Eddie Bauer Blazes a Web Trail

Everyone of a certain age and over a certain income level knows who Eddie Bauer is. For 79 years, the Redmond, Wash.-based retailer has built a formidable brand name in casual clothing, outerwear and housewares. Since 1945, it has been mailing catalogs to upscale customers and upscale wannabes. In that time, it has created a strong identity as a quality retailer who really knows who its customers are.

By 1953, Eddie Bauer was so well known for its quality outerwear that it outfitted several notable scientific expeditions, including trips to K2 in the Himalayas and to Antarctica.

In 1994, though, Eddie Bauer started a trek of its own into unknown territories: The Internet. Its mission: Expand its customer base to consumers who were taking advantage of online shopping.

But when Eddie Bauer got to the Internet, it found someone had already blazed the trail: Its own customers and those who exactly fit the Eddie Bauer profile. And so Eddie Bauer found that its challenge was not to create a name for itself on the Internet or educate its customers about the Internet. Its challenge was to get Web trekkers to stop and shop at the Eddie Bauer site. “Our target, in age and income, really is an Internet customer,” says Judy Z. Neuman, division vice president of interactive media for Eddie Bauer. “Our objective was using the Internet as an opportunity to extend our brand to garner new customers—those who were coming off of online sites and then introduce them to our retail stores and catalog. It’s our multi-channel strategy.”

No maps

But with no map for how to attract customers navigating the vast online frontier, and a limited budget, Eddie Bauer had to explore many different trails to determine the best route for driving online shoppers to its Internet site. Among its approaches:

• Contracting with an outside agency to help determine where its customers were on the Internet and what kind of Web advertising they would respond to.

• Hiring a specialized ad agency to develop ads that would tie into Eddie Bauer’s traditional image but that would be effective on the Internet.

• Making deals with portals such as America Online, which gets millions of visitors a month.

When Eddie Bauer entered the online world in the early 1990s, it was seeking electronic shopping alternatives earlier than most other catalogers, testing such media as CD-ROM, interactive television and a Time-Warner cybermall, called Dream Shop, in the early 1990s.

“We cut our teeth with early tests and learned all about the medium,” says Neuman, who notes that the online store already has lived through and learned from four holiday shopping seasons.

Eddie Bauer had good reason to be interested in electronic selling. It targets people aged 35 to 44, but with a broader age range of 25 to 55, who have average annual income of $65,000 and up. Eddie Bauer characterizes them as highly educated, family-oriented and active Net users.

Eddie Bauer set out to develop a Web presence on America Online in 1995 and eventually launched its own Web site in 1996. While the retailer initially planned its Internet marketing and advertising inhouse, Eddie Bauer began in fall 1998 to fine-tune its online advertising and marketing strategy, launching an online effort with the help of outside experts.

Looking outside

Today, Eddie Bauer works with Seattle-based Internet media buyer and planner Avenue A Media, which specializes in tracking banner ad performance, and with the creative power of New York City-based I-Traffic, which handles the creative end.

Leveraging its well-known brand name, the retailer sought not only to build a presence on the Internet anchored by consumer familiarity of its products but, more importantly, to generate traffic and capture online sales.

Eddie Bauer uses banner advertising to attract shoppers via sites that fit its demographics. It runs banner ads on or provides text or hotlinks on such major search engines as Lycos and Excite. And it has a presence on major shopping areas such as those on America Online and the Microsoft Network.

Although many retailers use banner ads to get their names recognized, Eddie Bauer was one step ahead. One of the most distinguishing characteristics of Eddie Bauer’s online marketing is that it does not focus on promoting its brand name, but skips to the next step in marketing—generating sales. “Our brand is almost 79 years old and people already know us,” says Neuman. “We would not be where we are in the online world without the other storefront and catalog channels. ”

Online marketing experts say Eddie Bauer has a supreme understanding of what its customers want, which is key to developing an online relationship. “Judy has a good pulse on the Eddie Bauer customer,” says Lauren B. Freedman, president of Chicago-based e-tailing Group. “The more information a retailer has on its customers, the better.” The challenge then is to drive traffic, figure out where customers will come from online and how much it is worth paying to get them to shop on the Web site, says Freedman.

Turning a customer familiar with Eddie Bauer into an actual shopper offers its own set of challenges: finding sites that such customers frequent. Working with Eddie Bauer, Avenue A uses a tiered approach to the demographics, says Terry Franklin, account manager. The first group includes existing online shoppers who also shop offline, then new Eddie Bauer shoppers who shop online somewhere, then a wider group of consumers who have not shopped for apparel online but have made an online purchase, and finally the wider net of people who are new to online shopping.

