According to a just released report from Jupiter Research, by 2007 5% of all retail sales will be transacted via the Internet. While this is no doubt a striking figure in and of itself, far more striking is another figure from this same report: By 2007 30% of all offline retail purchasing decisions will be influenced by information found on the Internet.
The contrast between these two pieces of data is stark. Even four years hence into the maturation of the Internet as a medium, six times the number of retail purchases will be driven through other channels by the Internet than will be transacted on the Internet itself.
In these numbers is an critical insight for the marketer: Marketing on the Internet for the foreseeable future will remain principally about getting the right information to the consumer, at the right time, and in just the form that will enable the consumer to move one step further along in the purchase consideration process.
Companies that successfully fulfill on consumer demands for the right information in the right form, will be rewarded with increased brand stature and market share. Companies that do not, will be placed in a precarious position, indeed
For better or worse, a company’s principal conduit for fulfilling on these demands for information (not to mention accompanying transactional demands) remains the company web site. It is little understatement to say, therefore, that it is generally a company’s web site, and not its online marketing campaigns, that is its greatest Internet brand marketing asset.
In this second release from our strategy roundtable discussion with three of the world’s foremost online marketing analysts, Forrester Research’s Jim Nail, eMarketer’s David Hallerman, and Jupiter Research’s Rudy Grahn discuss these issues, and more broadly the evolving role of the web site in the overall marketing mix, in greater detail. As in Part I of this roundtable discussion, the objective here again is to unearth emerging strategic opportunities for the marketer.
The analysts at a glance
Jim Nail, Senior Analyst, Forrester Research: Nail covers Internet marketing and advertising for Forrester Research, where his current research focuses on the role of the Internet in the overall media mix. Nail’s other areas of expertise include ad serving, targeting and tracking technologies, advertising formats, promotional tools, and email and media strategy.
David Hallerman, Senior Marketing Analyst, eMarketer: Hallerman is responsible for eMarketer’s widely-discussed annual Online Advertising report, which details the growth of the online advertising industry, emerging issues in the space, and the continuing convergence of online and offline marketing channels.
Rudy Grahn, Senior Analyst, Jupiter Research: Grahn covers online advertising for Jupiter Research, where he is a featured speaker at Jupiter’s annual Jupiter/IAB Online Advertising Forum, and focuses on online campaign measurement, analysis, and optimization, data management, and media buying and planning.
avant|marketer: In the last year or two it would appear that there has been a renewed focus on the company web site - with notions such as experience design and site usability coming very much into vogue. How is the role of the company web site going to evolve vis-à-vis the overall Internet brand marketing mix? Where are the strategic opportunities for companies in this area?
Rudy Grahn (Jupiter Research): I hate to be a crank, but I’m nowhere near as optimistic about the maturation of site analytics as your question perhaps suggests one might be. The entire field of experience design and usability is still something the IT department does. As long as this is true, we’re going to be locked in a time warp.
Web sites are marketing tools, first and foremost. What is the average conversion rate of a commerce site? It’s picayune. On average, eCommerce web sites fail to convert well over 90% of their visitors - a staggering number. Imagine any other “store” staying open with those numbers! This means either that the value of the web site to the actual visitor is not transactional in nature, or that everything we are doing is completely wrong. I believe that the former is much more likely.
Ultimately the expectations of a company web site must become aligned with marketing metrics as defined by marketing departments, not technical metrics as defined by IT departments. How a viewer arrives at a site, and what they view must be elevated in our optimization paradigm to the same level of when they “convert” online and what they “convert” to. This is where the value is actually being created.
In my view, the real opportunity is in understanding, above all, how web sites are creating ... yes, here we go again ... awareness and purchase intent. These are softer, more attitudinal metrics - metrics of feeling and attitude. Until we figure out how to make observed online behavior a strong indicator of attitude, the marketing folks will be forced to continue reading the tealeaves. Optimization of site performance still has to be perfected as a function of optimizing the attitude of the consumer - designers do this for a living; programmers, considerably less so.
