January 29, 2010, 12:00 AM

Putting goods on display

E-retailers find online display ads are more effective now that they can precisely target the right consumers.

By Bill Siwicki

Managing Editor, Mobile Commerce

Many last-minute online holiday shoppers don`t know what to get and have only days to get it. These shoppers are open to gift suggestions, especially when offers include guaranteed delivery by Christmas.

Watch and jewelry retailer Ashford.com decided to target these shoppers in the days leading up to Christmas 2009. And it chose online display ads to get the job done.

But it didn`t just put banner ads on web sites at random. It was able to present the ads to consumers whose online behavior has marked them as watch and jewelry shoppers, and it could choose the consumers it wanted to reach by age, gender and household income. The e-retailer also was able to target consumers who had visited Ashford.com but left without making a purchase.

Ashford was able to pinpoint the consumers who would see its ads by using behavioral and demographic ad targeting and retargeting technology and services from The Nielsen Co.`s Claritas and the ad networks from Yahoo Inc., Microsoft Corp., Permuto Inc. and FetchBack.

The ads Ashford presented assured last-minute shoppers that if they placed an order by the afternoon of Dec. 23 the orders would be delivered the next day. Traffic to the site surged: On Dec. 1 it was 50,000 visitors; on Dec. 23, after the ads had been running a few days, it was 100,000.

Sales on Dec. 23 were up 300% over Dec. 1. At $500, the average order value was significantly higher than the norm. And, the retailer says, it was the online display ad campaign, as shown by tracking codes and web analytics, that was responsible for generating approximately one-third of the increased sales.

"Display gives us the opportunity to be more visual and reach a broader audience than search or e-mail," says Eli Katz, president of Ashford.com. "Around the holidays it`s not just watch aficionados looking for watches but people looking for a great holiday gift. They suddenly see our ad and we visually communicate guaranteed holiday delivery and brand-name watches. We`ve now catered to a whole different customer who wasn`t really looking for us before."

Hitting the target
Ashford was successful, Katz says, because it was able to show its display ads specifically to consumers who fit into the ad network`s category of likely watch and jewelry buyers and who were of a certain age, gender and income. It`s this kind of demographic and behavioral targeting that is causing retailers to take a new look at online display advertising, a marketing vehicle largely dormant in e-retailing.

Ad targeting works, retailers who`ve used the techniques and experts say, and the techniques likely will lead to more retailers adding online display to their marketing efforts.

Behavioral targeting and retargeting are catalysts behind retailers beginning to spend more on online display advertising, says Cheryl Kellond, vice president of advertising business at ChoiceStream Inc., a vendor that specializes in product recommendations and personalized online display ads. Kellond formerly was vice president of product marketing for advertising at Yahoo Inc.

"Experimentation is back," she says, "and retailers are really committed to finding out what works. This is the year the shift in spending in retail will move from newspapers to online display."

However, privacy advocates have complained about web ads that are directed at consumers based on their behavior, and government officials have threatened action if the advertising industry doesn`t police itself. That has moved marketing trade associations into action, so far forestalling new regulation of behavioral targeting.

The behavioral targeting possible today enhances other advantages display ads have over other forms of interactive marketing. Display ads reach millions of consumers, many of whom may never have heard of a particular retailer, while e-mail marketing only reaches a merchant`s existing customers. And display ads can be more compelling than paid search ads that are limited to a few lines of text.

Advertisers of all kinds are showing confidence in the marketing tactic through their ad spends. In 2009, advertisers spent $7.8 billion on online display, according to Forrester Research Inc. The firm predicts $8.4 billion this year and $16.9 billion by 2014.

One retailer investing more heavily in online display advertising because of its targeting capabilities is apparel and accessories retailer New York & Company.

The retailer last year undertook a display campaign aimed at shoppers who came to the e-commerce site via paid search but did not buy. It bought space on the thousands of sites in the Right Media ad network at $2.22 eCPM, or effective cost per thousand ad impressions, the average price. That means the retailer pays whether or not consumers click on an ad, unlike paid search ads that only charge for clicks.

Here`s how retargeting works: When a consumer comes to the e-commerce site, New York & Company assigns her a cookie; the cookie contains no personally identifiable information, only her browser`s identification number. The cookie records where the consumer came from and what she does on the site. Right Media receives a copy of the browser identification number and whenever that number pops up on one of the sites in its ad network it shows a display ad for the retailer.

In the campaign that New York & Company ran last year, the ads touted free shipping on orders that met price thresholds.

"There were more sales and more new customers. The click-through to conversion rate was high, the cost per order was low and the average order value was high," says Amy Wong, marketing manager for e-commerce at New York & Company. "We were thoroughly happy with the results and shifted more funds to display."

New York & Company works with search engine marketing and online display ads firm Didit.com LLC. In-house, a creative designer puts ads together based on input from the marketing team. The marketing team and Didit analyze the campaigns. "In a given week no more than five hours is spent in-house on analysis and tweaking campaigns and some more hours on design," Wong says, for a total in-house weekly cost of $3,000 to $5,000 when a campaign is running.

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