Wednesday, August 12, 2015

Retail ad spending is speeding to mobile

There are few industries where mobile is having as big an impact as the disruption it is bringing to retailing. This should make publishers nervous. Very nervous. 

Though the rising popularity of mobile commerce may be great for consumers and could be pretty good for merchants, the phenomenon poses a sharp challenge to newspaper publishers, who rely on retailers to generate half of the roughly $20 billion in print and digital advertising they are likely to sell this year. Here’s why millions in newspaper advertising could be at risk:  

Now that three-quarters of Americans have smart phones, more than two-thirds of those consumers use their phones at some point in the shopping process. The Deloitte consulting group says that nearly a third of the $3.4 trillion in U.S. retail sales in 2014 were either influenced by, or actually took place on, a small screen – a six-fold increase from smartphone-shopping activity in 2012. 

In the interests of intercepting mobile-ized shoppers as they search for products, read reviews, compare prices and eventually click to buy, retailers this year are expected to spend nearly twice as much on mobile advertising as will be spent in any other digital ad category, according to eMarketer, an independent research service. eMarketer reckons that merchants will buy nearly $6.7 billion of mobile advertising, or about a third of the sum they’ll spend on retail ads in newspapers.  

Given the growing reliance of consumers and retailers on mCommerce, it seems fair to conclude that a certain number of the ad dollars formerly spent at newspapers will be diverted to the mobile channel as retailers embrace digital marketing. 

Retailing no longer is a matter of stocking shelves with cool stuff, buying some ads, throwing open the doors and hoping for customers. In the mobile era, retailing is becoming a subtle, sustained and increasingly sophisticated process of psyching-out customers through a relentless blend of cyber-sleuthing, cyber-seduction and cyber-salesmanship. It works like this: 

Tracking. The process starts when the consumer starts browsing, regardless of whether it is online or in a store. Merchants use cookies to track consumers who visit their sites, visit social networks and visit other digital venues to research products before heading to a store. Once in the store, customers can be tracked with the loyalty apps developed by most big merchants or with low-power devices called beacons that communicate automatically with a shopper’s smartphone. Although cookies have been around for a long time, Apple, Google, Facebook and other tech companies recently have launched aggressive programs to honeycomb retail locations with beacons. Business Insider predicts that more than 3.5 million beacons will be in place in American shops by the end of 2018.  

Attracting. To catch the attention of media-saturated customers, merchants will quadruple their investments on in-store digital signage to $27.5 billion by 2018, according to International Data Corp. Many of the flat-panels heading into stores will have touch screens enabling consumers to change the program by themselves, while others will have cameras that can detect a shopper’s age and gender to tune the content to her predicted preferences. 

Paying. Apple, Google, PayPal, Square and a host of other companies are jockeying for dominance in mobile payments. In addition to offering convenient smartphone apps, they and other digital platforms like Facebook, Pinterest and Twitter are adding buy buttons to their websites to capture transactions faster than you can say “shopping cart.” In addition to making it easier for consumers to part with their money, many of the payment systems are seeking to capture detailed information about customers by establishing loyalty programs that give points for every purchase someone makes. Even American Express has gotten into the act with its Plenti program, which gives points for purchases from partners as diverse as AT&T, Exxon, Macy’s and Hulu. The points can be exchanged for cash or credit.
Personalizing. Data captured from cookies, beacons, interactive displays, payment systems, product searches, purchase histories and loyalty programs can be combined with inferred and volunteered customer data to produce rich individual profiles and, thus, personalized offers tuned to a customer’s income, demographics, location, lifestyle and more. 

Engaging. The more retailers interact with customers, the more they will know about them. This will enable merchants to efficiently build the long-term individual relationships that they hope will lead to future low-friction, high-yield transactions. 

Unfortunately, print ads and much of the digital advertising sold by most newspapers do not capture the granular data that is the essential ingredient in the smart marketing programs that retailers are cooking up for smartphone owners. 

The more merchants require actionable data, the more they will put their marketing dollars into the digital media that deliver it. The shift in priorities could come at the expense of newspapers. 

© 2015 Editor & Publisher