We all know, it’s no secret.Amazon has come to disrupt budgets, raise expectations on conversion rates, and call attention to the quality of what we get for a “click.” (Massive amounts of first-party data is a heck of thing, isn’t it?) So, instead of rehashing what we already know about the size of the impact to date, let’s pull back a few more levels and take a bigger picture look at:
- What this means.
- Who is joining the party.
- What you should think about as we head into 2020.
Remember, advertising is second (and sometimes third or fourth) to selling on the marketplace in revenue generation.The revenues that a marketplace pulls in from advertising dollars is a fraction of what they pull in from seller fees (category commission rates, ranging from 5%-20% and sometimes as high as 40% of the sale) and store fees (monthly fee). Adding advertising revenue is pocket change, relatively speaking. They’re just trying to get you to spend a little more. So, when you think about investments in the platform, reporting capabilities and attribution, a search engine is highly incentivized to answer those questions and often provide those tools for free to keep you on the platform and searching versus a marketplace.
Advertising in Marketplaces:Examples – let’s take a look at a non-exhaustive list of marketplaces now offering self-service-ish advertising:
- Target (via Roundel) (select sellers)
- Kroger (via 8451)
The Return of Traditional Advertising:The current prediction (February 2019), according to eMarketer, is that traditional ad spending will drop slightly and digital will overtake traditional for the first time this year, ever. That being said, there are some new players to the traditional space we haven’t seen there before, specifically, startups and D2C brands that are looking for places and spaces to gain awareness and have been pushed out of the digital channels on price or saturation. So…cutting budgets from traditional advertising, maybe not a great idea. In fact, you might want to spend more.
Get Ahead of the Rise of Advertising on Marketplaces:I can’t tell you what to do exactly – or where to get the funds, that’s not how this works. I can only give you what is coming:
- More advertising options on marketplaces.
- More silos to break down.
1. Retail Readiness:This means being able to:
- Compete on pricing, multiple fulfillment centers (or staffing the one appropriately) inventory intelligence (in-stock, quantities and decrementing) in an automated fashion.
- Process returns, customer complaints, reviews and get those orders out the door. The new norm is two days.