Retailers shift their ad spending from TV, radio and print ads to digital ads.
Penney has combined its online and offline marketing budgets, and promoting its web site is a top priority, chief marketing officer Mike Boylson tells the Internet Retailer conference today.
J.C. Penney Co. Inc. has made big strides in integrating its 1,100 stores, catalog and web site, JCP.com. And, with the web growing more quickly than its other channels, promoting the web and reaching consumers online and through their mobile phones is a top marketing priority, Mike Boylson, executive vice president and chief marketing officer, said today in a keynote address to the Internet Retailer Conference & Exhibition in Chicago.
Boylson noted that Penney recently combined its $300 million annual online marketing budget and $1.1 billion offline budget into a single pool of funds to be allocated to best promote the company. “We see JCP.com as the No. 1 priority as we go forward as far as where that money will go,” Boylson said.
He noted that JCP.com is the fastest-growing channel for the company and attracts the youngest and most affluent consumers. While Penney advertises extensively through newspapers and direct mail, he said consumers between the age of 18 and 35 “simply aren’t consuming that media. When you look at the cost of paper, print and postage versus the digital space, it becomes an economic necessity to transform advertising into digital media.”
Digital marketing includes reaching customers via their mobile phones, another area where Penney is investing more heavily, Boylson said. He pointed out that while only 13% of U.S. consumers now carry mobile phones with Internet access, by 2011 that is expected to increase to 90% of consumers. “It’s becoming a mobile world,” Boylson said. “This is the wave of the future.”
J.C. Penney, No. 15 in the Internet Retailer Top 500 Guide, sells 250,000 items online and employs four distribution centers with more than 6 million square feet of warehouse space to fulfill direct-to-consumer orders. The wide assortment is essential, Boylson says, pointing out that more than half the apparel sold at JCP.com is in extended sizes, such as big and tall and petite sizes, and wide shoes. “This is a huge way to extend your assortment online without having to carry all that inventory in the stores.”
Penney continues to integrate its stores, catalog and web site. “Today marketing has full P&L; responsibility for the direct business,” Boylson said. “Everything is in one house, we’re beyond the channel silos, and we’re all focused on what is right for the customer and the entire company without regard to who gets credit for the sale and what channel it comes from.” The company also has unified the teams that produce creative materials to ensure a consistent look for the Penney brand across channels.
Boylson pointed to a web site feature called Know Before You Go launched last year that lets web visitors check product availability in their local stores and get directions to stores. That initiative was launched after research showed 90% of JCP.com shoppers also shop at Penney stores and that 70% of them research online before going to stores.
Such efforts are making JCP.com increasingly the hub of the Penney brand, Boylson said. “It’s a lot more than an e-commerce site and a place to transact, it will literally become the new face of the brand.” Recalling a dinner conversation last night with executives of Penney’s digital marketing firm, Avenue A | Razorfish, Boylson said he asked them what was Penney’s biggest opportunity. “They said by far it’s to make JCP.com much more exciting, much more interactive, and really driving that,” he said. “As the future evolves, JCP.com will be more and more important.”