Thursday, November 19, 2009

Black Friday, Cyber Monday Forecasted to Rise 1.8 Percent

(Excerpt from RST, 11/19/09)

While it won't be as bleak as last year, a new report predicts that sales will gain just 1.8% on both Black Friday and Cyber Monday. The estimate comes from BDO Seidman's "Retail Compass Survey," based on a poll of 100 CMOs at leading retailers.

The biggest surprise in the results, says Ted Vaughan, a partner in the retail and consumer product practice, is just how widespread markdowns will be, "with 96% of the CMOs saying they are going to be discounting. That level of promotion, even after what happened last [year], shows that given the current consumer mindset, retailers believe that deep discounts are just a fact of life, and the way to entice consumers. And when the major player -- Wal-Mart Stores -- is announcing so early in the season that it won't be beat on prices, there's not much else other stores can do."

Consumer confidence continues to be a big issue, despite positive signs in the economy. (That includes the survey's findings that most retailers believe business will pick up in the second quarter of 2010, which means they will begin to increase their orders for more merchandise soon.) "The unemployment rate is weighing on consumers," he says.

The emphasis on early, strategic promotional pricing is forcing retailers to rethink their holiday calendar, making Black Friday (Nov. 27 this year) less of an event, with shopping spread out over a longer period. "This year, discounts started before Halloween, which means that Black Friday is just one large shopping day," he tells Marketing Daily. People won't spend more, he says, but they will do their Christmas shopping over a longer period of time.

Last year, the same survey predicted flat growth, and the year before -- a distant "good old days" memory for most retailers -- an 8.3% sales growth for Black Friday and 21% for Cyber Monday.

In addition to the ubiquitous discounts, CMOs say they will rely heavily on online campaigns and email promotions (53%), as well as special events (43%.)

Another indication of the changing landscape, says Vaughan, is that more CMOs named toys as the strongest category, with 39%. "One of the shifts in consumer mentality we've seen is that more and more, people are focusing on what's most important to them," Vaughan says. "They may cut back in other areas, but they won't cut back on toys for their kids."

Conversely, only 24% believe that consumer electronics -- a darling in many Christmases past -- will be the strongest. As a result, it's where CMOs expect to see the biggest discounts: 37% say it will be the leading category for markdowns.

Respondents also believe gift-card sales will be underperformers this year, accounting for just 5% of stores' holiday sales, down from nearly 12% in 2008.

The good news is that stores seem ready for what's coming, and with leaner inventories and more controlled promotions, most do not believe that sales will decline, "a sign that the economy is stabilizing," Vaughan says.

As a result, he expects to see fewer retail bankruptcies than last year. "So many chains have closed underperfoming stores, laid off employees, and restructured credit. At this point, for many, any more would mean cutting into the bone," he says. "If they've made it this far, they can hang on."

(Source: Marketing Daily, 11/17/09)

Friday, November 6, 2009

Display Plus Search Makes Online Success

(Excerpt from RST, 11/6/09)

As retailers get ready for the holiday season, their first instinct might be to throw as much money as they can afford into search. But recent traffic trends may point them otherwise.

Less than 10% of online retailers' web traffic, on average, comes from search engines, according to an analysis by Nielsen Co.'s Online division.Nielsen found the majority of retailers' web traffic (61%, on average) comes from people going directly to a retail site -- consumers typing, say, into a browser address bar.

Nielsen's findings are based on second-quarter traffic for 200 online retailers. The analysis shows that comparison-shopping sites, such as NexTag or Scripps Networks Interactive's Shopzilla, collectively accounted for about 1% of traffic. Other referrals, such as affiliate programs or advertising (basically anything that wasn't direct navigation, comparison referrals or search), accounted for the remainder.

The 9.5% of traffic from search also likely included a good chunk of people conducting navigational searches -- typing Zappos into the search bar rather than searching for types of products (shoes) or product attributes (comfort footwear).

Brands matter Ken Cassar, VP-industry insights at Nielsen's Online division, said a recent look at the top 50 search terms revealed only three that weren't branded -- and those were pornographic.

"When you take a step back and look at that together -- the fact that such a high percentage of people go directly to retail sites and even those that search generally have a pretty clear intent as to which website they'd like to go to -- it makes a compelling argument that brand and past experiences (with a marketer) matter an awful lot and will be far more significant determinants of success than any customer acquisition strategy that they're going to engage in," he said.

The findings, Mr. Cassar continued, "make an important case for the continued relevancy of display advertising. While search gets a lot of credit because it's quantifiable, there's a reason people are typing things like Expedia into the Google search engine."

When looking at the actual transactions and dollar volume that visits from various channels generate, direct navigation gains even more importance.The challenges of tracking some less quantifiable channels (such as display or even offline channels) have caused some retailers to neglect them and instead focus on what's easy to measure.

Opportunity for display ads Chris Paradysz, CEO and founder of internet marketing agency PM Digital, was surprised search only generated about 10% of retailer traffic but said the data shows "it's still the big push media channels that are still driving a lot of volume."He suggested the research provides an opening for display sellers: If they can adopt some of the things that have made search attractive, such as the targeting and the pricing model, they will be in a good position to take some of the dollars marketers have been putting into search.

Still, search is a very important bottom-of-the-funnel marketing channel. It also helps retailers discern intent, in some cases helping them understand what consumer demand looks like.

