Retailers are becoming publishers and ad networks, offering reach, unified IDs and most importantly, a way to target active shoppers that can dramatically improve marketing ROI as massive amounts of ad spending shift to this new “channel”. Amazon could turn the big two into the big three.
Marketers and researchers…ARE YOU READY?
In April 2017, I published a white paper in partnership with Viant and NCS that proved you could double return on ad spend (ROAS) simply by targeting those modeled to be close to an upcoming purchase, i.e. active shoppers.
On August 2nd, I blogged about the importance of focusing on active vs. dormant consumers.
On Monday August 21st, I wrote in a LinkedIn blog that Amazon would turn the big two into the big three as it gets serious about ad revenues. I said that Amazon was like Google plus Walmart combined. I said that Walmart and other retailers would soon follow and there would be a massive shift of ad dollars as retailers become retailer/publisher/ad networks, following the Amazon model.
Then two days later, on Wednesday August 23rd, Google and Walmart announced an alliance, reportedly to blunt Amazon.
Now, on August 29th, it is reported that Amazon has a programmatic offering for any off-site web property in its network. The same article quotes Morgan Stanley as predicting Amazon’s ad revenues will grow to $7 Billion by 2020. Although in the right direction (big growth), I think this estimate is way LOW! They could easily get into the $20-30 BILLION range because marketers will WANT to invest their ad dollars this way…activation and brand building, all in one platform. No one else has this yet, although Walmart COULD.
Marketers…it’s on! Are you ready for the sea change as marketing shifts tens of billions of BOTH brand-building and performance advertising spending towards active shoppers?
A new “segment in the Lumascape” is about to develop. This new ecosystem will include:
- Retailers as publishers and ad networks
- Intender data aggregators
- Frequent shopper data for targeting
- Intender targeting: mine intention and interest signals on the web to target intenders both programmatically and via traditional media
- Location data
- Analytics providers who can help you measure and adjust marketing spending towards “Actives”.
- Media agencies who develop expertise in the systems that the new class of retailer/publisher/ad network offer for targeting ad messages.
What do marketers and researchers need to do to prepare for this sea change?
- Segment creation and lookalike modeling. Develop methods for identifying actives at scale so they can be targeted. Depending on your business, this will involve frequent shopper data, CRM data, digital profiles from 1st, 2nd, and 3rd party data, location data, and lookalike modeling that also includes demographic factors and profiling factors (e.g. life change events like getting married, buying a home, having a child, etc.)
- Media effectiveness insights. You need to prove or disprove this hypothesis: can you do brand-building by targeting active consumers and is it more effective than changing brand consideration and preference levels among those who are dormant.
- Separate measurement of actives and dormants. They do not offer the same opportunities for either short or long term growth. To continue to conflate these as we currently do in brand tracking would be a tragic mistake. Conflating reach across these groups for media planning might be even worse.
- Set aggressive targets. What is your marketing return on ad spend today? You probably do NOT currently know or measure this. You need to. Then you need to set an aggressive target to grow this by, say 20% for each of 3 years. Why would you not do this in an age when you can target active shoppers and demonstrate TWICE the ROAS?
Some naysayers will say this is the death of marketing and branding as we move to performance marketing. They are as wrong about this as they were that search would kill branding. This is the rise of “Relevance marketing” because consumers respond to advertising (both brand-building and performance oriented) that is about what they care about at the moment. “Right message, right time, right consumer, right way”…not the death of marketing but its future.