More and more people are becoming comfortable shopping online — that much is hard to deny. Just look at Amazon. Its retail sales are set to reach $258 billion in the U.S. in 2018, working out to nearly 50% of all online sales and about 5% of all retail sales. Part of the success Amazon has experienced can be attributed to how easy it is to buy on the platform. The e-commerce retailer offers competitive prices, free shipping (in two days with Prime), and a one-stop-shopping experience. There’s not much you can’t find on its site, which is probably why 44% of consumers start with Amazon when shopping online.
This change from brick-and-mortar purchasing to online shopping has led many brands — brands that sell through retail locations — to take a more straightforward approach and sell to consumers online. Retail e-commerce brought in more than $2.3 trillion in 2017. That’s an increase of 24.8% from the previous year. What’s more, $1.4 trillion was the result of m-commerce, or mobile sales. With so many new opportunities to reach consumers (not to mention track their behaviour and measure product performance), it’s no wonder we’re now seeing an increase in the launch of niche brands online.
While many e-commerce companies limit themselves to digital advertising, you can still benefit from offline media channels such as TV or radio. Large online retailers and direct-to-consumer brands spend over half of their media budgets on TV, radio, and out-of-home, based on the latest numbers from Kantar Media.
For example, a meal kit company that we worked with believed its digital media efforts were driving most conversions, but insights from our cross-channel attribution platform showed that TV campaigns were more responsible for conversions than online ones. The same company also discovered that its target audience still listens to the radio while driving, so it allocated more money to radio advertising.
For many small e-commerce companies, advertising on offline channels can, admittedly, seem risky. They might think there’s not enough visibility and tracking because they’re used to digital, where they can track user-level data all the way through to the conversion event.
As e-commerce companies grow, many start with offline tactics like direct-response TV advertising. They usually leverage remnant, low-cost TV inventory and measure the performance of TV investments using the increase in response over the baseline. We have seen great success in e-commerce companies leveraging TV to increase awareness, consideration, and sales while making their digital investments more effective. With the increase of brand exposure, consumers are more likely to interact with online ads and take the necessary steps towards conversion.
As the customer journey increases in complexity and buying habits continue to evolve, it’s important for e-commerce companies not to limit advertisements to online channels. This raises two questions: What is the right balance between online and offline media spend on your next e-commerce campaign, and how can you accurately track the customer’s journey to allocate the budget?
To answer those questions, you’ll need to have a holistic view of not only your customer journey, but also the adstock effects that both digital and offline media have on conversions over time. Getting this holistic view relies on advanced attribution models that take into account the full consumer journey and the synergy between offline and online media channels.
Understanding the full customer journey
Let’s say a customer was watching TV and saw a Nike ad. She then did some research on her phone before going to her laptop to search for the best price to purchase. This was her customer journey. There’s a tendency to attribute the end of a buyer’s journey as the reason for conversion — in this example, you might be tempted to attribute the conversion to the search ad. But that’s just telling us the moment of acquisition.
The challenge is tracking TV like online media. There's a gap in understanding the effectiveness of television. Consumers can take weeks to convert. During that time, they could bounce from landing page to product page to even a third-party affiliate site. So crediting one channel, tactic, or campaign to that conversion might be erroneous. Instead, a multitouch attribution approach helps you understand every single touch point on that path to purchase so you can appropriately “give credit” to the campaigns that contributed to that purchase.
Quantifying the synergistic effects of offline and online media
Finding the right balance between offline and online efforts is different for every business based on its objectives, specific strategies, and marketing context. It's important to remember that offline media still has a role to play, even when brands strictly live in the digital space. You never know what is going to prompt a potential customer to take action — she might hear a radio ad that inspires her to search for your product, see a social media ad that plants an idea in her head, and then visit your website after seeing a TV ad that explains how your product works.
No matter how comfortable people get with shopping online, e-commerce brands need to explore all their options when it comes to marketing. Offline channels can level the playing field for smaller brands. Just remember to always start with consumers, follow their journey, and look at how offline and online channels work together to turn them into loyal customers.
About Brian Baumgart
Brian Baumgart is a serial entrepreneur and angel investor with over 19 years of experience in advertising technology. He is currently the co-founder and CEO of Conversion Logic, a platform that provides marketers with the most accurate and advanced cross-channel analytics powered by award-winning machine learning and AI capabilities. Prior to Conversion Logic, he co-founded and served as the CEO of Gradient X, a leading DSP for programmatic mobile advertising, which was acquired by Singtel (Singapore Telecom) in 2013. Prior to Gradient X, Brian was an angel investor and previously president and chief strategy officer at Adconion, helping the company raise $100 million in funding and expand to 26 offices in 18 countries with more than 700 employees. Adconion Direct was acquired for over $235 million by Singtel. Brian is passionate about technology and is also an angel investor in nine different companies.