The fact is, until a consumer buys, the marketer is still tasked with persuading them to buy ... the marketer still has to employ marketing. Most web site usage by the consumer is done to set up future purchase, most often in a different channel. Site analytics as practiced today is a process of reconfiguring store layout [to increase the chances for an immediate conversion]. This has some impact to be sure, but it isn’t how demand is generated at scale, and is not reflective of how most of the product demand that is being generated by a web site gets cashed out by companies. That is what marketing is for. And, that is what web sites should be for.
I would say we’re there the day the IT team needs an “o.k.” from marketing to make a few changes to the site.
Jim Nail (Forrester Research): First off, I’d take exception to one assumption implicit in the question we’re talking about here ... the role of the web site in “the overall brand marketing mix.” Why limit the web site to the Internet branding? After search engines, most people find out about URLs from offline media so the question for the marketer should really be: What role does the web site play in the awareness/consideration/preference/purchase/loyalty path that the consumer travels.
I think Rudy is right ... the key here is really consideration and preference. This is critical for every product and brand. Some products are able to go beyond that to the purchase, but the direct sales potential is entirely dependent on the nature of the product and existing distribution channels.
That said, the web site must be viewed as a critical piece of the brand marketing mix, as well. What has to be realized about the role of the web site in the marketing mix is that whether or not they can buy the product on the site, the consumer is going to leave with a different impression of the brand than the one they get from an ad. The ad sets up an expectation and the brand embodies a promise. And, the experience on the site either reinforces or refutes that promise. If the consumer finds the information he is looking for easily, the brand is good. If the site is a mess, the brand is a dud.
This is easier said than done. For the past year I’ve been exploring how it might be possible to take technical measurement like pages viewed and time spent on a site and turn them into something meaningful about the attitude the consumer comes away with? And, I’m not sure you can. For instance, a lot of pageviews by itself doesn’t tell you whether the consumer was really interested or flailing around without getting what he came for.
What other actions - opting-in to an email list, search for a nearby store, requesting a white paper, and so on - say about the impact of visit on the visitor? This is better, but still falls a bit short of defining where the consumer was in his purchase process at the beginning of the session versus where he ended.
Forrester is a big proponent of experience design and Rudy is right on saying marketing should own it, not IT. Marketing is rooted in understanding consumer needs, motivations, and hot buttons, and experience design is a very powerful way of unearthing these critical insights.
avant|marketer: If we take the suggestion seriously that web sites are best utilized as vehicles to market to the consumer in the attempt to spur purchases in other, non-Web channels, what should a company’s web site - say, Ford Motor’s or even Wal-Mart’s web site - look like? What features should such a site have? Are companies such as Ford and Wal-Mart to revert back to the much maligned age of brochureware?
David Hallerman (eMarketer): We shouldn’t force the Internet into a pigeonhole. Even when you throw out all the old “best thing since sliced and toasted and buttered bread” hype about the Internet, it’s still the most flexible marketing medium out there.
From the marketer’s point of view, that means don’t limit your web site goals only to direct response or branding or information or sales or customer service or data gathering. “All the above” is generally the best course of action.
Obviously, most manufacturers of expensive goods, such as automobiles but even down to televisions, are usually not going after the direct sale on their company web sites. Perhaps first impressions weren’t really all wrong, and that original web site use as company brochureware got to the core of what consumers want: information. If you look at research from the Pew Internet & American Life Project you see that getting information is the most popular online activity among Americans. Jupiter puts it third after e-mail and using search engines. And DoubleClick says that next to permission-based e-mail, company web sites are the main way people find out about new products, services, and promotions.
So when web sites make it easy for consumers to find information about specific products, to find out about the company and how it operates, to find more about buying the product (no matter what the channel), that company ingratiates itself with the consumer.
