Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
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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.
“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.