from this year's online holiday rush should immediately begin testing as many banner and e-mail marketing campaigns as they can before arriving at any solid presumptions about what to expect -- or even who to target.
Adknowledge is among a growing number of Internet marketing and research shops now in a position to advise traditional direct marketers about the future of their industry. The company also works with traditional and interactive agencies such as FCB Direct and Young & Rubicam on clients Amazon, Macy's and Hewlett-Packard.
The company said the strong economy as well as a continued demand for consumer goods and services has many catalogers and direct marketing merchandisers already thinking about how to make the most of their upcoming fourth quarter sales season. And with favorable memories still lingering from the encouraging contribution the Internet made to last year's holiday sales, there is plenty of anticipation about what the likely online performance scenario might be for the entire industry this season.
"Certainly a lot of marketers are moving more seriously beyond food, water and shelter online" said Findley. "We have a flood of e-commerce retailers signing up with us right now, and I think they all represent specific examples of what many companies are thinking now about for the [Internet and] 1999 holidays. But many are just now starting to look at the next level of sophistication and they're asking a lot of questions."
Findley isn't comfortable with catalogers making too many specific inventory commitments based on last year's Internet performance activity without serious online performance testing of their brand. He emphasizes instead the importance of striking a balance between comprehensive testing in the online industry overall and what has traditionally been projectable for each merchandiser by specific market sector through traditional direct marketing means. But he cautions there are risks present for emerging online merchandisers who often go about conducting their tests effectively but eventually find themselves getting bogged down in unnecessary analysis and market information -- a phenomenon he singles out as common for an industry still in its infancy and prone to change.
"Online marketers can really overwhelm themselves with too much data very easily," said Findley. "The trick is to get the right data first and then crunch the numbers." For creating a sustainable, long-term addition to revenue, he said catalogers should make decisions about potential online sales based on a "solid understanding of how their banner media buys are working in conjunction with their offline strategies."
"The largest amount of research activity for banner advertising services and tracking is still among what we call the dot-com retailers - companies that are essentially marketing Internet brands. The more traditional catalogers who still have both online and offline sales activity are a smaller category so far. To me that says traditional catalogers still have some catching-up to do in order to take full advantage of the Web's
Findley said catalogers could eventually become the "new dot-com specialists" because Internet advertising can help them answer questions that could never before be answered. For instance, he said catalogers can now know the number of people who were exposed to their ads even if they never clicked on the actual banner. Something a cataloger (or any advertiser) couldn't do with a simple branding print ad.
Findley said too many marketers still have to learn how to treat the online world with the same level of sophistication that they've long treated the offline world, noting that you can only really know what you test and track.
No forward-thinking direct marketer is saying "It's only June" -- in their minds, he said.
"The best way for catalogers to prospect for the holidays is to start conducting tests now. A cataloger could buy 30 ads on thirty different sites, and with proper testing and follow-up synchronization of cookies with the cataloger's online customer ID,
you could get the results and then have to buy ads on only 10 sites during the fourth quarter. The benefits of doing this right, opposed to doing it wrong, can be 100 percent improvement," Findley said.