Eddie Bauer uses its targeted approach to determine on which sites it should use banner advertising, utilizing different creative approaches, with constant emphasis on tracking ad performance and using new sites. Site segments that Eddie Bauer tries to target include women and family, travel, news, information engines, local geographic or community and technical. “We did well on the technical sites, which is an opportunity to home in on technology users,” says Neuman, who notes that Eddie Bauer will consider testing the financial and investing sector this year. In 1998, Eddie Bauer tested major online sites where it found its demographic base, such as travelocity.com, abcnews.com, ivillage.com and women.com. It tailored banner ads to fit such events as outerwear sales, generic ads or holiday promotions. Overall, the retailer ran banner ads on up to 100 sites. Only about a dozen of those made the final cut. The sites that garnered the most sales for December are Lycos, Excite, Netscape Netcenter, Alta Vista, Infoseek (now the Go network), Webcrawler, Hotbot, Microsoft Network and AOL.

And while target marketing is the goal, Eddie Bauer’s online team does not rule out new territory. Even with the “know thy customer” mantra, some sites produced surprising results.

“Some of our initial thoughts about which sites would produce customer sales didn’t work. We felt that our customers would be on family-or community-oriented sites such as disney.com. But they didn’t always convert to purchases,” says Neuman. And some site areas, that Eddie Bauer continually tests that may be borderline of its customer demographics, did produce sales. For example, weatherunderground.com was surprisingly good for driving traffic and sales, says Neuman.

In addition to target banner ad placements, the retailer also maintains a presence on America Online, Microsoft Network and sidewalk.com as part of annual contracts that provide real estate on the shopping segments. Neuman notes that having a permanent placement on portal shopping sites for such locations, and on search engine site shopping areas, garners particularly strong sales—a part of the online strategy that is likely to stay. Internet marketing experts and Neuman agree that having a presence on a shopping area within an Internet site drives sales because consumers are ready to shop. And finding ways to reach new and existing customers online, Eddie Bauer had to figure out how to measure its progress.

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Blind alleys

“When we first went online, we had nothing scientific to use to measure what our sales should be. We just threw it against the wall to see if it would stick,” says Neuman. “We looked at the potential customer acquisition and potential sales based on where the industry was.” But experience has refined Eddie Bauer’s approach. “Now we reforecast often because so much can change,” Neuman says. “The ante goes up with every forecast. We have to look at our budget and apply those dollars to get a return on the investment and get profitable early.”

Most of Eddie Bauer’s online advertising and marketing budget is spent on target online campaigns. “Money can burn up fast if you don’t know how to plan the media buys,” she says. “That’s why we work with a planner.”

Neuman declines to divulge the online budget but says it is conservative. “We are not planning to strike multimillion dollar deals up-front,” she says.

The real knack for online advertising is keeping up with the changes and finding new places to attract customers. “The key to Internet advertising is test, test, test,” says Neuman. “We have a small pool of money and we don’t want to spend it all in one place.”

Test, test, test

That’s where Avenue A comes in. Negotiating site deals, as well as prices for click-through rates for banner ads on different sites, Avenue A is able to secure well-priced deals on a volume basis. The firm uses proprietary demographic software and Internet expertise to determine on which sites its clients should advertise.

Unlike real-world advertising, where retailers can never be sure their ads are actually driving sales, Avenue A is able to gauge how many banner ad click-throughs generate a sale. The banners include an action tag, which allows Avenue A to track the user to the site and if the user makes a purchase, therefore showing that the banner ads are converting browsers to shoppers.

While the Internet often seems to be going in all directions, the one aspect that is black and white is performance. “The great thing about the Internet is that we know right away if a site is not working. We can put money into the highest performers,” says Franklin. This suits Eddie Bauer’s budget theory: “The only reason we advertise online is to get a conversion to a sale,” Neuman emphasizes.

Avenue A works with Eddie Bauer’s creative team at I-Traffic to ensure that the creative banner ads match the sites on which they will run.