Helping customers creates loyalty, and on the web, making it easy for customers to get info is a big-time help. Simple, clear, attractive web site design makes that easy. Blend that with copious amounts of information to make it good. Giving people the type of information, such as interactive and deep information they can’t get from TV or Radio or Print, can make the web site invaluable to the customer. This all sounds simple and obvious, but too many company web sites are more focused on flash than the basics. As Rudy said, web sites will become full-fledged marketing tools the day IT needs to get permission first before making changes.
A large retailer like a Wal-Mart might also use its web site in parallel tracks. That is, give the customer information about specific products and special deals, let the customer buy online if he or she prefers, and help the customer if the shopping decision moves in the offline direction. That help might include elements such as letting the customer reserve an item online-say a popular, on-sale item-and then pick it up at the store, wrapped and ready to go.
What companies need to remember is that consumers don’t separate the company’s online presence from its operations in other channels. In fact, the greater the integration and cross-elements, the greater the customer satisfaction. Okay, this is just one personal, subjective example…but I love the way I can buy Patagonia clothing off the company’s web site or phone in the order or buy it from a third-party retailer, and then, after I receive it or bring it home, if I don’t like it, I can just drop by the company store to return or exchange it. Seamless integration works!
Rudy Grahn (Jupiter Research): David has it completely right, and, in fact, what he’s saying should be very easy for marketers to integrate into a practice. Stop thinking like a marketer and start thinking like a human being. The reason seamless integration works is because no consumer spends time pondering concepts like “interactive brand proposition” or “multi-channel distribution” ... and why would they, anyway? Transactions are a series of events in which expectations are either met or unmet, regardless of the channel. You quantify it by asking people if their expectations were met or not. Online, you observe their behavior for insight as to which direction things are heading, or to find out where simply asking doesn’t give you enough information.
I would be appalled if WalMart.com were a flashy, super-expensive looking site; it would seem antithetical to their entire “Wal-Mart keeps prices low” proposition. I would be similarly appalled if Absolut.com were Spartan and functional; that site had better be razor sharp. Everything flows from the value the consumer perceives in the brand. A marketer that understands what consumers expect of their brand will have enough information to know what their site should look like. They will also know where the consumer ultimately consummates the transactions the site generates. Consumers are telling marketers everything they need to know; it is marketers that need to know what to ask, and how to listen.
avant|marketer: What does a view of the web site as a multi-channel marketing tool say about the endeavor of Web analytics? It’s typical today to see site analytics initiatives heavily focused on transactional metrics such as conversion-to-sales ratios. Are these initiatives fundamentally misguided? Are they too one-sided? And more importantly, what should site analytics efforts be focused on doing, anyway? Rudy, I believe you touched on this issue a bit earlier.
Rudy Grahn (Jupiter Research): When I’ve approached this question in research, it has been easiest to think of analytics within a “hierarchy of needs”. At the bottom are the necessities of technically competent content delivery, transactions, and navigation. Mid-level is the need for the site to drive internet-centric business objectives: does it adequately portray the brand online, does its architecture facilitate the desired online behavior, and so on? At the top, and what defines a truly mature analytics practice, would be a focus on how the site impacts behavior in all channels. What is the enterprise-level value of a web site? And, as I’ve said, I’m finding less and less reason to believe it is transactional over everything else.
What is a good site conversion rate? 4-5%? What is the other 95% of the traffic doing? The way site analytics are currently set up, you would think it doesn’t matter. To the contrary, I think there is every reason to believe that the other 95% of traffic that a web site receives generates the marketer more revenue than the transactional revenue it generates.
The focus of site analytics must become such that sites are optimized to increase purchase intent, in whatever channel it happens to come. Yes, deliver content. Yes do transactions correctly. But optimize your presence to influence all revenue, not just online revenue. This is a marketing construct: awareness, interest, intent. Stop optimizing the checkout lane, start optimizing the store.
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