Article

The ‘New Circular’: Putting digital shopper marketing to work

Transforming the traditional circular is key in reaching consumers.  

June 14, 2011

In an age where a retailer’s website is the new store front, and a targeted email or Facebook conversation is the new personalized home page, the path-to-purchase is anything but direct. Regardless of whether the ultimate purchase is made online or in-store, digital engagement typically plays a large part in consumer purchases, which many times includes some type of special offer.

In the transition from print to Web and mobile, both online retailers and their consumer brand partners have a vested interest in ensuring shoppers are aware of the latest deals. Deals need to be pushed out through coordinated site promotions and special offers emailed to an exclusive, targeted mailing list. Advertisements need to appear on social media channels and through the latest mobile and tablet applications.

An interactive digital shopper marketing strategy circulating through multiple digital platforms is the new way to effectively market to shoppers.

Effective digital shopper marketing techniques can help gain shoppers’ attention, communicate the best deals and promotions to customers, and ultimately transform online browsing into digital spending.

Shopper marketing and going digital

The growth and increasing sophistication of modern technology has had a profound effect on the ability of consumers worldwide to easily make purchases online, at any time, from almost any location.

This change has affected even those consumers opting to ultimately make a final purchase in-store, with an estimated more than half of shoppers beginning to search for deals online before even heading to a physical store, or performing tasks such as searching for price comparison deals on mobile devices during the in-store shopping process.

Regardless of whether the final purchase is made digitally or at a physical store, it is now imperative to grab the attention of potential buyers online. With more ways than ever for potential customers to gain awareness through promotional tactics such as email marketing, mobile marketing, social networking and in-store promotions, businesses need to spend a significant amount of time and investment on the “exploration phase” of the new digital path-to-purchase.

Traditionally, securing optimal shelf space placement has been one of the most highly-effective methods for achieving increased awareness and, as a result, is naturally a top priority for retailers and their brand partners. An example of this concept in action can be found in the data that Walmart released last year, illustrating that for health and beauty, the company sees a 28 percent increase in sales for brands who occupy an end cap in their stores.

The procurement of optimal shelf space typically involves the placement of brand ad dollars with retail partners and is embodied in the practice of shopper marketing. Shopper marketing is currently the number one investment for brands looking to reach in-market shoppers, and a large number of manufacturers rate shopper marketing programs among the top four that deliver results.

Digital shelf space can be thought of as the digital version of the end cap; while the in-store physical end cap showcases products of interest, online, it amounts to placement in the first row of category or search results.

According to a recent report by Booz & Co., retailer websites now outrank search engines as the No. 1 place for product research, with more than 20 percent of consumers making it their first stop on the path-to-purchase. Couple those findings with those of ComScore, who reported that 94 percent of shoppers click between one and 10 product results on the first search and category pages, and it is clear why digital shelf space assets on retailer sites are valuable real estate for brands that want to be seen where it matters most along the digital path-to-purchase.

Reinventing the circular advertising model

Advertising revenue as an income line has been a part of the retail store makeup for decades. Traditionally, major retailers have been able to rely on a steady stream of brand co-op advertising revenue in exchange for prime product placements in the weekly circular, providing needed exposure for brands and increasing sales, while providing a stable and consistent source of revenue for the retailers.

However, with the majority of newspapers experiencing a steep decline in sales in today’s increasingly digital world, it is not as common for consumers to rely on the Sunday paper to discover the week’s best deals.

As many consumers read the print versions of the newspaper less often, the profitability for brands in advertising in these circulars has diminished. As a result, it is time to reinvent the traditional paper circular to more effectively target and reach shoppers in the online medium – by creating the “new circular.”

Retailers are the top spenders when it comes to Internet advertising, and are expected to spend $5.73 billion on online advertising in 2011—accounting for more than one in every five online ad dollars, according to recent data published by eMarketer.

Through highly-effective digital shopper marketing strategies, brand marketing dollars can be more effectively connected with digital shelf space. Many innovative retailers are now monetizing their sites by transforming them into a privatized marketplace to offer brands premium digital shelf space via paid product placements, while brands are more effectively spending ad budgets that may have been previously allocated to circular advertising.

This provides a new source of high margin revenue for the retailer, increased awareness for the brand and the classic commercial shopping experience is preserved for consumers through more effective retail merchandising in the digital realm – providing an enhanced, still highly relevant online shopping experience.

Ji Kim is Founder & CEO of digital marketing firm DiJiPOP.