RetailWire Discussion: BrainTrust Query: Key Item Marketing

Commentary by Don Delzell, Managing Director, Future Merchants, Inc.

Key items are the core of powerful assortments -- always have been and always will be. For years, retailers have depended on promotional marketing techniques like newspaper inserts and direct mail to stimulate sales. Unfortunately, economic realities and changes in consumer behavior are combining to create measurable erosion in the lift and ROI delivered by these methods. Moreover, the recession's impact on expenses has put even greater pressure on marketing budgets.

The costs of production and distribution for inserts, magazines and direct mail have climbed significantly over the past five years. Circulation and readership for newspapers and magazines has plummeted, and read-rates on direct mail are at an all time low. Cost per impression has risen sharply, and marketers find themselves with fewer dollars chasing less effective methods.

The ability of CPG brands to drive traffic is at a cyclically low point, a result of the recession having rendered aspirational marketing ineffective. Consumers want information about product features and benefits, and seek confidence that the merchandise will meet their real-world needs. The internet has created a means for shoppers to effectively render retail assortments into commodities, limiting marketing to price and availability.

Multi-channel merchants and marketers need an innovative response to these conditions that reinvigorates key items, creates differentiation, and enhances the retail brand. Retail chief marketing officers, whether for multi-channel retailers or pure play ecommerce sites, almost universally mention "video" as a desired site enhancement for the coming year. A study by Future Merchants, Inc., shows that 67 of the Top 100 have some form of video on their site. However, the adoption and incorporation of video remains, at best, an inconsistent and difficult to sustain effort for most of Internet Retailer's Top 100.

Video is seen as a medium that can effectively communicate and demonstrate specific product features linked to valid consumer needs. Further, video has become economical, when applied to key items. Video production costs have plummeted and key items have sufficient upside potential to warrant the expense.

Delivery remains the critical factor, and the ecommerce website offers numerous advantages. With millions of monthly unique visitors, already engaged in the purchase cycle, retailers don't have to pay for attention -- they already have it. Effectively, the distribution costs are nil.

However, video content that does exist on retail sites doesn't tend to be key item focused, and often lacks a sustainable approach. Future Merchants found in their survey that many retailers used video to launch an exclusive brand, support a season such as BTS, or was repurposed from television commercials or 3rd parties -- with no regularly found updates or additions which would reward repeat consumer interest. The video content is typically poorly positioned on the site, seldom integrated into the shopper's normal behavior, and often opens in a completely new browser window. Product demos are limited and generally support the vendor's key items, not the retailer's.

Discussion Questions: How do you rate the potential for using video programming as a key item marketing method on e-commerce sites? What industry dynamics are keeping good dollars supporting failing methods to promote key items? What is keeping e-commerce sites from being used as marketing distribution platforms?

RetailTV Demo - Future Merchants

Comments:

Video is a great medium but it really depends on what you are selling. Online shopping sites suffer from a plethora of 'distractions' that impede the buying decision. Video and having embedded video players can be a huge distraction to the customer. Make sure you marketing message is short and sweet. Producing your own videos is very cheap now and the latest Flash players make it easy to install video onto any website. Good way to get your message across as long as the customer doesn't lose interest.

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Doron Levy, President, TheMortgageMachine.ca

There's a lot hyperbole in this article. One has to question why the author is so intent on pushing video on retail websites. Yes video can enhance the consumer web browsing/research experience, but video is not the end all and be all for these sites.

A good website needs to be easy to navigate. It needs to be thorough. The ability to interact with the retailer or brand is essential, as is dialogue with other consumers.

Used well, the Internet is a great component of a marketing mix. Yes, newspaper and magazine readership is down, but that does not negate them as good advertising vehicles. The same is true for direct mail, television viewership and radio listening. Strong creative in any of these media can attract consumer attention and motivate investigation and purchase. A strong CMO or CRO knows this and incorporates many media channels into his/her marketing mix.

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Max Goldberg, Founding Partner, The Radical Clarity Group

Website content is rarely evaluated on the basis of its ability to attract attention and generate involvement. Hence, videos are often a throw away and overlooked by visitors. It would seem that marketers concentrate their investments on search engine optimization, i.e. "build it and they will come."

Our website studies show great hesitancy on the part of visitors to click onto videos. There are some obvious reasons. There is often no indication of how long the video is and visitors don't want to commit excessive time. And typically there is little to suggest what content is about to unfold. In turn, the visitors' eyes move elsewhere.

If the category is very important to the consumer, such as the baby seat shown in the query or the application of a knee brace, the shopper will take the time to look and see. However, for many video subjects, there is a bigger challenge for engagement which goes unheeded.

Like many aspects of website design videos are a hotbed of personal indulgence, while parameters of effectiveness for such site components are ignored.

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Joan Treistman, President, The Treistman Group LLC

I think there is a very important place for video in a retailer's online presence, but I don't think it is a mere "cut and paste" of manufacturer videos. We all bemoan the loss of the true "service representative" in the retail store. Video may be a way for retailers to differentiate themselves from both their online and brick & mortar competitors. The challenge of course, is the old Borders/Amazon issue where consumers loved the Borders book reviews but bought at the Amazon lower prices.

To make this all work, I think the online videos must be combined with an easy to use online store and in-store pickup or home delivery. Only by integrating all the shopping steps to the point of payment received can a retailer recoup the expense of video. This has to include a return process that encourages the consumer to try an online purchase even though there is some uncertainty about size or precise color. The threat of a difficult return policy is probably still one of the biggest deterrents to online sales. In fact, one of the videos a retailer could offer would distinguish the ease of their return policy.

By addressing the videos to the consumer and helping them with their decision process while also educating them on the subject, retailers have the opportunity to build a relationship that positions them as the consumer's advocate in the marketplace. This position will not only help with the current purchase, but will make the retailer the "go to source" for future purchases.

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Bill Bittner, Principal, BWH Consulting

I know I'm not necessarily the target consumer here, but here's my problem with video. Nine times out of ten, I'm browsing the web in front of my TV. It's rare that I use any feature that employs sound in those situations. If I'm in an office at work, I'd have to put headphones on to use video--a sure-fire giveaway in a lot of places that you're not doing work stuff. Even when there are times that I have an opportunity to use video, I'm impatient--I like to skim stuff, and with video it's a tour through what you want to tell me, exactly how you want to tell it to me. If it's longer than 3 minutes, unless I know the video is wildly engaging, you're not going to catch me.

So, like I said, I'm not necessarily the target consumer, but these are some things to think about--what do you do when the consumer can't use the volume? Or just wants the down and dirty version, not the one with high production values? Video has a role, but it's in a wide array of content choices--choices, consumer choices, being the operative word.

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Nikki Baird, Managing Partner, RSR Research

The focus of the article on a single element (video) provides a partial answer to the discussion question of why good dollars continue to be spent on failing approaches. One consistent aspect of retailing is the relentless pursuit of the "Magic Lever" that, once pulled, will cause profits to rain from the sky. After 35 years in the business, I can state unequivocally that it simply does not exist.

My point is that video surely has a place in effective brand communication. However, the entire process of communicating with consumers has been turned completely upside down by the Social Media phenomenon. Effective marketing now entails engaging the customer in a two-way conversation. It would seem, to me at least, that this piece of fundamental re-engineering is what will improve ROI.

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Bill Emerson, President, Emerson Advisors

The focus for the BTQ was on the use of video programming, and a distinct type of video programming, as an answer to the decline of traditional media to stimulate key item sales across all channels. Retailers dependent upon promotional marketing to drive sales of key items really do have a problem. They are having to spend more to get the same results, or endure eroding impact with the same dollars. Neither of these are sustainable propositions.

The comments concerning a limited point of view are apt: the focus was on a single potential alternative, not on a sweeping overview of all available marketing new media options. Guilty! Social marketing is indeed a new frontier, and as those exploring it will attest, it is one with a difficult to articulate value proposition, costs all its own, and no current formula or model which delivers sustainable impact on sales for retailers. One WILL be developed...it's just not there yet. However, there IS a workable model for video programming, supported by existing data, and enhanced by a comprehensive, best-practices guide to implementation.

In other words, it is possible to implement powerful video programming NOW. However, NOT as one author suggests, cheaply and with a D-I-Y approach. In fact, the survey we completed shows that such an approach doesn't deliver the kind of ROI desired, is difficult to sustain, and begins to run into many of the concerns others have noted on implementation.

The "best practice" approach advocated by Future Merchants includes attention to how the video is implemented on the site, where it is implemented, and what type of programming is developed. Just as other forms of key item marketing required a coherent and comprehensive set of decision rules in order to be effective, so does video. Best practices for the layout, size, scope and type of product best supported for seasonal direct mail catalogs exist...ask any retailer!

Don Delzell, Managing Director, Retail Advantage

Great article about this in today's Wall Street Journal. Bandwidth, bandwidth, bandwidth, or should I say lack thereof? It needs to be integrated with other mobile communication strategies and bandwidth is very important.

Mark Johnson, President and CEO, Loyalty 360

We're always humbled (when evaluating what could be done technologically with flash, streaming video, social media, or whatever might emerge next...) by the power of simplicity and relevance. Google is a blank box with a square around it. Lots of white space. No flash. It performs exactly the way you want. It delivers. You leave.

The author suggests video can effectively communicate and demonstrate specific product features; video has become economical; video distribution costs are nil; it's basically about production, rather than consumption, and therein lies the fundamental challenge legacy marketing concepts face morphing with interactive media as a channel.

It feels like the innovation needed in the industry today is less about technology and more about attitude.

Frank Beurskens, CEO, ShoptoCook, Inc.

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