For more than 15 years — since the dawn of the Internet, really — display advertising has held promise, but it has often underperformed with boring, static banner ads whose value diminished greatly as consumers became trained to ignore them. Today, innovative technologies are pumping new life into display advertising and helping e-commerce brands profit by turning this medium into a finely tuned, money-making channel.
At the center of this transformation lies an asset that online retailers already possess but few understand and even fewer use: their own customer data. By harnessing the power of this data and applying it to their display advertising efforts, retailers can turn a once poorly performing channel into a profitable, scalable and precise marketing tool, capable of delivering proven incremental revenue.
Uncovering Data Clues Online
Simply put, using their own customer data, online retailers can more effectively and efficiently reach their most promising prospects. By breaking down and analyzing this data, retailers can gain valuable information about otherwise anonymous online visitors, including their product interests, their buying frequency, and their shopping tendencies and patterns.
A deep level of understanding about their online customers can give retailers insights similar to those a brick-and-mortar storeowner might have. Think about it from a traditional storekeeper’s perspective: When a shopper walks into a store, the owner immediately receives visual data and can make real-time judgments about that person’s shopping tendencies and the likelihood of making the sale.
The owner can deduce the shopper’s age, gender, general affluence and interests. If the customer is carrying other shopping bags, the owner also has an idea of what items the customer has already purchased and can address the customer accordingly.
Similar signals are available online, where the bag-carrying shoppers are represented by anonymous cookies — but these signals are hidden in a flood of Web analytics data. Understanding this data is the cornerstone to a successful display advertising program.
Why Aren’t More Retailers Using Their Data?
Early on, Amazon perfected the art of tying customer data to valuable features, such as product recommendations and merchandising.
Behind Amazon’s efforts are deep investments in technology and large engineering teams that created the infrastructure necessary to process the immense amounts of data Amazon collects.
Many online retailers, even the largest brands out there, don’t have this luxury. It’s simply too complicated and too expensive to gather, store, interpret and plug that data into their marketing efforts.
Instead, this valuable data typically sits idly in a dusty server because retailers simply don’t have the resources or know-how to make sense of it.
Mining for Data Gold
On average, less than 5 percent of an online retailer’s shoppers make a purchase. These shoppers are the lifeblood of online sales, but what about the 95 percent of shoppers who don’t buy? Could they be as valuable as their purchasing counterparts? In many ways, they are.
The signals these abandoning shoppers leave behind can be collected and used in highly effective marketing efforts, provided retailers can make sense of this data gold mine. The challenge is that most retailers cannot crack the data code on their own.
Fortunately, powerful new data management technologies can help online retailers uncover and make this information usable, allowing online retailers to know and interact with their customers even more personally than a store owner on Main Street.
Data-focused technology vendors can handle all of the heavy lifting, from relevant product recommendations that enhance the on-site experience, to display ad retargeting, a tactic that returns attractive abandoning shoppers to a retailer’s site to drive incremental purchases.
Retargeting campaigns, driven by a solid understanding of customer data, can cut through the noise online and allow retailers to focus on their highest potential shoppers, without wasting money or effort on prospects who simply aren’t likely to purchase.
Display Regains Its Sheen
Thanks in part to retargeting, display advertising is seeing a resurgence in growth. The biggest names in online advertising, from Google to Facebook, expect to substantially increase display revenues during 2011.
Powered by real customer data, display advertising has become an extremely profitable channel for retail brands with an online store. These modern ads are dynamic and personalized to each shopper, allowing retailers to engage with “ready-to-buy” consumers in an effective format — in much the same way a bricks-and-mortar shopkeeper would.
Timely and incredibly relevant ads yield dramatically higher click-through rates and ultimately greater profits for merchants.
In the past, only the largest online retailers with the biggest budgets were able to filter and effectively use customer data in their display ad programs. Now, the era of customer data is bringing big, positive changes to display, and today’s retailers don’t have to go it alone.
Data-focused technology vendors in the display ads space have turned what was once a data headache into a data opportunity, allowing retailers to vastly increase the IQ of their display advertising campaigns and more intelligently and selectively reach their most promising shoppers — wherever they are on the Web.