Many of the brands we serve here at iProspect sell their products primarily via third-party retailers vs. directly on their own brand sites. It would be far more convenient for brands if people bought these products – from shampoo to televisions – directly from the brand sites because then brands would be able to measure advertising all the way to the shopping cart. However, driven by a desire for convenience, consumers usually shop at multi-category retailers like Walmart and Amazon. (Sorry, brand site owners!)
Based on this scenario, there is a lot of co-op advertising that takes place between brand and retailer. While such arrangements are definitely beneficial for brands, they also present a fair number of challenges. A recent survey that looked at some of the most common challenges identified managing brand consistency and proving value are both big challenges. Overcoming these kinds of challenges is one of the reasons we work so hard with retailers to prove results and also educate everyone involved about the marketing opportunities available in the digital world.
One such opportunity is the emerging auction-based merchandising space, which happens to address many of the challenges faced by brands attempting to make the most of co-op marketing. Not only do well-run co-op programs help improve placement, they also make it possible for brands to measure brand advertising budgets on products sold on retailers sites such as Best Buy, ToysRUs, Amazon, etc.
HookLogic, a leading auction-based merchandising platform, has recently announced a game-changing expansion to their HookLogic Exchange with a new offering called Drive to Retail.
Perfect product placement via auction-based merchandising is very effective for ensuring that when a potential customer is on a retailer’s site – Walmart.com, for example – the brand’s product is efficiently cross-sold or up sold. This tactic provides brands with placement that is the equivalent of valuable end-of-aisle/front-of-store advertising, and it delivers fantastic results. However, it has never been the perfect solution for brands that want to generate more in-store foot traffic or, in the world of auction-based merchandising, more visits to the online store.
What HookLogic has developed is a new way for brands to partner with retailers in order to help them get more digital ads out to potential and existing customers. Say, for example, that Walmart has a $1,000 campaign with the goal to bring a 1,000 new visits to a Dior perfume launch. If they were buying on a CPC basis, they would only be able to buy at a max CPC of $1.00. With the launch of Drive to Retail, HookLogic and retailers are unveiling that they have developed a way of working with marketing platforms like Facebook, Google, and Criteo to give brands – in this hypothetical example, Dior – the ability to top up the auction. So, the brand might contribute $0.40, which would then enable Walmart to spend $1.40, win far more auctions, and – ultimately – win more potential customers. In this scenario, everybody wins: the retailer is happy to have generated more traffic and the brand is happy because they have had to contribute only a fraction of what it would have cost to run their own campaign. Finally, the actual uplift and ROAS is available down to a SKU level.
Another benefit brands gain with this approach is the ability to influence which products the retailer advertises. Imagine Google Shopping scenario, for instance, in which Sony is advertising televisions. If someone typed in “latest TV,” a retailer like Best Buy might choose to show SKUs for which they had high inventory or margins. This might not, however, be aligned with Sony’s goal to promote and sell their a set featuring their latest advancement in TV technology. With HookLogic’s Drive to Retail, Sony could use the “top up” method to influence which SKU the retailer features, even though the retailer may not have chosen to promote an untested product.
Can we expect to see other auction-based merchandising platforms launching similar offerings to HookLogic’s Drive to Retail? Potentially, yes. Certainly, a retail giant like Amazon has the capability to do so, but since approximately 44%* of U.S.-based shoppers already start their consumer journey on Amazon, what incentive does the company have to offer that kind of product, particularly when you consider the data openness required? Amazon may be interested in exploring the option for isolated markets in which they are not dominant, but the time and transparency it takes to work with brands and media vendors like Facebook may dissuade them.
Whether other providers follow suit or not, one thing is for sure: HookLogic has such a strong network of retailers and are looking at the right advertising partners – Facebook for social, Google for paid search, and Criteo for display – that brands are bound to start testing this new tactic to see how it can help them influence e-commerce and retail more effectively with smaller marketing budgets than usual.