Holiday 2010 Will Be Business As UnUsual
At no other point in recent history can I remember when helping retailers define their online marketing strategies has been this challenging. In “business as usual” times, looking backwards is an important part of looking forward. Historical year-over-year planning is one of the fundamental approaches for determining strategy, timing and budget. But 2010 is one of the only times since the Web’s inception in which that approach simply won’t work.
Unlike the rest of the past decade, the performance of the last couple of holiday seasons can in no way, shape or form be used as an accurate indicator for what lies ahead in 2010. Consumers have changed—and so have retailers.
In these “business UnUsual” times, consumers have lost their perceived control over the retailer and their associated interactions. In 2009, when the consumer patiently waited for the retailers’ desperation-driven discounts to begin, they instead found greatly limited inventories and less aggressive discounting than in previous years.
Concurrently, the retailers, who were still reeling from a painful 2008, changed their approach. Instead of counting on huge top line sales, retailers controlled bottom line costs by reducing factors like marketing spend, limiting inventory levels and managing margin through smaller discounts.
This has ultimately led to confusion among consumers and retailers alike. While both sides thought they understood the unwritten rules of retail interactions, it’s clear the game has changed…but neither side is exactly sure how or to what.
Here are some of the new rules for these “business UnUsual” times.
Rule 1: The proliferation of technology and Internet access are fundamentally reshaping the retailing business.
The end of Cyber Monday, as we know it, is at hand. For many retailers, Black Friday was equally as strong, if not stronger, for online purchases as Cyber Monday. Instead of waiting to return to the office to make online purchases like in the past, the consumer now has ample access and technology to make purchases from home or from wherever their mobile devices may take them. It simply goes to show that the consumer will now shop whenever they want, or when retailers give them the incentive to do so, (hence the introduction of such marketing events like Cyber Monday II and Second Chance Cyber Monday in 2009).
Take Away: The successful retailer of the future will ensure that marketing messages are channel agnostic, giving the consumer the opportunity to determine channel preference.
Rule 2: Consumer engagement will become much more local.
If you haven’t heard the phrase “hyper local” before, you will in the near future. It’s an emerging phenomenon fueled in large part by Google’s introduction of the Android mobile platform. Unlike the iPhone before it, Google’s Android software platform is free of charge to phone manufacturers and is not limited to one particular carrier. This means in 2010 and beyond, we will see the mass introduction of tremendous numbers of new devices running on Google’s platform.
Like most things that Google does, this is not just a benevolent gesture. Instead, Google sees this as an amazing opportunity to bring together the many assets from their cloud of computing programs (like Google Maps, Gmail, Google Docs, etc), all with tight integration to Google’s advertising capabilities. And, hyper local targeting is absolutely a key to Google’s success in this endeavor.
Unlike traditional online advertising (PPC and display) that offers somewhat limited geo-targeting capabilities based on IP address, targeting of mobile devices can be done through far more accurate means, like triangulation between cell towers or even utilizing the phones’ onboard GPS technology. This means that targeted localized advertising instantly becomes much more accurate and relevant, and therefore much more valuable to advertisers.
Take Away: New technology provides the opportunity to enhance the relevance and timeliness of advertising. Not only will this help to improve conversion rates for advertisers, but it will also improve consumers’ receptivity to the advertising. So, it’s time to revisit your advertising plans with hyper local in mind.
Rule 3: Mobile is no longer just for leading-edge retailers.
Nearly one in five consumers used their mobile phones to assist with holiday shopping in 2009. This trend will certainly continue to grow as devices and wireless access continue to improve.
• You only need to look at the numbers to confirm that this trend on the rise. PayPal registered an increase of 650% in payments completed through mobile devices in comparison to the prior year.
• However, the statistics are not all favorable. Our firm recently completed a study of the top 50 retailers from Internet Retailer’s Top 500 Guide and found some troubling results.
– Of the retailers examined, only half have Web sites that are mobile friendly, or that degrade nicely and do not mandate use of advanced technology (like Flash or Java) for functional use of the site.
– Only 30% have introduced mobile optimized sites, or standalone sites built specifically with mobile devices in mind.
– And worst of all, only 10% of the retailers are “full” mobile players or have multiple mobile solutions, including a dedicated mobile Web site with commerce capabilities or at least a mobile optimized app.
Take Away: 2010 is the year to invest in mobile infrastructure. It’s no longer something retailers need to do to be cutting edge, but is instead a necessity for dealing with the demands of today’s consumer.
Rule 4: Search is becoming real-time and highly personalized.
Search has been a hot topic of discussion within the retail industry for years and this year is no different. However, the conversation is becoming very different. For example, many current conversations are focused around topics like Google’s Caffeine Update. Unlike updates of the past that consisted of minor algorithmic tweaks, the Caffeine Update is basically a complete overhaul of Google’s supporting technology. The significant update is having all kinds of major impacts on the retail industry. The Caffeine Update:
- provides much greater flexibility and ease for Google to make future updates to the platform and user interface. (Changes to the user interface are no doubt an effort to keep up with the advances that have been introduced by Microsoft’s Bing);
- forces further convergence of acquisition and user experience/page speed;
- introduces social media content – Facebook status, Tweets, user reviews, etc. into the search results page;
- brings location-based content and filtering into the organic search results.
Take Away: Organic search results are changing as we speak. Your traditional listings’ location on the page will change as real time updates or “latest results” take up a significant portion of screen space. This means that optimization activities must be enhanced and include both strategy and execution that bridges the gap between SEO and social media.
Rule 5: Multichannel measurement and optimization is the only real way for multichannel retailers to effectively manage the marketing mix.
With the consumer showing us that channel exclusivity is a thing of the past, it is now critical for retailers to remove the artificial barriers that exist between these channels. While it’s certainly not easy, for example, to measure the impact that marketing in one channel has on conversions in another, it’s a necessity for effective optimization.
Take Away:
1. Cross channel insight and attribution is a must for smart marketing investments.
2. While utilizing channel-specific agencies is likely to remain a reality, getting them to collaborate for measurement and optimization needs to be assigned a higher level of priority and accountability.
When faced with “Business UnUsual” times, it’s important not to go on with business planning as usual. Acknowledge the changes in the consumer and their preferences and then utilize this research for inspiration on the tactics and tools that will enable success in 2010 and beyond.
Paul Elliott is a partner in Rosetta’s consumer products and retail vertical.
