Ask a dozen multichannel retailers or direct marketers what they think of Internet advertising as a vehicle for driving sales, both online and offline. The variation in their answers will astound you. Half will tell you they tried it and it didn’t work. The other half will tell you it’s their most profitable and efficient direct marketing vehicle.
What’s going on? Who’s right and who’s wrong? And how can there be such a wide disparity in opinion?
The answer is straightforward.
Many traditional retailers tried Internet advertising and failed miserably. They jumped quickly into large deals without performance clauses. They quickly spent millions of dollars to catch up with their pure-play e-commerce competitors. Most importantly, they failed to aggressively test, learn, and optimize around meaningful metrics. The results were millions of dollars down the drain, careers damaged, companies wounded.
At the same time, there were a handful of retailers who began applying the rigorous disciplines of direct marketing online. Over the past few years, these retailers have seen a steady and significant increase in the efficiency of their Internet advertising.
These retailers took a slow, cautious approach to Internet advertising. They used test-and-control methods. They relentlessly optimized campaigns based on the most relevant metrics, such as cost per sale, cost per revenue, or gross margin return on advertising investment. They carefully tested offers, creative units, messages, publishers, and placements. Over time, they learned what worked, and they refined strategies based on smart, well-reasoned marketplace intelligence.
Today, the retailers who’ve done the hard work have a significant competitive advantage over those who have been sitting on the sidelines. They know what works online.
So what are these smart marketers focusing on now?
The rapid growth of the at-work Internet audience seems to be transforming into a prominent industry trend. It turns out that significant numbers of people are shopping and buying online while at work. According to a recent study by the Online Publishers Association, more than 55 million people now log on to the Internet while at work.
Not only are people using the medium while at work, it turns out they’re shopping and buying as well. Avenue A historical data, comprised of aggregate information from more than 20 major online advertisers, demonstrates clearly that online purchases peak at 1 p.m. eastern time. And in a recently released study of online purchase behavior, Avenue A used anonymous behavioral data to demonstrate that the at-work audience was 64 percent more likely to make an online purchase than the at-home audience.
Will employers crack down on at-work Internet use? Some will and have already, but the data suggests that at-work Internet use is growing, and, in general, management is doing little to stop it. Most companies are probably willing to accept their employees sitting at their desks to do a little holiday shopping while they eat their lunch. It’s an inexpensive employee benefit.
For direct marketers, this provides a powerful new tool to reach high-income customers at a time when they have been traditionally unreachable. It means that retailers who have been on the sidelines need to get back online before they fall too far behind. And it means that the discipline of direct marketing will become increasingly valued in a world where everything can be measured, and more importantly, where everything needs to be measured to generate sustainable growth and to maximize profits.
