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Jonty KeltCEOGroup Commerce |
Almost all publisher-driven e-commerce in the past two years has been powered by something of a first-generation social tool: email. The daily-deals space provides a clear example. As a result, the focus was exclusively on list size and the cost of customer acquisition.
Today, the paradigm is changing as publisher e-commerce programs provide CMOs with a powerful, new multichannel platform to reach audiences. In addition to email, they have expansive Web page, social, mobile and offline assets that can be leveraged to promote e-commerce offers. This is due to the trend of publishers pushing well beyond email in creating seamless buying experiences that dovetail with their superior content.
Ad-serving widgets, social-media channels, mobile-buying apps, online marketplaces, and themed content offerings (e.g., holiday guides) are just a few of the tools that publishers are using to redefine themselves as legitimate contenders in the world of e-commerce.
Meanwhile, marketers on the brand side have historically used e-commerce distribution to unload remnant inventory and achieve better economics through direct sales, as well as a space to acquire customers and strengthen their brands (often via discounts). When working with publishers, however, these goals are served in superior fashion:
- Direct Sales: By crafting a good deal to be distributed via these new e-commerce channels, marketers achieve incremental revenues at a higher margin than those offered by brick-and-mortar outlets. The partnership with a publisher provides new options for delivering creative (e.g., ads, visuals, etc.), as well as content partnerships to help provide product context (providing a higher conversion rate).
- Remnant Inventory: Moving remnant inventory at a price point that makes sense is a challenge for brands; in this scenario, publishers provide free marketing to their audiences and do so while moving the inventory. Some--but not all--will even hold it. Others rely on drop-shipping from the brands, which is not viable in all cases, though increasingly painless and invariably cheaper than the margins demanded by retail outlets.
- Customer Acquisition: Want to attract new customers to try your product or service? Wow them with a quality offer via a trusted publisher, and target them with follow up offers (a.k.a. loyalty programs or CRM) to create an ongoing and profitable relationship. Publishers--newly empowered via their increased investments in their e-commerce programs--can match the reach of traditional e-commerce players while providing critical context.
- Branding: Publishers offer a tremendous space in which to extend a discount on a product or service, owing to their trusted relationships with their readers. Reach and impact large audiences for no up-front cost, and parlay an audience’s trust of the publisher into loyalty for your brand.
It’s also important to spend a moment addressing those brands that rely exclusively on brick-and-mortar distribution channels. While it’s true that traditional distribution channels (those middlemen that take your goods in bulk and sell them to consumers for you) provide a valuable service, it’s not the only way to grow your business.
Bluntly, retail, as a classic entity, simply can’t come close to replicating the economics involved in direct sales. Even the cost of a drop-ship fulfillment partner plus an e-commerce storefront is far less than the middleman's markup; it’s for this reason that major brands like Nike are looking to move upward of 30% of their product direct-to-consumer within the next five years.
Further, e-commerce partners allow marketers to control the brand message to the consumer. Think of the traditional distribution model via many middlemen: The millions of dollars of effort invested in building the brand/its story/what it stands for is translated to a $10 per hour shop floor attendant trying to sell that brand to a consumer.
Some brands have fully embraced this and are successfully managing the ire of their traditional distribution partners (the primary disincentive). Others have not even started for reasons of either fear or inadequacy. But it's not a matter of if they should do this; it's simply a matter of when.
Today, consumers will engage across all channels and devices. As a brand, you simply must be where the consumer is. The cost is low and capability is accessible. Just as an investment manager integrates new and innovative vehicles with big ROI potential into the financial portfolio, so, too, can the top marketing executive proactively integrate a smart e-commerce program into his/her marketing portfolio in the coming year.
Also by Jonty Kelt: The Future Of Group Buying And Social Commerce
About Jonty Kelt Jonty was co-founder of Europe's first Internet affiliate network, and a founding team member of a Chinese sports and entertainment events business. Before co-founding Group Commerce, he led DoubleClick's search technology and services businesses in Europe and Asia, through the acquisition by Google.
