Retail Website Monetization: Do’s and Don’ts

As online retailers, we’re all too familiar with the reality that conversion rates have remained stagnant at two to three percent throughout the first decade of e-commerce history.

Yet thanks to the abundance of information, tools and features we’ve added to our pages, the path to purchase increasingly begins at the retail website. This increase in site traffic has given us an opportunity most have yet to realize—the introduction of meaningful advertising revenue through shopping media.

“Shopping media” is defined as relevant advertising targeted to shoppers as they navigate the purchase funnel on a retail site.

How do you, as an online retailer, evolve from pure-merchandising play to introducing this advertising concept to your site? How do you ensure that advertising complements your shopper’s experience? And what critical must-haves and pitfalls should you be aware of?

First, Cross-Functional Support

It’s one thing to convince your management team of the value of introducing advertising to your site—but it’s another to build support across your entire organization. While the parties most often involved in supporting this effort are those that run the site (marketing and IT) and those that buy the products (merchandisers), everyone in the company has a stake in both the customer experience and in the bottom line. Since these incremental funds will help fuel future growth and innovation, each stakeholder will need to understand the benefits of this for your site.

For many major brand advertisers, shopping media offers considerably more benefits than placing advertising dollars on traditional ad networks in terms of driving engagement and awareness. Regardless of whether you’re an online pure play or a multi-channel retailer, consumers are using your site to research both online and offline purchases. This is invaluable for advertisers—for CPG companies in particular, a premium multi-channel retailer with engaged shoppers is many times more attractive than a blind ad network.

What are the must haves to make this work?

Complement the Consumer: The high level of investment many retailers have made in building their online brands means that the majority have the luxury of being labeled as “premium” publishers. This important distinction enables you to demand high CPMs for your inventory (10x the average!). It also means that you’ll be able to cherry-pick which advertisers to allow on your site. With that in mind, your primary selection criterion should be advertisers that help you drive incremental sales—whether or not they sell products on your site—as long as the customer’s ad experience can be tied to the purchase funnel.

Educate Your Consumers: Whether they’re looking for recipes or buying guides, shoppers are going to retail sites to do brand research and product benefit analysis. As such, you have a huge opportunity to encourage advertising partners to provide educational resources as part of their ad campaign, whether this is a simple video demonstrating a new food recipe, or a more complex tutorial on a new section of your website devoted to buying guides for different HDTVs. The key deliverable is to create advertising that provides useful educational content for your consumers.

Adhere to Your Brand’s Style Guide
Just because you’re allowing ads on your site doesn’t mean you have to open up your inventory to ads that create dissonance with your brand palette. Make sure to set and adhere to the creative guidelines you establish with your advertising partners. At all times, strive to put in place guidelines that match your company’s style guide.

Protect Your Consumers’ Data
You’ll want to make sure your ad-serving partners are compliant with the prevailing industry standards for privacy. The last thing you want to see is an article in the Wall Street Journal showing your site as one infected with ads that use grey market means to cookie your consumers.

Pitfalls to Avoid

Keep Competitors Out
Some ad solutions in the marketplace are blind to publishers regarding which advertisers are buying your ad inventory. For some, that opens up the possibility of competitors showing ads on your site! Be careful here, and make sure you have a partnership that gives you control over the specific brands that have access to your shoppers.

Banish the Dancing Mortgage Lady
As a premium publisher, you have the right to dictate how your remnant inventory should be handled. I’m fully supportive of exchanges/networks that solve for remnant inventory, but only those that do so in the right context. If you’re concerned about customer experience and quality of advertisers, participating in a blind ad network (or even an exchange) is not the best solution. Consider that retailers have held off on pursuing advertising precisely because they’ve been scared away by the quality of advertisers. We’ve all seen the “bad-teeth” or “shoot the monkey” campaigns—ads that are usually bought for pennies on the dollar to fill in remnant inventory.

If you offer your inventory through a network or exchange, customers that pay a premium for your ads WILL find that loophole. Don’t even make it an option for them. Ideally, you should solve for remnant inventory with personalized content or your own in-house ads (product recommendations, coupons or category sales).

Be Transparent
This one is pretty simple. Even though ads should complement the user experience and blend well with your site, you should not hide the fact that you’re showing ads. In fact, customers have come to EXPECT ads as a part of their online experience. So make sure to call out when content is sponsored, or risk an even stronger negative reaction from consumers who might think that you’re tweaking their buying experience by showing preferential treatment to advertisers.

Key Things to Remember:

1. Don’t think you can just you should turn on an advertising program on your site and forget it. This solution may be easy in the short term, but can come back and bite you in the absence of constant monitoring and optimization. Just like any other initiative, you get out of it what you put into it. It takes investment and nurturing to be truly successful.

2. Be flexible so that you can take on the biggest opportunities. The most powerful publishers (Yahoo as an example) are always innovating new sponsorship vehicles. Insist that your retail ad-serving partner is delivering new, creative expressions of digital media.

3. Respect your shopper. Your customers are your biggest asset and their experiences on your site are a reflection of your brand. Foster an experience that is rich, rewarding and relevant for online shoppers and you will not only support your brand, but also build on it.

Jake Bailey is chief evangelist for RichRelevance.