THE COLLISION OF BRAND AND E-COMMERCE
One important impact of the pandemic has been the acceleration of digital commerce. Whether it’s marketplaces like Amazon, stores-turned-retail-media like Walmart or Target, or delivery apps like DoorDash, growth has soared. While that may plateau post-lockdown, few think it will be reversed.
The surge in e-commerce adoption is triggering significant changes for marketers – in the way they spend money, and the way teams are structured. For many, 2022 will be a year to resolve internal tensions, and to seize the opportunities emerging in the space between brand building and digital commerce.
A sign of how important this topic is came in Gartner’s annual CMO Spend Study 2021. The research showed optimisation of digital commerce is the number one priority in terms of allocating the marketing budget (12.3% of budgets, on average). This is followed by marketing operations (11.9%) and brand strategy (11.3%).
Not only are the platforms evolving their capabilities quickly, there is a growing array of agency and vendor services available to help marketers navigate these areas. In the Marketer’s Toolkit survey, 78% expect to spend more on e-commerce; 75% on social commerce.
But few marketers feel they’ve got it right. Recent research by the World Federation of Advertisers, in conjunction with Ebiquity, found not one of 52 global media leaders interviewed was “very satisfied” with their current capabilities in e-commerce.
Some of this dissatisfaction may reflect the fact that only 28% of media and marketing teams own the budgets for shoppable media formats. Anecdotal reports suggest marketing and e-commerce teams remain separate in many businesses – but budgets increasingly need to be aligned.
“Org structures should be completely blown up and re-thought for the reality we have today”, argues John Denny, VP, E-commerce and Digital Marketing at CAVU Venture Partners. “In the most advanced organisations I see, the team is simply one group – all with advanced knowledge about every lever that can powerfully drive consumer behaviour.”
STRUCTURING FOR MARKETING EFFECTIVENESS IN AN ONLINE-TO-OFFLINE WORLD
There are two major challenges for 2022: getting to grips with a fast-changing commerce advertising landscape, and aligning teams internally to be effective.
KEY STEPIC DRIVERS
POLICY The imposition of lockdowns have forced consumers to flock to e-commerce sites, driving new purchase journeys and behaviours.
SOCIETY Increased time at home over the past two years has helped drive time online, including more time on e-commerce platforms.
INDUSTRY Accelerated digital transformation by brands has also been an enabler as is the growing awareness of changes in purchase journeys and the corresponding steps that brands must make to ensure engagement at key decision points.
RETAIL MEDIA MOVES BEYOND PERFORMANCE
The first point to note is that the platforms are investing heavily in broadening their ad offers. And, crucially, they are looking to broaden their ad offers away from a performance-dominated approach. Performance ads, particularly search, have been key to winning adspend from other channels. But some platforms have spied an opportunity to close the loop between brand advertising and purchase, driving a new phase of growth.
Amazon pushes hard: Adam Epstein, VP Growth at WARC’s sister company Perpetua, points to three developments marketers in Amazon-dominated markets should be aware of.
AMAZON ADVERTISING CAPABILITIES
Amazon’s ongoing attempts to build brand advertising opportunities through its existing video properties, plus acquisitions like MGM and licensing of major sporting events. A major advantage here is access to rich first-party data, especially given the impending death of the cookie.
AMAZON MARKETING CLOUD (AMC)
The continued roll-out of the Amazon Marketing Cloud – this is the clean room that allows brands to monitor whether people who have seen upper funnel ads then go on to interact further down the funnel and ultimately convert. This is potentially powerful but will require a lot of test-and-learn and further refinement in 2022.
A new product which allows brands to see whether consumers who have awareness of a brand then go on to spend more with it. This and AMC are designed to prove that brand and response work together – and that Amazon is the place you can do both and measure the outcome. To this end, some early adopter advertisers are testing an 'always on' OTT strategy within Amazon properties.
It is telling that Amazon has launched a B2B campaign to tell advertisers about its brand-building potential. And anecdotal reports suggest Amazon's sales people are all now incentivised on selling upper funnel.
OTHER PLATFORMS ARE ON THE SAME TRACK
Walmart doesn't have video but is partnering with Trade Desk to access its inventory, and has the added benefit of being able to combine with in-store. Meanwhile, the push by social platforms such as Facebook and TikTok into commerce promises to build the same combinations from a different starting point.
ASIA IS ALREADY THERE
These trends are also advanced in markets like Southeast Asia, where platforms like Shopee present themselves as entertainment as well as shopping destinations. Chinese platforms already successfully combine social and commerce elements.
REALIGNMENT OF TEAMS AS COMMERCE AND BRAND MOVE CLOSER
The collision of brand and e-commerce is causing organisations to reassess internal structures – particularly where e-commerce and marketing have sat in different functions. This tension is particularly clear in the allocation of budget. What might have been considered trade or shopper marketing in the offline space (for example, in-store placement) is in the online space being funded by the marketing budget. In some cases this is what Dr Grace Kite has referred to as “online rent” – investment that does not drive incremental sales, but enables consumers to find brands they may be looking for anyway.
