Digital Media Merchandising -- Trade Promotion using Online Media

I spent my first 4 years at Google aggregating "Retail best practices" and sharing them with advertisers. During this time, the majority of these "best practices" were focused on driving greater cost effective e-commerce. Over the years, retailers and their marketing partners/agencies have become more open to ideas of cross-channel inclusion and testing.

Over the last year, I've shifted my focus a bit. While there is so much that marketers CAN DO in online advertising - I feel like we online marketing enthusiasts sometimes become blind to what we SHOULD DO. In this vein, I've tried to focus on what Retail marketers do in other media channels - so we can apply those concepts to the online marketing channel without re-inventing the wheel.

I've often asked the question - "What works for Big Box Retailer X?" The answer .... "Circulars" Why do retailers love circulars? ... Some (and not all) reasons include:

They work! Retailers (and manufacturers) can track on a local level the sales lift of products in circulars and compare to the cost of the circular - which almost always shows a positive return - and most importantly - moves large volumes of product.
Consumers find value in them - Research shows that consumers still love their Sunday FSIs.

• Costs are usually shared between retailers and their manufacturer supplier.

In summary - Circulars over the last 20+ years have been the ultimate merchandising tool. They have put the RIGHT OFFER in front of the RIGHT CUSTOMER at the RIGHT TIME - in a scalable way. Customers read circulars to find the best deals ... the fact that they are seeking this information out pre-qualifies them as being interested in those products, and the retailers offer "deals" on the circulars to help drive these customers into stores to purchase the goods.

Now, we've all probably read the news about declines in Newspaper circulation. And while this is true, Circular advertising still thrives due to the bullet-points above (as it should!) If it works - no marketing, sales, or merchandising function is going to panic.

The conversations I have with retailers are not about how they need to SHIFT marketing dollars away from the circular and into digital media merely because of media consumption trends. Conversations I try to have, especially in these economic times, are about optimal merchandising that will net the best, accountable sales results...and in the online channel - I believe there is TREMENDOUS opportunity...

To paraphrase again - circulars work because they PUT THE RIGHT OFFER IN FRONT OF THE RIGHT CONSUMER AT THE RIGHT TIME. Search Advertising works in the e-commerce equation because it puts the right message in front of the right user at the right time ... So - my question is: How come we can't combine the two?

We have the right user at the right time (someone who theoretically raises their hand to say "I'm in the market for a blender" by searching Google for "blenders"). In the cross-channel merchandising equation -- the online channel is missing "the right offer". While no one has completely figured it out - I can say that a lot of retailers are trying to figure it out. The concept of locally targeted offers to relevant, online customers is certainly an area that most retailers agree is an untapped market. We have examples we are happy to share to those interested...

Getting tactical for a minute ... I urge readers to search for any retail related general query on Google. Example: "Printers" or "refrigerators" or "Men's Suits" or "Running Shoes" (I can go on for a while here). In almost every case - there are National and Local Retailers who promote the general category ("Buy Printers at Retailer X") and there are manufacturers promoting their brands/websites ... BUT ... there are typically no instances of joint co-op marketing.

The paid results you see are what I'm calling "The Virtual Aisle" or "The Virtual Shelf Space." I like to equate this to walking into a store and asking the clerk where they sell printers. In most cases, the clerk will say (for example), "Aisle 7." As you, the consumer, approach aisle 7, you will often be greeted by an "end cap" merchandising display, usually promoting manufacturer brands (that are funded by these manufacturer partners). Additionally, when you walk into aisle 7, the top-to-bottom shelving order is often based on merchandising relationship with manufacturers as well. In the online world - there are very few "Virtual End caps" to point to.

If manufacturers want to reach consumers who come to "aisle 7" - I can't think of a reason why they wouldn't want to reach a much larger audience of extremely qualified shoppers (people searching thousands of variations of the keyword "printers"). Furthermore - when retailers reach the consumers looking for printers - I believe their is an untapped merchandising expertise that can lead them to more creative ways of driving sales than the message: "Find Printers at Retailer X"... For e-commerce - that messaging works, but e-commerce only represents 6% of total sales. The internet effects a lot more than 6% of sales (89% of shoppers say they use the internet before purchasing products*) - but the digital merchandising to date has not matured to this story - and again - this is what I talk about around the enormous opportunity...

Posted by Brett Goffin, Google Trade Promotion Team