Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
(Page 2 of 3)
An open question
As far as analysts such as Forrester Research’s Sucharita Mulpuru are concerned, the issue of retailer ROI on 3-D animation, for example-one rich media application now getting a try-out from some online retailers-is still an open question.
“The biggest challenge to incorporating something like this is the IT integration time it requires,” she says. “One has to feed quite a bit of data on the products that may or may not already exist and then plug it into a site’s architecture. And then after all that, the tool may or may not drive incremental revenue. Any sites incorporating such a feature are certainly ahead of the curve.”
In fact, they are far enough ahead of the curve that even many who are adopting rich media don’t yet know what they’re going to get out of it. TigerDirect, which had been producing a limited amount of Flash-based product content on its own, started receiving enhanced Flash as well as expanded HTML content from manufacturer partners through technology platform provider WebCollage only five months ago. It doesn’t yet have hard data demonstrating the effect of expanded rich media content on sales.
Anthropologie.com’s new Flash-built cart from Allurent streamlines checkout into a pageless application that eliminates the click-and-wait restrictions of the former cart, showing running totals of each item as added, continuously-running visuals of each item as added and a continuously-running window that shows visuals of selected cross-sells. Not yet live with the new cart, Anthropologie has expectations, but results are in the future.
Upping the add-to-cart ratio
With retailers pioneering advanced forms of rich media still gathering data on how it’s affected their sites, vendors are conducting tests at sites hosting rich media and making those aggregated results available to prospective customers. In an A/B test this summer across multiple retailers, manufacturers and products and across millions of consumers, for example, WebCollage found that shoppers served a product page offering a link to “see product information from manufacturer” featuring rich media and expanded HTML content, added products to their carts 6% to 15% more often than shoppers who weren’t served the link, depending on the product and the retailer.
Such data suggest the strategy at retail sites has evolved-or should evolve-from an earlier emphasis on how many clicks it takes to find and buy something, says Eli Singer, WebCollage CEO. “Today, the thinking of retailers is that their sites are there not only to serve people who already know what they want to buy. Most of the 95% of the people who come to a site and don’t convert are there because they are still choosing. They want advice.” If they don’t find it on the site, Singer says, they’ll have to go somewhere else to get it.
That perspective moves retailers’ use of rich media on a site beyond a question of cost versus direct ROI into the realm of the cost of doing business. And that’s where technology vendors believe it’s headed in retail, following an adoption curve similar to that of earlier enhanced content applications. “When retailers climbed on board with zoom, everybody had to do it as a cost of entry. And we believe 3-D will come to that stage fairly soon,” says View22’s Zohar, whose company, with clients such as Kohler Co. and Deere and Co., supplies 3-D technology to web sites on a hosted basis.
Rich media to help sway a decision on pricey faucets, bathtubs and even tractors is one thing, but is there a payoff in applying it to an inexpensive toy? Toy manufacturer Hasbro Toys and Games thinks so-it’s had interactive video product demos on its site for five years. It uses Exemplum Inc. to create video demonstrations of dozens of toys. Hasbro produces the videos and sends them to retail partners’ sites at no charge to the retailer.
Hasbro was looking for a way to approximate online the “try-me” packaging critical to its success in stores; that is, toy packaging open enough to allow access to a button that allows the toy to be tried out before it’s purchased. “‘Try me’ became very important to show feature benefits, because a lot of these decisions are made at the point of sale,” says director of Internet marketing services Jan Rimmel. “So I looked at demos as ‘try me’ packaging and our merchandising strategy for online.”
The toys for which videos have been produced range in price from $5.99 to $99-at the low end, well below the price of and margin on digital cameras, designer fixtures and other products accorded rich media treatment on retail sites. But Hasbro doesn’t use a toy’s price as the determining factor in deciding which products get demos.
According to Joe Chasse, Internet project manager, marketing services at Hasbro, “We look at the importance of supporting the product, and it’s not based on the minimum price. We compare the demos to other means of promoting the product online and offline, so the rich media demos are still cost effective when compared to other mediums.”
Hasbro also justifies the expense of creating the demos by broadly distributing them to retailer partner sites. “We have multiple distribution platforms for them,” says Rimmel. “If we just showed them on our site, it probably wouldn’t pay off as much because our margins are not as significant compared to something like the consumer electronics category. But by distributing them to every partner site we have seen a very positive ROI in general.”
Settling the question
Given the ability to measure consumer actions that’s a distinguishing feature of the online environment, it follows that the industry service providers who offer such measurement services are beginning to figure out how to measure the impact of rich media on retail sites and thus get closer to settling the question of direct ROI.