The contemporary e-shopping process has been increasingly experiential versus transactional. Over 50 percent of consumers begin the path-to-purchase journey somewhere like Amazon (likewise Lazada, Flipkart, Tmall and so on), with more time spent browsing in an e-retailer environment than in any other kind of site. 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 consumer's wants and wallets.
A key ecommerce 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 percent of total advertising spend. But look at where we are today.
I reckon we’re in the same early days for ecommerce, where 30 to 40 percent of retail sales will be facilitated through it with unprecedented speed in the near future. And keep in mind that ecommerce happens every day, such as when people hail a taxi via an app. You and I are taking part in ecommerce without being aware 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 will really matter is cost per sale.
Our business is in driving a sale, through connecting consumers and advertisers. Our business is one of a problem-solving nature, and built upon the observation that ad dollars are being eaten by ecommerce 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, ecommerce (excluding China and South Korea) constitutes between 2 and 7 percent of all retail purchases, but actually influences over 70 percent of physical purchases.
Consumers are increasingly looking at e-retailers to get ideas and make decisions about 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 ecommerce. Its ultimate expression is 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? Ecommerce has disrupted and will continue to disrupt physical retailers, who shell out for salespeople, utilities and rent, which 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 touchpoints 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.
Ken Mandel is APAC president of innovation and commerce with Publicis Media