Author: Marco Belmondo (Chief Marketing Officer at Datrix group)
How to drive new revenue stream from advertising
«Only 1.7% of the traffic on retail digital channels ends in a purchase» (source: E-commerce KPI benchmarks 2019 – Wolfgang Digital). By creating a media business and selling ad inventory, online Retailers can turn the remaining 98.3% of the traffic into revenue to complement their core businesses.
Following the eye-opening example of Amazon (third-largest advertising company with a boom of $14 billion of ad revenue in 2019, +40% vs 2018), online Retailers can acquire a new source of revenue by monetizing the data of their non buyer users’ audiences on the advertising market.
During the Coronavirus period, a sense of trust, familiarity and gratitude for the digital world, including online Retailers, is maturing at all levels, which we know will settle down and never go away.
Some Retailers can perceive on-site advertising as a possible threat to their primary revenue source. But they can overcome the fear of cannibalization showing advertising only in the areas of the website with less impacts on the process of conversion and purchasing and, in any case, to users with lower intent-to-buy. Now this is possible thanks to the use of AI technologies to predict customer behavior.
Third party advertising will be shown only in specific positions and certain sections of the website, such as product category page, marketplace page, product page (under the descriptions), search results page. The ads won’t be displayed neither in home page nor in the shopping cart.
Ads inventory will be sold to premium Advertisers in Private Deals to ensure brand safety and to block websites that can harm the core business (competitors, unethical companies, etc.)
In many cases, relevant ads can improve the experience for shoppers and enable Retailers to build a separate ad sales business. Here some examples related to large-scale Retailers:
- they can sell online ads to suppliers/business partners (eg. an online grocery store to CPG companies, an online retailer of consumer electronics to manufacturers)
- they can sell hyper profiled and non conventional audiences that match specific interests collected from navigation behaviors;
- they can engage offline customers through mobile push potifications of specific products as they get in the physical store;
- they can display online ads of complementary products and services they don’t sell. For example, people shopping for flights to tropical destinations could benefit from discounted swimsuits or sunscreens.
Thanks to DataLit.AI ad network technology, Retailers can leverage their own data by segmenting automatically users into clusters with similar characteristics. These valuable clusters represent a unique opportunity for Advertisers to reach an hyper-targeted new audience that interacts and shows preferences both in the physical and digital world.
Advertisers are looking for:
- digital properties that qualify the user from a geo-local standpoint to target areas where they have a stronger business presence
- audiences profiled on the basis of interests, specific content and readiness to make the purchase
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho. Its performance media platform is delivering as high as 2X return on ad spend compared to Nielsen benchmarks for CPGs. The platform gives brands access to proprietary shopper data to target shoppers on digital channels and drive sales across the retailer’s network for more than 2,300 stores in 35 US states. The ability to connect in-store purchases with digital marketing allows CPG companies to enhance campaigns by delivering messaging based on in-store purchases and better measure the returns on these investments. In an era when CPGs are shifting online marketing budgets to Amazon, the ability to target in-store traffic in more effective ways could also help grocery retailers drive physical sales.
Also other grocery giants like Walmart, Target and Kroger have invested in building an audience activation platform on their first-party data to attract ad dollars.
Retailers have the opportunity to create seamless, frictionless advertising experiences that allow the consumer to go from engagement directly to transaction. DataLit.AI technology and services are ready to deliver to Retailers new income stream from the sale of online advertising to premium Advertisers. Because Intelligence drives Revenue.