Brick-and-mortar retailers may not be as hot as their direct-to-consumer (DTC) peers, but a physical storefront and a historically robust CRM capability arms retailers with insights and the ability to react to market change more efficiently. As marketing becomes more data-driven and the walled gardens retreat into a black box, knowledge of your customer will be a distinct advantage to retailers who know how to target customers and navigate the open internet.
The trouble with the platforms
According to eMarketer, U.S. retail ad spending is expected to reach $28 billion in 2019, a 19% increase over the previous year. Much of that spend will end up inside one of three walled gardens—Google, Facebook and Amazon.
To retailers, these platforms are “frenemies.” Google and Facebook take your ad dollars, tap you politely on the head and say, “Don’t worry about it, we’ll take care of everything.” What they won’t do is share campaign data, which means retailers have to trust Google and Facebook without the ability to verify. And while there’s a long history of advertisers demanding better transparency from those platforms, the arc of that history is bending toward darkness for two reasons.
First, in the walled-garden era, Google and Facebook are substantially more powerful than in the past. Everyone except the mega advertisers have had a hard time extracting meaningful transparency concessions. Second, the platforms have been successful in leveraging privacy laws to withhold data.
Then there’s Amazon. They’re just as stingy about sharing campaign data with advertisers, but because they’re Amazon, there is also an ecommerce twist. If you achieve meaningful success within the Amazon ecosystem there is always a chance that Amazon will use your data to compete with you.
Add this up and it paints a familiar picture of what the big-box stores did to mom and pop retail. Go with Google and Facebook—but don’t expect access to the data you need to replicate, optimize or understand where the ceiling is for your campaign dollars. Or go with Amazon, where the sales ramp can be rewarding, but all too exposed to the competition.
The open internet has a lot to offer
The open internet represents roughly half of all online advertising that isn’t sold by Google, Amazon or Facebook. Advertisers typically access audiences and inventory via direct sales, or through third parties.
In some instances, the open internet overlaps with walled gardens, but not always. For all their reach, these platforms don’t necessarily reach everyone inside a typical household. Amazon, for example, boasts about 100 million Prime subscribers, but more than half the time that’s only one person in the household.
Facebook has a different problem. According to eMarketer, Facebook has an estimated 169 million U.S. accountholders, representing 51% of the population. Pew puts the number of U.S. users closer to 70%. Facebook could obviously settle this discrepancy if it was to their advantage to do so, but for now it means advertisers have to rely on estimates with a 20% plus or minus margin of error. Nevertheless, by any estimate, 30 to 50% of consumers clearly aren’t on Facebook—and those that are, tend to skew older, female and less affluent. And of course, all of this is premised on knowing how many Facebook accounts are active—but for the sake of consistency, that information can also only be “estimated.”
To grow on the open internet, you must know your customers
There’s a persistent narrative that DTC brands know their customers better than any brick-and-mortar brand. But we need to take that with a grain of salt.
Starting with zero customers, DTC brands initially thrive inside of walled gardens, gathering sales and customer information directly from those customers. The brand with the lowest overhead and most aggressive pricing is bound to pick up short term wins. Over time, however, qualifying and reaching the right consumers grows in importance and all that sales velocity starts to plateau—or even fall. With little access to the platform data, retailers can find themselves outside the walled garden over spending to get back in.
Brick-and-mortar brands amass gigabytes of data on their customers. They measure both instore and online purchase behavior—storing and segmenting it for application across the omni-channel. These robust CRM platforms often offer greater depth and transparency to a large portfolio of customers.
That portfolio is best operationalized in the open internet where the transparency is greater. Rather than continuing to pour valuable intelligence back into the black box of a walled gardens, both DTC and brick-and-mortar retailers have ample reasons to leverage the customers they know where that knowledge can best be applied.
Too often the default position for marketers is Google, Facebook or Amazon. While a logical first step for most marketers, the only way to manage for the future of your brand may be to put equal resources into the open internet option. Syncing first-party customer data and campaign data, retailers can refine marketing to be more consumer-focused, which in turn helps grow customer relationships while managing customer acquisition costs.
It’s an iterative process that is the work of professional marketers and takes more than spending blindly inside a black box, but over time the results fuel a virtuous circle where retailers are able to manage the levers of their own success.
Semcasting’s technology is designed to allow organizations to onboard CRM data, create new prospect audiences, identify qualified leads and monitor audience performance.Favorite