Interviews with senior marketers reveal that alignment of strategy and metrics across brand and e-commerce teams is a key theme. For example:
- Pernod Ricard: Invested heavily in digital commerce and is now keen to speak with a single voice. It has introduced a “media to shelf” approach that looks to join the dots
- Kimberly-Clark: Drawing lessons from China on how to use data from commerce platforms to inform awareness and consideration work as well as conversion and retention
- Cadbury: Building “fully integrated solutions” within Amazon
- Ford: Increasingly looking at customer lifetime value, with e-commerce options becoming part of a broader customer relationship that stretches years beyond the purchase
- Yum! Brands: Has developed the Sales Overnight/Brands Over time (SOBO) approach, where it makes longer-term brand building a major initiative, and then looks at Sales Overnight as activating the resulting awareness
Some brands are already reconfiguring team structures to break pre-existing silos and ensure joined up thinking. Hershey moved early on this in 2020, attempting to merge marketing and e-commerce teams to avoid the doubling up of promotions.
For many, it’s still early days when it comes to playing in the digital commerce space, but a sizeable proportion of marketers are already rethinking team structures. The Marketer’s Toolkit survey shows one quarter of respondents are merging e-commerce and digital branding teams.
While there’s not a one-size-fits all approach to winning in today’s media and marketing landscape, an integrated approach is beneficial. It will help join up thinking across teams, clarify accountability and optimise budget allocation. In addition, it should help facilitate knowledge-sharing across e-commerce and branding, ultimately ensuring an improved customer experience.
UNDERSTAND THE CONNECTIONS
One reason marketers are looking to join the dots between brand building and digital commerce is that buying behaviour is affected by what happens offline. For example, TV has long been known to drive search or traffic to online destinations.
An omnichannel health retailer studied by Analytic Partners found that TV was actually a stronger driver of website traffic than store traffic. One explanation for this is that TV viewing tends to be done alongside a smartphone, an increasingly important channel for e-commerce transactions. This hybrid channel usage behaviour links brand communication and e-commerce, making it more important for teams and skill sets to also be integrated.
Source: Analytic Partners, featured in ‘Do you need online ads to drive online sales?’
KFC ARABIA: SHIFT+K+F+C
ADVERTISER Yum! Brands/KFC Arabia
MARKET Middle East & North Africa
KFC, the quick service restaurant, wanted to drive e-commerce sales with gamers in Saudi Arabia.
The challenge was to do this in a non-disruptive way, to minimise interruption to the game. KFC found an innovative way to engage gamers through Shift+K+F+C, a cheat code that was programmed directly into its e-commerce website, to accelerate the online ordering process.
Created just for gamers, this code would unlock a unique menu tailor-made to gamers' needs. The menu contained options that were quick to eat, not messy, convenient, and in line with the habits of immersed gamers. The campaign was promoted solely through Twitch and gaming influencers, including Bandarita, RealFeras, 3Gaming and Meshael MR.
- The campaign triggered a 45% sales uplift.
- It resulted in 102k new sessions from new users.
- Website visits grew 58%.
- Know your audience. Develop a deep knowledge of your audience’s world, culture and need states.
- Focus on the customer experience. Make the online ordering process as seamless as possible. Look for ways in which you can make your customers’ lives easier and deliver an optimum brand experience.
- Tap relevant influencers. When targeting a specific community, leveraging its influencers can help you gain credibility.
THE CMO VIEW
"My view is the sooner we can think of these as an integrated strategy, and architect the path to purchase, the better we'll be at both brand building and conversion, so it's not an either or for us."
PAM FORBUS Chief Marketing Officer, Pernod Ricard North America
"How do we leverage and use [e-commerce] in an innovative and meaningful way to delight consumers? Using it as a tool to provide an entertainment and shopping experience and as a platform for us to build our brand equity, versus just selling, has been a key task that we've been working on."
GAYOON JUNG Vice-President Brand Design & Innovation, Global SK-II
"As our cars are more and more connected, the way that we think about e-commerce shifts pretty dramatically, because it's not just about the purchase at that point; it's about the lifelong relationship that we're going to build with a customer that really creates more everyday interactions."
SUZY DEERING Global Chief Marketing Officer, Ford
THE TRENDS CONNECTING COMMERCE AND CONTENT PROMISE A NEW DEGREE OF INSIGHT INTO THE WAYS BRAND BUILDING AND PERFORMANCE MARKETING WORK TOGETHER WITHIN A CLOSED ECOSYSTEM
But there is a lot of refinement to come in 2022. Brands with heavy exposure to digital commerce should be looking for opportunities to test and learn as new products enter the market.
ONE OF THE KEY AREAS FOR EXPLORATION IS THE BEHAVIOUR OF CONSUMERS EXPOSED TO BRAND ADVERTISING – FROM INTERACTING WITH OTHER BRAND CONTENT TO MAKING PURCHASES
It will, of course, also be important to factor in external activity from outside the ecosystem, and to consider the impact of the brand work over months rather than hours.
A SILOED APPROACH WILL MISS IMPORTANT CONNECTIONS
While there are many ways to structure brand and e-commerce teams, it will be vital to remove silos so that brand teams gain real understanding of the platforms, and e-commerce teams understand the impact of brand within purchase journeys. This will, in turn, help shape better customer experiences.