Report • 31.01.2013
Efficient ways of advertising
Modern sales approaches for the retail market
It almost seems like an anachronism: while retailing increasingly takes place on the Internet and e-tailers are taking away more and more market shares from brick and mortar retailers, the German retail market prefers to stick with traditional types of advertising. Flyers, catalogs and ads continue to be the most popular and promising ways of advertising. However, new media advertising continues to be on the rise and will also create new types of advertising in the future.
When it comes to advertising, there is no direct conflict between online and print advertising. On the contrary:”Surprisingly, e-commerce in particular is a promoter of these traditional types of advertising, since catalogs and print ads are considered indispensible as an inspiration for later online shopping“, explains Marlene Lohmann, Head of Marketing Research at the EHI Retail Institute, in our current iXtenso interview (link to the interview). Even today, with a percentage of 53 percent of the advertising budget, many still regard traditional print ads with handouts and magazines as “the one and only alternative“.
Mobile applications are becoming more important
Regardless of the status quo, new types of advertising are nevertheless on the rise. According to a current EHI study, which surveyed 33 national commercial enterprises, online marketing in particular is going to pick up momentum within the next few years. An increase of 113 percent is expected over the next three years in this area. Many retailers particularly seize mobile marketing as a bridge to POS, because if customers are being approached on their cell phone while they are on the go, their distance to the store is not as far as from their couch at home. The appeal to pick up a corresponding sales offer right at the store while you are out is considerably higher with mobile marketing. Traditional couponing is also scheduled to be replaced by mobile, digital coupon apps in about three to five years. However, in this case – similar to mobile payments – the required technical infrastructures as well as standardized processes are oftentimes still missing today.
Mobile advertising is effective after working hours
The increase in mobile marketing however presents retailers with several problems in handling this new type of advertising. This includes the proper time to send mobile advertising for instance. The retailer needs to know when the users are most susceptible to advertising messages and when the conversion rate is therefore very high. A study from last year by the apprupt Company, who specializes in mobile marketing, offers some interesting clues on this.
Weekdays between 5 p.m. and 11 p.m. is the most effective time for mobile advertising campaigns, with the peak for brand susceptibility being at around 7 p.m. Mobile Web advertising therefore works best in the so-called ”lean back time“, when the user relaxes on the couch and surfs using his/her tablet or is looking at his/her Smartphone on the way home.
Social networking sites are a tool for marketing, not for sales
These days, social networking sites and primarily Facebook of course, are among the most-used mobile apps. Until about two years ago, retail viewed integrated stores in these networks as the integrated marketing and sales channel of the future. Advertising and product purchase were meant to be as closely connected as possible. Customers accept recommendations and tips from their friends and directly end up at the Facebook store of the corresponding brand.
Many businesses had hoped to open up an additional sales channel with very little effort this way. However, many of them have come to realize that Facebook and friends are great communication tools, but very poor sales media. The integrated opportunity to purchase items is too complicated for many users, even though Facebook definitely has the potential of a dialogic marketing platform where users are able to make contact with a company. After all, many users definitely tell their friends about the companies and brands they like. People also often click on the Facebook pages of famous companies.
(Still) no faith in social commerce
After the daunting example of the quick ending to most Facebook stores, many German retailers are rather skeptical about the topic of social commerce. Even though most companies have their own fan page on Facebook, they are still not entirely convinced about its benefit as a marketing tool. This is why there are also only small investments in this area. In a May 2012 survey, Become Europe, a service provider for pricing comparisons, surveyed 1,000 retailers. Only 21 percent of surveyed retailers believe that a commitment to social networks can have a positive effect on their company’s success.
Although the perception that activities in the social Web would not pay off still dominates, 89 percent of the interviewed companies have their own fan page. Even though retailers still do not really believe in the effectiveness of these measures, 64 percent of them mention new customer acquisition as the motivation for their commitment. Other mentioned reasons were the effect on branding and customer retention. The reason for this skepticism therefore in most cases is perhaps the lack of tools to measure effectiveness of this online presence.
Word-of-mouth advertising also works online
Generally one of the most effective ways of advertising is still word-of-mouth advertising. Recommendations by other consumers are always more believable than company advertising. While traditional word-of-mouth advertising is as old as retail itself, it has continuously advanced during the expansion of Internet retailing. These days, you no longer need face-to-face contact between two consumers. Word-of-mouth advertising takes place via customer ratings, comments in forums and blog contributions instead.
More and more online stores today offer their customers the chance to rate and comment on their purchase. In addition, consumers compare notes on specific providers in special forums or social networks. Many bloggers also talk about stores, products and offers in their blogs and thus create an additional medium in terms of word-of-mouth advertising.
Since online retailers today know exactly how effective this type of advertising is, they might be tempted to influence such ratings and their content. However, utmost caution is advised here, since Internet companies very quickly come into conflict with consumer rights and competition laws if they manipulate ratings or otherwise influence their content.
Daniel Stöter, iXtenso.com