In the past year, the retail industry has been one of many disrupted business sectors. Retailers have had to pivot their strategies to meet consumers’ changing behaviors and the omnichannel demands of customers in an increasingly digital economy.
With a growing emphasis on data-driven decisions, developing and deploying analytics solutions is helping marketers drive results across traffic and revenue, customer insights, and accomplishing goals. A key component of meeting these new priorities is understanding that there is no value in the “offline vs. online” mentality: omnichannel commerce is the new norm.
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The new omnichannel world
In the past year alone, we’ve seen the reliance of technology spike. From ordering groceries and buying clothing, to online learning and working from home, being constantly plugged in has led to the rise of “omnishopping.” Researching a product in one environment then purchasing in another is proving that siloed online and offline advertising is becoming increasingly complex and more difficult to manage.
To truly understand the omnichannel world, business leaders and marketers alike need to think, plan and measure holistically. This doesn’t mean B2C marketers need to spend money on every channel, but rather focus their efforts on how physical experiences and impressions can impact online shopping, how digital marketing impacts online and offline sales, and how macro factors like demographic and economic environments impact performance. This allows marketers to have a unified view of their business to better test and optimize spend and drive cross-channel sales growth.
When looking at the latest year versus 2019 and pre-COVID, we see some trends. Opportunities to grow through omnichannel efforts, given the acceleration of ecommerce, almost doubled in 2020 with an 87% increase YoY. Given the more limited human mobility of 2020 and increase in consumers spending time in their own homes, the rise in ecommerce is hardly a surprise, nor is it a flash-in-the-pan trend. The pandemic did not create new behavioral shifts, it simply accelerated those that already existed. In other words, people adapted to the world around them. Likewise, our philosophy is that for leaders to thrive, they need to continually adapt and evolve their strategies to be more holistic in this constantly changing world.
Importance of holistic view across tactics and channels
To better manage the consumer experience across touchpoints, marketers are streamlining their advertising technology and developing unique strategies to take more control. As consumer behavior shifts even more to online shopping, it’s important to recognize that online advertising channels are not the only tactics that drive online behavior.
We have seen consistently that media is a key driver for any omnichannel business, and that offline, physical store presence and online engagement are critical components of the consumer experience. These channels work together, rather than compete against one another. In fact, a combined physical and digital presence can help brands drive increased impact by 32%, according to our ROI Genome report.
Every new form of marketing will impact a business differently than previous tactics. This does not mean we cannot use accumulated knowledge to inform decisioning about new tactics and formats. Results vary from execution to execution, and the timing and audience and contextual relevance will impact performance. However, each of these concepts can be quantified and incorporated into another critical practice for success: scenario planning.
Scenario planning as a practice is built on a credible foundation of measurements of success, performance drivers and key considerations to support data-driven decisions. It allows business leaders to accurately consider what-if scenarios and a range of possible outcomes. By understanding what may unfold, it helps create better strategies to increase the odds of success. While historical performance is not a perfect prediction for the future, it is invaluable to help triangulate a range of likely outcomes, whether through AI or informed decisioning.
Without holistic measurement and strategies like scenario planning, brands have the potential to understate the impact of their marketing efforts. Brands measuring by individual channel, whether ecommerce or brick and mortar, without a holistic understanding of online and offline media are at danger of understating the impact of their efforts by roughly half. Some executions can also certainly overstate the role of marketing – simple example being last touch – which again highlights the importance of holistic measurement to understand direct, indirect and synergistic impacts onto different KPIs such as traffic, sales, and new customer acquisition.
There is an opportunity for brands to shift from seeking one-off wins to a more holistic performance mindset. To do this, brands should leverage a strategic framework for scenario planning incorporating online and offline drivers and impacts, internal and external forces, and risk and opportunity assumptions. Such a framework will support consistent growth.
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Adapting and evolving in order to thrive
As ecommerce grows, marketers are increasingly turning to new online media marketplaces like Amazon to reach shoppers as they learn about products and prepare to make purchases. So how do brands prioritize spend across these new online channels?
With consumer behavior trending further online partly due to the pandemic, Amazon is proving to be a smart place to put advertising dollars, delivering a 20% higher return on investment relative to a brand’s average marketing ROI. Importantly, a large percentage of the impact of this investment is outside of Amazon itself. Nearly half of the impact of display advertising on Amazon’s site is actually onto non-Amazon sales. This is also true for Amazon Search, where one-third of its impact falls outside of Amazon, on average. This highlights the critical importance of developing a clear understanding of how each channel impacts others in the ecosystem and having a holistic view of the relative importance of various marketing factors.
The case of cross-channel impact is not just true of Amazon. Given that all media, both offline and online, can impact both ecommerce and brick and mortar sales, it’s crucial to look at every channel investment within the context of the full picture.
In fact, one of our recent ROI Genome reports has shown that even in recent time periods, offline efforts are still often the primary drivers of online behavior. For example, a buyer may be exposed to a product through a traditional video advertisement, check out the product in-store, but ultimately decide to purchase it online through their mobile phone. Without a holistic view of traffic and sales channel impacts, a conversion that should be attributed to traditional TV may instead be wrongly attributed to Search. While it may be tempting for business leaders to think about marketing in siloes, consumers do not. Measuring across all channels helps marketers plan more effectively, and place budget and emphasis on the right tactics to get results.
Marketers must continue to test and iterate
Throughout the pandemic both offline physical store presence and online presence have continued to be critical components of the consumer experience. The retail landscape will continue to evolve in many ways beyond COVID-19, and as such it’s crucial that business leaders continue to adapt their strategies and focus for the ever-changing omnichannel journey.
While the world waits to return to a time of normalcy, smart marketers recognize there is no normal and should continue to keep testing and experimenting across channels to understand the role that new offerings can play. Iterative testing and experimentation, alongside a data-driven strategy and a strong comprehensive scenario planning framework, is the key to true omnichannel success.
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