I-Traffic develops the tag line for the banner ads and uses product shots, Eddie Bauer logos and even shots from the catalog to create an ad. “The ultimate goal is bringing customers to the online store,” says Eric Valk-Peterson, vice president of account services. I-Traffic produces general ads which aim to attract customers to the site, or to promote sales of certain items, which it hopes will convert to sales. Eddie Bauer’s online media team declines to reveal percentages of banner ad impressions or sales. But some industry experts say the average click-through rate for a banner is 1% of those who view the banner. Ralph Wilson, director of Wilson Internet Services, says that advertising conversion rates across the board for online shopping run from 1/2% to 5% of those who view banners. Testing success rates of sites is not the only way to find customers. Eddie Bauer also tested a service that offered a solution to a major obstacle for enticing consumers to click ad banners and actually buy something. The problem with online shopping is that while banner ads may be tempting, consumers typically are taken away from the site they were visiting if they choose to click through a banner.

Inside the box

For example, while reading an online newspaper, a consumer could see a banner for a clothing sale. The consumer clicks on the banner and is taken from the newspaper site to the store site. The shopper must then go through a sales process, which typically has a few different screens to download. If the consumer wants to go back to the newspaper site, he or she has to click back a few times to get there. Some analysts contend that such a process is a shopping deterrent.

But Waltham, Mass.-based @Home Network, formerly Narrative Communications, offers software that allows consumers to remain on the original Web site while detouring briefly to buy something through a banner ad.

Neuman says Eddie Bauer, which used the interactive banner to sell jeans last year, is not using the Enliven software right now but will not rule it out for future online strategies. “This feature is great to encourage impulse buying,” says Neuman, “But today not everyone has the right kind of Internet browser that would allow them to take advantage of the banner.”

Generating Web sales clearly is a combination of thoughtful target marketing, open-minded planning and the basics of how good your site looks to a potential customers. “A lot of conversion depends on how you set up your store,” Wilson says, noting that customers should be able to find what they are looking for, via category segments, and the site should have a fast and easy process to make a purchase. The fewer clicks a customer must make online, the more chances they will make a purchase.

Neuman concurs: “We’re always retrofitting the Web site. We’re cleaning up the order process to make it easier and faster to use.” The site is tailored to what customers want to see or already see in Eddie Bauer’s catalog: a white background and uncluttered presentations of shopping sections. Some Internet customers like to see a lot of information packed onto Web pages, such as some music sites. “Our customers do not respond to that,” Neuman says.

A 3D experience

In terms of building a site on which people will want to shop, Neuman has some hard and fast rules. “You need to offer a full assortment of online goods. Many retailers still do a subset of what they offer in their stores or catalogs,” she says, noting that many online customers are dissatisfied with limited selections. And not only knowing your customer, but also listening to your customer, can improve online presentations. Eddie Bauer, for example, added home accessories to its online page as a result of customer feedback, specifically, from e-mail sent through the Web site.

Anything that can help a browser become a buyer is fair game for Eddie Bauer. Other software that Eddie Bauer utilizes to enhance the shopping experience for online customers includes Bothell, Wash.-based iDream Software’s iDream Realism product, which allows shoppers to see houseware items in a three-dimensional virtual room.

In addition, Eddie Bauer’s site offers a virtual dressing room. Eddie Bauer in 1999 is planning to add a feature by which customers will be contacted directly via e-mail with certain Web site sales information. Now, consumers can sign up for the service on the Web site. Such e-mails would include graphics, which show particular items, and hotlinks, which can connect the customer directly to the Web page for a particular item. While Eddie Bauer counts most of its pennies for online advertising, it does not rule out the strength of its brand in the real world. The retailer plugs the virtual store site at its real-world store, by printing the URL on cash receipts and shopping bags. And its catalogs have the online address on the back page of each issue. Most recently, Eddie Bauer launched in February a major national branding campaign which will include some promotion of the online site by the fall.

Eddie Bauer plans to continue its aggressive online climb. “So far, we beat the heck out of our projections,” says Neuman, who notes that sales growth exceeds 200% over last year. Sales more than tripled in fourth quarter 1998 over fourth quarter 1997.

With innovative plans for an online sweepstakes and, possibly, some games customers can play on the Web site, clearly, the retailer is not sitting on its laurels. Neuman did not provide details about the upcoming projects, except to say that the timing would be around Father’s Day with a promotion that ties into its catalog and store channels. She notes that Eddie Bauer will continue to utilize targeted online advertising with a combination of banners and fixed placements in high traffic sites. “We also will continue to focus on portals that deliver results and on performance-based models,” Neuman says.

E-tailing group’s Freedman notes that Eddie Bauer’s direct-marketing approach is a model that works for online sales. “Over the long run, it’s like the tortoise and the hare: the retailer who jumps onto the Internet and runs may not be the winner. It’s more likely to be the tortoise who sits back and figures out what it needs to do and expands on that wisely.” •