PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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The reason is that retailers are actively searching for “What’s next” in the way of new technology that can enhance their online marketing, according to Kahn.
The answers to “What’s next?” are further leveraging data feeds on customer behavior and products, employing tracking technologies, and tapping into social networking sites to expand distribution of retailers’ marketing campaigns.
Many vendors are attempting to bridge the gap between art and science by offering applications that leverage customer behavior and demographic data to create audience-specific campaigns that play well with consumers on social networking sites and advertising networks, such as aCerno, Advertising.com and ValueClick. Advertising networks have a broad reach across the Internet and connect retailers with consumers through a variety of Internet destinations.
“There is a large source of potential new customers that are not being reached with traditional marketing methods,” says Suzy Sandberg, president of Internet marketing services firm PM Digital. “The ultimate metric in e-retailing is generating sales from new customers and there are new tools emerging that can help retailers do it.”
The time to touch a shopper
In addition, opportunities exist for retailers to expand their presence on comparison shopping engines, which are growing in popularity and numbers as consumers flock to the Internet to locate the best prices on products. For many retailers, comparison shopping sites are the first opportunity they have with a potential new customer.
“Retailers need to expand their marketing influence to more customer touch points and comparison shopping engines are destinations that offer retailers a chance to connect with the consumer and ensure a consistent experience when interacting with their brand,” says Eric Best, CEO of online performance marketing firm Mercent Corp.
One of the newest marketing techniques to emerge in the past year is remarketing; a technique that tracks shoppers after they have left a retailer’s site without making a purchase and serves them up display ads for that retailer. The remarketed ads are shown only when a shopper visits a site within a participating ad network. The intent of this tracking strategy is to prompt the customer to return to the retailer’s site to make a purchase.
Part of the appeal of remarketing is that online display advertising revenues have been growing at a healthy rate, 21% in 2007-a total of $4.4 billion, according to the Interactive Ad Bureau and PricewaterhouseCoopers LLP. The market for display ads is about half that for paid search-which totaled $8.8 billion in 2007, up 41%-but with growing competition for paid search ads, display can be a more cost-effective form of advertising, experts say. Plus, consumer interest in the medium is expected to increase as more advertisers rollout video ads.
“After paid search, remarketing is a technique that is generating the most new customers for our clients,” Sandberg says. “Retailers are starting to budget for this type of marketing.”
From a technical standpoint, remarketing involves the implementation of a pixel, which is a source code similar to a tracking cookie. Pixels are placed on pages throughout the retailer’s site and as shopper’s visit these pages, the pixel records the products they viewed. Advertising networks use that information to determine the type of ads to be displayed after the shopper leaves the site.
“It’s a technique similar to using GPS technology to send text marketing messages to mobile devices when a consumer nears a retailer’s store,” Sandberg says. “It can be a very effective way to push a promotion to a consumer.”
PM Digital, which places remarketing advertisements with ad networks, helps retailers select the advertising networks that will deliver the best return on investment.
The key to successful remarketing is for retailers to place as many pixels as possible throughout their site. “Retailers don’t want to limit pixels to the home page,” Sandberg says. “To create an effective remarketing campaign, retailers must make the commitment to apply the necessary technical resources. It’s not as costly and as time consuming as one would think.”
Retailers must be careful, however, to avoid the appearance of in-your-face marketing when launching a remarketing campaign. “Remarketing has the potential to scare shoppers in a Big Brother sort of way,” Wu says. “Instead of aggressive messaging in the follow-on ads, retailers should offer specials and coupons that benefit the shopper and get them over the tipping point for making a purchase.”
Another emerging marketing tactic is placement of display ads on social networking sites. In the case of Facebook.com, retailers can submit demographics of their target audience and keywords they plan to use in their marketing campaigns. Facebook.com will match keywords to those found in member profiles. It will also tell the retailer the size of the potential audience they can reach and will place the retailer’s ads with the appropriate profiles.
“Social networks and other communal web sites are a great way for retailers to expand the distribution of their marketing campaigns in a highly targeted fashion and differentiate their marketing campaigns by establishing a presence where competitors aren’t,” says DoubleClick’s Kahn. “So far, the conversion rates on ads we’ve created to run on Facebook.com have been quite high. One retailer successfully used a Facebook.com ad last Valentine’s Day targeted at male gift givers.”
Another example DoubleClick cites is the inclusion of a banner ad in certain Facebook members’ spaces notifying them that a publisher is looking for freelance writers. The ad was placed because the member profiles indicate that they belong to a writers group and include other references that their profession involves writing.
“These are highly targeted ads that go to a motivated audience and target what information people push out about themselves on the Internet,” Kahn says. “Retailers must still know their audience and offer relevant products, but the opportunity to interact with consumers in new ways through this channel is huge.”