Ad dollars are being eaten by e-commerce dollars says Ken Mandel, President of Innovation and Commerce, Asia Pacific, Publicis Media.
e-Retailers are future Publishers. Let me explain – the contemporary e-shopping process has been increasingly experiential versus transactional. Over 50% of the consumer begin the path-to-purchase journey somewhere like Amazon (likewise Lazada, Flipkart, Tmall, etc), with more time spent browsing in a e-retailer environment. So if we want to effect a product or service purchase, we need to be driving consumers to a place that encourages it. Our job should be to minimise the friction between the consumers’ wants and wallets.
A key e-Commerce potentiality is the increased accountability to sale, thanks to the cost per sale measure. When I first started in this business, digital in the very early 2000s was 1% of total advertising spend – but look at where we are at today. I reckon we’re in the same early days for e-Commerce, where 30%-40% of retail sales will be facilitated through it with unprecedented speed in the near future. E-Commerce happens every day, such as when people hail a taxi via an app – it is likely that people such as you and me are doing e-Commerce, unaware of it and that is good thing.
Companies such as Alipay and Apple via ApplePay increasingly take the friction out of online buying, making it easier and safer, through omni-channels. I believe this all leads up to marketers no longer looking through an alphabet soup of acronyms such as CPMs, CPCs, GRPs, and others – the only metric that really matters is Cost Per Sale.
Our business is in driving a sale, through connecting consumers and advertisers. This business is of a problem-solving nature, built upon the observation that ad dollars are being eaten by e-commerce dollars. Marketers are increasingly shifting spend to more accountable and frictionless media: As a CMO, would I put my money towards a CPC or CPM, or have it as a cost per sale? With the latter, it’s a clear relationship of seamless conversion between my media spend and the business result – the sale. Right now, e-Commerce (excluding China & S Korea) constitutes between 2-7% of all retail purchases, but actually influences over 70% of physical purchases.
Consumers are increasingly looking at e-retailers to get ideas and make decisions of what to buy. As players in the advertising business, with budget shifts towards commerce, we naturally follow the money and ensure the continuation of purchase and awareness.
The linear funnel experience of: awareness, consideration, and purchase, has been shortened and arguably flattened by e-Commerce. Its ultimate is of attribution, alongside the advertiser’s motivation of driving sales. In short, media spend will be directly connected and converted to sales. A holy grail, perhaps? E-Commerce has and will continue to disrupt physical retailers, who shell out for salespersons, utilities and rent, that may not be accounted for in the consumer’s decision to purchase online. Add in omni-channels, which further raise uncertainty in terms of increasing touch-points that can influence a sale.
Publishers of the old world must also look at potential disruption and begin incorporating their revenue lines, beyond selling ad space, such as affiliate links that drive commerce conversion. An intriguing technology example I recently saw was WooTag which enables consumers to purchase directly from within a video environment effectively blurring the lines between brand and performance advertising – as it should be.
Source: Linkedin/Campaign Asia