'Tis the season for the e-shopper : Media Mind

A new type of shopper has emerged out of the recession. Battered consumers who have seen their bonuses sliced, jobs disappear and credit card limits capped are now more thoughtful, discerning and frugal and cautiously explore all options online before they buy.

The new rush to shop online provides new advertising opportunities for retailers. By carefully targeting relevant online sites and providing the optimal number of exposures they can bring potential buyers to both online sites and drive footfall to retail stores.

Surfing for the best value

Forrester Research has found that 33 per cent of online users will do research online to make sure that they get the best price, 22 per cent of consumers say that they use search engines and comparison shopping sites to get the best deal, while 13 per cent compare products online to reduce the number of stores that they visit (US Retail Research, March 2009).

All this online activity is increasing the share of purse that is dedicated to e-commerce. ComScore reported that in Q2 2010 US retail e-commerce sales reached US$32.9 billion, up 9 per cent compared to last year.

Online traffic in the UK, with the highest share of online out of total retail sales (9.5 per cent), is following a similar trend. According to eMarketer, the number of UK consumers who shop online is  expected to reach 71.1 per cent in 2014, or 30.8 million shoppers.  

Holiday rush online

Unsurprisingly, the holiday season typically brings a big spike in online shopping activity.

The Media Mind Retail Research study released this month reveals that retailers spend a high percentage of their annual advertising budget in the lead up to the holiday season. 

Media Mind’s 2007 and 2009 data shows that one third of all global retail online ads are run in November and December. This is compared to only 6 per cent of ads served during January and February, despite the post-Christmas sales.

While 2007 and 2009 exhibit similar advertising behaviour, the figures for 2008 show a less dramatic increase due to the financial crisis in the second half of 2008, which severely impacted retailers’ online advertising in that year’s holiday season. November and December accounted for 24 per cent of online impressions in 2008.

Top performing sites for online ads

Depending on the focus of the retailer, the choice of sites for ad placement varies considerably. Specialty retailers may benefit from placing their ads on sites that cater to a specific niche. Other retailers that cater to a more diverse audience can benefit from many types of sites and placements.

Direct response retailer campaigns can achieve the highest conversion rate on homepage placements. Most buyers visit the homepage of a retailer as part of their search process. This analysis indicates online display advertising for national brands on homepages directs users to branch retail stores.

Those retailers that are focused on raising brand awareness have the best results while serving rich media ads using music, mail and instant messaging applications.

Repetition works

Media Mind’s research found the optimal frequency for online retail campaigns are between four and six exposures, but most users received only a single exposure to each campaign.  

The results indicate that the conversion rate is highest at the first and second exposure that users receive. However, only after four exposures, the conversion rate drops below the average conversion rate for the entire campaign. This indicates that online retailers should not be hesitant to increase frequency to the target audience, rather than scaling the campaign for more users.

For retail campaigns designed to boost brand awareness, the study indicates that users are more likely to engage with ads that they have already seen, and therefore low exposure frequency can jeopardise overall campaign performance. 

Summary

Price savvy shoppers have an increased demand for price comparisons and product information online.  As a result, retailers can use display advertising effectively to boost online and in-store sales. 

Each consumer should have at least four exposures with a maximum of six exposures to achieve an above average conversion rate. However, most retailers under utilise the online channel by providing only one exposure per viewer.

Direct response ads that appear on the homepage generate the most conversions, with niche sites reaching specific verticals also proving effective.   

As more consumers shop online, and even more find details about products and prices online, online presence becomes ever more important. This research shows that online users actively respond to retailers’ offers and engage with their ads to pull them to the right store, whether physical or virtual.