E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
That includes display ads and digital content crafted with retailers, an expert says.
The vast majority of brand manufacturers—96%—say they plan to increase the amount of advertising they place on retailers’ web sites within the next two years, according to the “Omni-Channel Shopper Marketing” study by consultancy Booz Digital, a division of management consulting firm Booz & Co. Inc., and trade group the Brand Activation Association. And 30% say they will increase their advertising on retail sites by 10% or more during that span, the study says.
Booz Digital surveyed 26 brand manufacturers online and interviewed 20 brand executives by phone in the first three months of 2013 for the report.
“There’s been a big shift to brands collaborating with retailers not just around promotions, but doing advertising with them,” says Matt Egol, a Booz Digital partner and author of the study. While the advertising refers in part to display ads that brands place on retailers’ web sites, it also includes brands collaborating with retailers to create digital content, he says. For example, a home improvement retailer might create a Do-It-Yourself bathroom project article for its web site and enlist the help of a faucet or plumbing brand manufacturer and then highlight that brand in the article’s text or images.
In the past, retailers and brands typically collaborated only when the time came to build a store display for a special promotion, Egol says. However, those campaigns were limited by the duration of the sale or event and are not well targeted like online alternatives—stores need to either ensure that the right customers will come see the display or that it will appeal to enough random shoppers to justify the effort, he says. So, retailers now focus more on digital marketing as their first means to get shoppers into stores, he says.
Today when retailers and brands co-produce content, they still usually link it to an online promotion or deal, he says. However, they often design it to be more broadly useful, he says. For instance, they can leverage a video of grilling tips for promotions around Memorial Day, Father’s Day, the Fourth of July or other summer holidays.
Digital content that isn’t immediately linked to commerce but rather is designed to inspire consumers or help them answer questions drives loyalty, and thereby sales, Egol says. “Retailers and brands are trying to create content to engage the consumer during this pre-store activity,” he says. 68% of the brand manufacturer executives in the Booz survey say that they’ve prioritized over the past two years investments in content to engage shoppers before they visit a store to win sales and increase average order values, the study says; 64% say it’s been a priority to drive customer loyalty.
As brands move more of their marketing budgets into digital collaborations with retailers, they are decreasing their traditional advertising budgets accordingly. In the study, 70% of respondents say they plan to decrease the share of print advertising in their marketing mix over the next two years and 52% say they will decrease the share TV advertising in favor of digital marketing, Booz says.