"The primary reason you have to be there (in search) is it shows explicit intent and because it's so ROI-driven," Mr. Paradysz said. But beyond the issue of return on investment, he said, "there are very real branding implications that have impacts on downstream click activity."Mr. Paradysz noted many people use search for product research, which influences their behavior down the line. He illustrated an example: You search for a red cashmere sweater, looking for who has the best deal. You see J. Crew has it for $119 and Neiman Marcus for $329. You don't buy it then but later head over to and make the purchase.

"You have to have the brand presence," Mr. Paradysz said, "because if you don't, you first don't benefit from the paid search, and second, you potentially lose some of that downstream activity."(Source: Advertising Age, 11/04/09)

Wednesday, November 4, 2009

Consumers are Most Spend Happy on Saturdays

(Excerpt from RST for 11/4/09)

That's from recent Gallup survey data of consumers' "self-reported average daily spending in stores, restaurants, gas stations, and online." It shows that Americans spend the most on Saturdays, and the least on Tuesdays.

Gallup found some other interesting patterns in the data, too. For example, Americans spend significantly more during weeks when they earn a paycheck. Dennis Jacobe and Jeffrey M. Jones of Gallup say this "paycheck effect" has been particularly strong in recent months. One possible explanation, they say, is that Americans could be less comfortable using credit than they once were, and prefer to shop when they have cash on hand.

The survey also found that average daily self-reported spending was much higher for men than for women -- $73 versus $53, respectively -- and is also highest for adults age 30-49.

Source: The New York Times (11/02/09)

Tuesday, November 3, 2009

The Latest Crop of Online Advertising

(Excerpt from, October 30, 2009)

by Matt Pressman

Pushy, pushy!

If you surf the Web—and if you’re reading this, you obviously do—you may have noticed a new breed of online ads recently, appearing on such marquee sites as Just in time for Halloween, it springs unexpectedly from a seemingly normal banner ad like a ghoul jumping out of the bushes and shoves whatever you’re looking at to the bottom of the screen (don’t worry, it crawls back into its shell after 7 seconds). It’s called a push-down ad, and it was introduced this summer by the Online Publishers Association (O.P.A.), a trade group that includes most of America’s biggest media companies and is devoted to promoting Internet advertising.

The online-ad business is no longer in its infancy—more like its adolescence. And like many adolescents, it is going through an experimental phase. “We were hearing from the agency community that they wanted new ways to connect with the consumer,” says O.P.A. president Pam Horan. “If you’re trying to deliver a unique brand experience, this provides a new way to do that.” The push-down has been very successful so far, according to Horan: several of the companies that tried the new ad unit when it was first rolled out—a group that included such names as Porsche, Air France, and Levi’s—have already signed on for follow-up campaigns.

The difficulty for advertisers is finding that sweet spot between being annoying and being ignored. On one hand, pop-up ads are generally considered such a nuisance that virtually every browser comes with software to block them; on the other hand, some marketers fear that Web surfers have trained themselves to ignore traditional, unobtrusive banner ads (there’s even a name for the supposed syndrome: “banner blindness”). Push-downs definitely grab your attention, but is there a risk that they’ll become as reviled as the pop-up? According to Horan, the O.P.A. has not received complaints about push-downs, and as she notes, “Consumers are not shy. If they have an issue, they let us know immediately.”

The push-down is just the latest in a long line of advertising innovations aimed at wringing more money from the Web, where ads are still exponentially cheaper than they are in print or on TV (Horan confirms that push-down ads are “commanding a premium”). Here’s a quick primer on some other favored techniques, old and new:

1. The Big Brother ad One of Google's main sources of revenue is targeted ads based on key words that you enter into its search engine or its e-mail program. But while nobody minds when they Google “aluminum siding” and a list of home-improvement-store ads shows up alongside the results, it can feel like a rather disturbing invasion of privacy when—as happened to one BoingBoing commenter—you are having a Gmail conversation about the fact that your child was born without a left hand and you get an ad reading “Table Saw Accident?”

2. The stealth ad The popular aggregator The Daily Beast, which for months after its high-profile launch carried no ads whatsoever, is trying out lots of novel ways to integrate ads and editorial content seamlessly. One of several non-traditional ad types they’ve recently showcased is what they call a “homepage expandable unit”—an ad subtly disguised as one of the eight rotating “box stories” on the home page.

3. The troll ad You click on a link, but before you can get to your destination you must first pay a toll: several seconds of looking at a full-page plug. These are called interstitial ads, and like push-downs, they’ll usually go away on their own (or if you click the little “skip this ad” link that is sometimes tucked into a corner of the page). Delayed gratification can be a good thing (as a Red Sox fan, I can attest to that), but Web surfers are not known for their patience.

4. The Hulk ad Scenario: you’re scrolling down a Web page when your hand slips and—whoa! A massive ad is now covering up that hilarious lolcat! You’ve just encountered an expandable mouse-over ad, which, like an angered Bruce Banner, can grow to several times its normal size. While some such ads expand without warning when you move your cursor onto them, others are clearly marked “roll over to expand” or “click to expand.”

5. The blogger endorsement For nearly as long as there have been influential bloggers, there have been marketers trying to get product samples—and perhaps additional enticements—into the hands of said bloggers. The draconian new rules issued by the Federal Trade Commission earlier this month mean that bloggers will have to disclose such freebies, but it’s still an effective way for brands to get noticed (they’ve been doing it for decades with print media, which are, oddly, exempt from the rules).

Of all the vexing questions about the future of the media business, the most important one is: how is anyone going to make money from Web content? Given the reluctance of users to pay for anything, advertising seems like the only realistic solution. So instead of going apoplectic at the sight of a push-down ad temporarily displacing your precious Maureen Dowd column, grin and bear it—it may be journalism’s last best hope.