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Report: Retail ads perform worse than most other online ads

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Why do retail ads perform worse than most other online ads? Why are ads geared toward men as important as those geared toward women? A new study by Dynamic Logic offers several tips for retail marketers on how to deliver effective holiday ads.

Among the report's key findings are the following:

  • Retail ranks third among the top five industries in ad awareness and purchase intent.
  • Men's ability to associate a brand's message with its advertising after exposure increases more than women's.
  • Rich media's ability to persuade retail store or site visitation is not significantly different from static ads.
  • Retail “intent to visit” does not vary much as frequency increases.

According to Aaron Katz, director of Dynamic Logic's MarketNorms, retail online advertising performs below the online average in key brand impact metrics. “This is an inherent property of retail,” Katz told Direct Marketing News. “Retail ads are for discounts and getting people into stores. Retailers are selling other people's products and there are restrictions on what you can show. Unlike an iPod ad that can be focused, retail ads are trying to get a general message across.” Katz suggested retailers focus on a single message rather than creating several “diluted” messages to sell lots of products.

There is a common misconception in retail that women are more responsive to ads than men, Katz claimed, but the study found that 3.5% of men were impacted in regards to message association, as opposed to only 3.1% of women.

“We found that ads that ran on sites that are geared toward men have great response rates and outperform a lot of retail advertising,” Katz said. “The first reaction for a lot of retail advertising is getting women into the store but men need to be marketed to as well.”

The study also found that rich media and flash drive ad awareness but don't significantly motivate consumers to make purchases. “There is less relevance to the way the ad comes up and more to the message it delivers,” Katz said. “Rich media matters a lot in drumming up interest for [products] that might seem unusual but for retail it may just be that the offer [and message] matters more.”

The frequency of ads is another factor the industry has overrated in terms driving “intent to visit,” according to the report. In fact, the report says as online ad awareness increases from 1% to 10% of consumers, behavior intent increases less than 1%. “If you're shown an ad 20 times and the ad wasn't compelling the first time you're not more likely to go to the store,” Katz said.

This research for the report is based on more than 120 online advertising campaigns by retailers over the past three years from Dynamic Logic's MarketNorms database, according to Dynamic Logic.

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