Retailers that carry online advertising both open up a valuable revenue stream and serve customers better, argues Henry Eccles of Google. Jonathan Wright reports
When retailers set out to go online, building an ecommerce operation is self-evidently the main priority. Yet this isn’t all that’s being built. In the words of Henry Eccles, Google’s head of ecommerce-publisher partnerships, an ecommerce presence is also “an online media asset”. Think of the way, for instance, M&S.com, after initial teething problems, successfully combines content with commerce to engage customers.
At which point, many who work in the retail sector will roll their eyes and point out that the idea of retailers being more like media companies is nothing new, we’ve been here before. Except have we? Intriguingly, Eccles’ focus isn’t primarily on content, but advertising.
“Those browsing on websites of the Guardian, Telegraph or Mail are in a very different place to those on retail sites, who are in an intent-driven state at the point of purchase – and reaching shopping ‘intenders’ is the holy grail for most advertisers,” he says. “Do you actually want to target your advertising at someone who is at the point of purchase, where you can actually have an immediate influence on their purchase decision, what they might buy?”
The answer to this, from an advertiser’s perspective, is almost certainly yes. However, for many retailers, and for deep-seated cultural reasons, Eccles’ words may seem counter-intuitive. Just as offline retail is about trying to tempt people into the store, online retail is about trying to tempt people to an online destination. Why employ techniques that tempt potential customers to leave a site?
Do the maths
The numbers are one major reason. It’s been estimated online retailers generate 7.5bn page views a month, as against 3bn page views for news websites. While, according to a 2015 report by OC&C Strategy Consultants, Creating Value From Every Visit, news sites generated £400m in a year from search, display and trade advertising, retailers generated just £150m from the same sources. “British online retailers are missing out on an estimated £1bn worth of advertising revenues by choosing to not sell advertising space on their own websites,” claimed OC&C.
What should we make of this figure? To return to the idea of customers leaving a site, there’s no point of generating advertising revenue if a retailer is losing sales. Retailers’ fear of “cannibalisation” [see boxout], Eccles thinks, is overstated. “What we see, through a number of different methodologies, is that just doesn’t happen,” he says. “We’ve seen people that click on ads on retailer’s sites are actually more likely to then convert on that [original] site than they are on any other site, and the rationale for that is those that actually do click on ads are further down the purchase funnel.”
This interview first appeared in the IRUK Top500 Merchandising performance dimension report. Click here to read it in full, or click here to see what else that report covered.
