Search engines have been spotlighted as key entry points for brands and retailers to engage with ready-to-buy-consumers.
Now, Google is making the search experience more relevant and retail friendly with its Google Shopping Product Listing Ads (PLAs). Social media juggernaut Facebook also is venturing more into the paid advertising space.
So what does this mean for retailers trying to optimize their paid advertising spend without inundating consumers? In the below Q&A, Bob Buch, CEO of SocialWire, shares his thoughts on the paid advertising space. SocialWire works with retailers and ecommerce companies to make social advertising as effective as Google AdWords.
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Retail TouchPoints (RTP): Based on your extensive experience in the digital advertising space, how has the space evolved over the past few years?
Buch: Automation is the key underlying theme for the last several years in both search and display marketing. Google released PLAs, which, like SocialWire, takes retail catalogs and converts them into image ads within Google for specific products. This has been massively successful for retailers, and therefore for Google, in the last year and a half. Display used to be dominated by a few large players like Yahoo, AOL and Microsoft. But the rise of programmatic advertising has enabled any publisher to join an exchange and monetize its audience much more efficiently.
For retailers, most relevant in display is the rise of retargeting. It can be jarring for users from a privacy perspective, but there is no denying that it is highly effective at closing the deal once the customer has expressed intent to buy. When done correctly, both PLAs and retargeters are essential elements of the marketing mix for retailers.
RTP: What trends do you believe are going to emerge during 2014?
Buch: Facebook became an important part of the marketing mix for retail and direct response in 2013. Some retailers are spending north of $20 million per year doing direct response on Facebook, and those budgets will increase in 2014. Twitter will be ramping up its efforts in direct response this year, as well. So if you are already doing direct response on Facebook, by mid-year it’ll be time to give Twitter a look.
RTP: What should retailers keep in mind about Facebook’s advertising opportunities?
Buch: Custom Audiences is the big story for Facebook. If you are a retailer and you’re not using Custom Audiences, you are leaving profitable revenue on the table. We are seeing it work across the board for our clients, seeing returns that look more like branded search ROI. Sponsored Stories was always limited in scale in that there simply weren’t enough users choosing to organically share the things they purchased. The only way to get volume was to use spammy practices of sharing things without the user explicit agreement to share. For this reason, Facebook shut down the whole program, making it more difficult to do implicit sharing, and then shutting down Sponsored Stories because the volume wasn’t there to support it.
RTP: Will Facebook be a key advertising channel for retailers moving forward?
Buch: I believe Facebook has the potential to be the leader in transforming display advertising on the web and mobile. I could see a future where Facebook lets advertisers use Facebook data to reach customers off-network (outside of Facebook). The company is already testing this with a few mobile partners. Facebook has a serious advantage in mobile because its users are logged in on both desktop and mobile, which enables them to understand identity in a stronger way than traditional display ads, which have always had trouble matching the same user across devices. If Facebook plays its hand right, it could fundamentally change the way marketers buy display media, and this could spell trouble for the incumbents of the traditional display space.
RTP: What potential do Twitter, Pinterest and Instagram have in terms of digital advertising?
Buch: Of these platforms, Twitter is the closest to having a useful offering to retailers — they will have it this year. Pinterest and Instagram are still in the stage of being useful as organic traffic drivers. It’s a good opportunity to take advantage while it lasts because we’ve all seen this movie before. They will eventually shut those doors and direct everyone through the paid door. This isn’t a bad thing — paid advertising offers much more predictability and scale. Pinterest and Instagram are testing ad formats, but will not likely have anything useful at scale for the next six months at least, and even then they’ll likely want to partner with only the largest brands and retailers as they continue to test.
RTP: What role does social advertising play in search performance?
Buch: Some of our customers used to have the mentality that Facebook would never be as useful as Google because its users don’t have intent to buy when they visit the site. What they’ve learned this last year is that while the intent part may be true, Facebook is in some ways better than Google because it offers an opportunity to actually sell a customer on a product — not just fulfill demand that already existed as Google tends to do. The savvy marketers are using Facebook to create demand, and letting it trickle down to Google to fulfill the demand that flows in later during the consideration cycle. The key is being able to attribute purchases more precisely. If you only look at last-click, you may not be giving social enough credit for the demand it is creating, and you may be giving Google or retargeters too much credit for doing fulfillment that would have happened anyway.
RTP: What final tips or best practices can you provide to retailers?
Buch: As a baseline you should be using Facebook Custom Audiences, Google PLAs, retargeting using Facebook Exchange (FBX), and you should be thinking about your marketing strategy at the product level.
