Lowe’s Cos. Inc.’s ability to tailor messages to consumers’ interests and behaviors, as well as its ability to track the impact of its ads has led the retailer to allocate roughly 45% of its marketing budget to digital ads this year, a marked increase from 17% just three years ago. And with its sales up 20.8% in the first three quarters of 2017, Lowe’s believes its approach is working.
The effectiveness of Lowe’s marketing stems from its ability to tailor its messages to individual consumers. Doing so is contingent on the retailer linking the information it knows about them—their location, their interests, their previous purchases—across everything from email to paid search to social network ads, says Shannon Versaggi, the retailer’s vice president of targeting marketing. “We need to be relevant to shoppers,” she says. “That requires us to personalize the messages we’re presenting them.”
For instance, leveraging its knowledge of where a shopper is located has produced significant results for Lowe’s, Versaggi says. That’s true across display, search, email and social marketing channels. At the most basic level, the approach follows a simple idea: A consumer located in Los Angeles in February is unlikely to be interested in the same items as a shopper in Minneapolis. But then the retailer layers weather-related triggers on top of that location-based targeting to enable it to deliver messages that a consumer is likely to be interested in when they’re online. For instance, if there’s rain in Minneapolis, Lowe’s might run a display ad campaign featuring indoor projects for consumers in the Twin Cities metropolitan area, while running a display ad campaign featuring outdoor projects in other markets in Minnesota, Wisconsin and South Dakota. At the same time, it might launch a paid search campaign on weather-proofing products in the Twin Cities metropolitan area.
“It’s important to know our customers and anticipate their needs,” she says. “That way we can respond with the right message at the right time.”
Lowe’s leverages a number of marketing vendors’ tools to deliver the right message at the right time (the retailer declines to share which vendors’ technologies it is using to integrate weather-related information into its ad targeting). That technology leverages machine learning to understand and adjust to the types of messages consumers respond to in particular situations and artificial intelligence to determine when, where and at whom it should target, as well as how much it should bid for ads.
The retailer aims to demonstrate to shoppers that it understands them and understands what it is that they’re looking for. “Home improvement can be intimidating,” Versaggi says, noting that when consumers embark on a project, there are a nearly endless array of decisions to make.
“If we want to be successful we need to understand the mindset of our customers,” she says. That’s why the retailer has spent much of the past year examining how consumers engage with different social networks. For instance, it’s found that consumers are typically passively engaged on Facebook but that they’ll stop their scroll when they encounter something meaningful to them. That makes the platform particularly effective for retargeting via dynamic ads, the ad format that enables a brand to automatically promote products to shoppers who have expressed interest on the brand’s website, app or elsewhere on the internet. On Pinterest, shoppers are actively engaged with the category as they’re looking for home improvement ideas and inspiration, she says.
As a result of Lowe’s efforts, the average number of consumers clicking from a social network to its website grew 64.9% to nearly 1.08 million from 653,242 in 2016.
In optimizing its ad spending, Lowe’s has “leaned in” to Pinterest over the past year, she says. For instance, the retailer last year turned to Pinterest to find potential customers who it aimed to drive to make a purchase.
It launched a Pinterest Shopping campaign. Pinterest Shopping campaigns use a retailer’s product feed that’s formatted to the same specifications as a Google Product Feed to create product pins on Pinterest. That means the retailer can create ads at scale and dynamically update them based on its inventory levels. Lowe’s targeted the ads to search because that’s where it thought it would find the consumers who were most likely to be looking to make a purchase.
Using digital marketing vendor Kenshoo’s Campaign Mirroring tool, which enables a retailer to copy campaigns, audiences and creative from other channels onto Pinterest, Lowe’s launched ads across its kitchen, home décor and seasonal décor categories from June to September 2017. The ads, which were Pinterest’s one-tap promoted pins that take a shopper who taps directly to your chosen landing page, generated a return on ad spend 76% greater than its goal. And, compared to averages from the same period a year earlier, the Shopping ads delivered a 20% higher click-through rate and a 43% lower cost per click.
Lowe’s is No. 25 in the Internet Retailer 2017 Top 1000.Favorite