How Online Advertising is Reconciling Retail with Digital

opinionThe following is a guest contributed post from Stéphane Pitoun – Co-founder and CEO of Adxperience.

The relationship between retail and digital has always been turbulent. Yet in 2015, in the French marketplace alone, e-commerce grew 10 times faster than conventional commerce.* And the launch of Amazon Prime in France, which promises to deliver to Premium customers within an hour (in Paris only for the moment), won’t help brick-and-mortar retailers. However, the mobile age could disrupt this imbalance. Almost everyone now has a smartphone with them, all of the time. This has a direct consequence for retail: it’s now much easier to capture a potential customer at the right time and accompany them in-store. And even maintain contact with them after they leave. This is the era of “moment marketing.”

Conventional direct marketing in a major transformation. Until now, direct marketing could almost be summed up as traditional screening/display (TV, billboards, etc.) and distribution of promotional coupons. But this is changing as mobile technologies evolve. Today, when a brand wants to generate in-store traffic, it has an array of tools at its disposal. For example, sending geo-located messages in real time to reach consumers just when they’re most receptive and likely to make a purchase. To do this, three operational levers are used: connected devices, mobile advertising and connected marketing tools.

  • Connected devices as a whole provide a mode of interaction between consumers and physical stores: they include smartphones, of course, but also tablets, smartwatches, connected wristbands, etc. In the near future, a brand at a shopping mall could cross-reference data on a user (with prior consent, of course) and send them a discount on a product they’ve previously searched for online. Inspired by Amazon in the United States and its ‘Dash’ button, France-based Darty has taken a first step toward this coming-together of conventional retailers and connected devices. The ‘Bouton Darty’ looks like a simple button, displaying the French brand’s famous red, black and white logo, except that it’s connected. Once pressed by the user, it requests a call by a Darty adviser, who provides remote assistance for an electronic appliance. The system enables the retailer to extend its trademark after-sales service and, at the same time, reach a younger audience, enthusiastic about connected devices.
  • Real-time geolocated buying techniques: Real Time Bidding (RTB) technology, used in online advertising and, by extension, on mobiles, consists of allocating an advertising impression to an advertiser in real time and determining its price using a set of user data (geolocation, browsing history, age, interests, buying behavior, etc.). Thanks to RTB, it’s now possible to target a mobile user with certain precision. Let’s take an example. For a particular campaign, a major nationwide sporting goods retailer wants to target web users who’ve visited a sports website in the last several weeks. It will also target these users when they’re near one of its stores, in order to deliver the message to an interested person just when they could potentially walk through the door.
  • Mobile technologies for proximity marketing. There are several technologies, already deployed with users, which, combined with RTB, also contribute to this coming-together between retail and digital:
  • The electronic wallet (such as Passbook on the iPhone or Google Wallet on Android) offers a way to interact with users by sending them information they can store in this virtual wallet, such as flight tickets, concert tickets or even store coupons. For the retailer, this type of information is easy to send and could have a considerable impact on purchase decisions in stores, especially since many users can pay with their smartphones.
  • Near Field Communication (NFC) is another information exchange technology that’s built into most smartphones on the market today. Simply by bringing a smartphone into proximity with an NFC-compatible terminal (store window, poster, sales desk, etc.), the system triggers an interaction with the user: transfer of a coupon, promotional offer, interactive ad, etc.

The combination of these three levers opens up new and unexpected scope for marketing action by retailers. So let’s try to describe a direct marketing campaign using these new technologies. To do this, we’ll take the example of our sporting goods retailer. With the fall season approaching, it could, for example, look for all web users who’ve shown an interest in hiking, own a smartphone and are under 23 and male.

  1. The brand runs an RTB advertising campaign on mobiles/tablets/connected devices: it could initially choose to target the relevant users (interested in sport, male, 23, smartphone owner). Then, it narrows its target to users located within a 3-mile radius of one of its 100 stores. Lastly, the campaign is broadcast during the opening hours of the nearest store. The interested customer thus has a greater chance of visiting a store. If users are targeted with offers matching their areas of interest, the chances they’ll respond to the store in question are further improved. Clearly, targeted advertising is considerably more precise and more powerful than any ‘conventional’ direct marketing campaign.
  2. The message contains a promotional offer, inviting the user to benefit from an exclusive deal. This offer is for a limited time only, which adds a sense of urgency.
  3. The user clicks and downloads a coupon into their electronic wallet.
  4. They go to the store and accept the offer by presenting the downloaded coupon. No need for a bankcard: they pay using their phone.
  5. The store invites the user to benefit from its loyalty program by adding it to their virtual wallet. No more paper, everything is stored. At the same time, the user can download the store app by scanning a barcode. The customer now enters a marketing channel that enables the store to maintain contact with them via the installed app.
  6. This customer is now outside the conventional advertising channel. They’ll no longer be reached by the store, which is careful to deselect them during its next advertising campaign.

Conventional retailers will also need to draw inspiration, as Amazon has done with Amazon Prime, from the models proposed online. Delivery within an hour is one example, but there are many others. This is the age of real time, ultra-precise targeting and interaction. It’s the era of ‘moment advertising’. It’s the era of ‘drive to store’. This is what the well-known GPS-based app Waze, for example, is offering. Ads are only displayed on the app once the user is stationary. A banner may appear in the top half of the screen, offering, for example, to guide the user to a fast-food outlet located less than a mile from their location, inviting them to make a detour from their route. Even better, thanks to RTB, Waze analyzes the opening hours of the outlets concerned and displays the word ‘open’ in the banner, within the ad, thus adding important incentive information for the user. And if the fast-food chain is closed? The RTB system prevents the ad from displaying, thus avoiding ‘wasted’ advertising space; an aspect that’s recognized and particularly appreciated by advertisers today, who are all seeking to stay on top of their cash burn.

Retail has always been a bit exasperated by digital: brands that don’t have an online store are barely represented in media purchasing, except for certain image campaigns. Today, technologies such as RTB offer huge communication opportunities, which will progressively replace ‘conventional’ direct marketing in the months and years ahead.

*Fevad study 2015: