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Ad spending strategies. How Google and
Amazon are changing the retailing game.
Why email (for now) trumps social media.
With strategic partner
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RETAIL MARKETING
THE FUTURE OF RETAIL,
ONLINE AND OFFLINE
Ad spending is growing again.
Data-driven marketing matters.
By Beth Snyder Bulik —
bbulik@adage.com
INSIDE
THE FUTURE OF RETAIL,
ONLINE AND OFFLINE
- Now you see it, now you buy it
- Amaz-ing Amazon
Charts:
- 25 largest retail advertisers
- Sales of the 10 largest
retail advertisers
- Largest department-store
advertisers
- Largest food-store advertisers
- Largest advertisers by category
- Retail ad spending by medium
- Retail ad spending by category
3
5
7
6
7
8
8
9
10
11
WHY RETAILERS AND SHOPPERS
LIKE PRODUCT LISTING ADS
12
Like trends in fashion, what’s old is new again in the world
of retail marketing.
Overall ad spending is up, particularly TV and digital.
Department store ad spending is on the rise. Couponing (albeit
digital) is growing. Customer service and engagement is more
important than ever. Even the Made in America pitches and downsized stores with smaller footprints feel like déjà vu all over again.
The economy—and retailing—are still in a comparatively slow
recovery from the 2007-2009 Great Recession. Retailing’s
rebound has not been easy.
Some elements of retail marketing aren’t coming back. The
rise of digital marketing has come with the fall of print. U.S.
measured-media spending in newspapers by retailers has tumbled 39% since its 2004 peak (based on spending in print editions
only), according to data from WPP’s Kantar Media. Overall newspaper advertising revenue last year was down 55% from its 2005
peak, according to the Newspaper Association of America.
“The downturn in the newspaper business has arguably hit the
retail sector harder than any other category because of the primacy
that newspaper had in retailers’ plans,” said Jon Swallen, chief
research officer at Kantar Media Ad Intelligence North America.
“Until five years ago, when the print industry really started eroding, print was a very integral part of retailers’ budgets and media
plans. Not only for the major national brands, but also for a lot of
the regional and local market retailers for whom TV was comparably less affordable.”
That has forced retail advertisers to do one of two things, Mr.
Swallen said: Sit by and do the same thing and get less and less
return, or adapt and make changes and spend money in other
places to reach your target audience. Fortunately for the industry,
Chart:
- Biggest users of Google’s
product listing ads
13
WIN THE WEEK, WIN THE WAR 14
50%
GROWTH IN RETAILER
DIGITAL-COUPON
PROMOTIONS IN 2012
OVER
$490
MILLION
WHAT MASS
RETAILERS SPENT
LAST YEAR ON
PAID SEARCH
SOURCE: KANTAR MEDIA
Chart:
- When retailers advertise
15
RETAILERS SPEND MORE,
BUT DO VIEWERS GET
THE MESSAGE?
16
Charts:
- How to measure commercial
reach and wearout
- TV campaign effectiveness
17
17
EMAIL VS. SOCIAL MEDIA
18
Ad Age DataCenter produced this research
report based on data from Kantar Media.
Retail Marketing was researched and
written by Beth Snyder Bulik, a freelance
writer and frequent Ad Age contributor.
Published Sept. 30, 2013.
This is one in a series of research reports
published by Advertising Age. To see
other Ad Age reports and download
additional copies of this one, go to
AdAge.com/trend-reports
This document and information contained therein are
the copyrighted property of Crain Communications
Inc. and Advertising Age (Copyright 2013) and are
for your personal, noncommercial use only. You
may not reproduce, display on a website, distribute,
sell or republish this document, or the information
contained therein, without the prior written consent
of Advertising Age. Copyright 2013 by Crain
Communications Inc. All rights reserved.
CONTINUED ON P. 5
ADVERTISING AGE
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CONTINUED FROM P. 3
many retailers took the latter strategy.
Some of the spending shift has benefited TV, and some went to
digital marketing (including, among other digital media, the online
editions of newspapers).
The number of retailer digital-coupon promotions, for instance,
grew by more than 50% from 2011 to 2012, according to Kantar
Media’s Marx, which tracks consumer promotions. Mass retailers’
paid-search spending topped $490 million in 2012, according to
AdGooroo, a digital-marketing research venture owned by
Kantar Media.
The denouement in the long-standing war of online retailers
versus traditional brick-and-mortar stores seems to have
arrived. Each side realizes neither one is going to disappear.
The new normal is a competitive online and offline market
where players cross platforms frequently and more easily.
Still, like most accords, this truce has had casualties. Offline
retailers such as Circuit City Stores and Borders Group disappeared, while Sears Holdings Corp. (Sears, Kmart) and J.C.
Penney Co. are shadows of their former selves.
“The competition between online and offline retailers has
been analogous to a pendulum swinging back and forth,” said
Mr. Swallen. “As online shopping became more established the
pendulum shifted in the direction of e-tailers. Traditional retailers adapted, consumer behavior continued to evolve, and now
the pendulum has moved back towards an equilibrium characterized by greater integration between online and offline retailing.”
The fight for consumer dollars may have lessened since the
recession, but the battle is far from over. The slow pace of economic recovery has created what the National Retail Federation
calls an “either/or” economy.
Consumers are spending again, but doing so more carefully.
Whether that means choosing either a new computer or a new
wardrobe for college students, or the choice between bulking
up the kids’ college fund or going on a Disney Cruise, consumers today aren’t generally doing both.
“It’s still a competition. Amazon still wants you to spend $25
with them instead of somebody else. And you’re only going to
spend that $25 with one or the other,” Mr. Swallen said.
Advertising and marketing spending strategies matter more
in that world. Social media, while still a nascent ad platform,
will become a more important tool as well as offer important
analytics into customer behavior.
Kantar Media, for instance, in August 2013 announced a
partnership with Twitter to develop analytics combining TV
and social-media data. New social media like fast-growing
Pinterest will continue to make waves and offer even more data.
The key for retailers lies in evaluating the media, the channels
and the consumers who use them to deliver the right message at
the optimal time and place to the correct target. Data-driven
thinking matters.
ADVERTISING AGE
NOW YOU SEE IT,NOW YOU BUY IT
Go online, then see what’s in store
While the rise of visual social media like Pinterest and
Instagram is changing the way retailers market, it’s also
driving an emerging consumer shopping trend: reverse
showrooming. People see and discover products they want
online, and they then go out to brick-and-mortar stores to
buy them.
This turns on its head the struggle retailers face with
showrooming, or the practice of customers using local
stores to examine products and then going online to price
shop and purchase.
Reverse showrooming is not an entirely new practice.
When it comes to larger purchases, or more expensive
apparel such as running shoes, consumers research
products online first and then go to the store to see, try
out and buy the goods.
For instance, Kantar’s Millward Brown Digital (formerly
Compete) found that although 59% of in-store shoppers
looked online for running shoes, 71% of them still
bought in-store.
The new twist is that visual social-media sites such as
Instagram (bought by Facebook in 2012) and Pinterest, and
to a certain extent social-media mainstays Facebook and
Twitter, encourage product discovery through pictures and
photographs.
Consumers stumble on products they want through
friends’ artful photos, original pins and repins. While those
products are sometimes linked to a store or direct-purchase
site, more often they are linked to a blog post or other editorial commentary.
Users do search and shop for those items online, but
they also are going to the physical stores. In part, that’s
because pins tend to be more creative and extensive than
just a single product photo.
It’s not just an image of a box of crayons, but a photograph of melted crayons made into wall art. You can buy
the crayons online of course, but you’ve also got to get
the canvas and blowtorch, so you might as well get them
all on a trip to the craft store.
Food and recipe pins, the most popular category, generally
require a trip to the grocery store.
“Shopping used to be confined to the store and its
store hours,” said Matt Pace, director of retail and consumer products at Millward Brown Digital. “Then with the
PC, it became confined to the time consumers had to sit
down at their desks and browse and shop. With mobile,
consumers could shop anywhere they wanted. Now the
store experience can be accessed anywhere.”
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25 LARGEST RETAIL ADVERTISERS
By 2012 U.S. measured-media spending in 18 media. Dollars in millions.
RANK
2012
RETAILER
HEADQUARTERS
1
Macy’s
Cincinnati
2
Walmart Stores
3
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
CATEGORY
$842.4
$839.6
0.3
Bentonville, Ark.
762.4
674.3
13.1
Mass merchandiser and food
Target Corp.
Minneapolis
671.9
700.8
-4.1
Mass merchandiser and food
4
Sears Holdings Corp.
Hoffman Estates, Ill.
642.0
666.3
-3.6
Department, mass merch.
5
J.C. Penney Co.
Plano, Texas
506.5
446.3
13.5
Department
6
Home Depot
Atlanta
470.5
490.5
-4.1
Home improvement
7
Lowe’s Cos.
Mooresville, N.C.
359.6
344.6
4.3
Home improvement
8
Kohl’s Corp.
Menomonee Falls, Wis.
356.4
332.7
7.1
Department
9
Best Buy Co.
Richfield, Minn.
342.0
374.5
-8.7
Electronics and appliances
10
Gap Inc.
San Francisco
340.2
302.3
12.5
Apparel
11
Walgreen Co.
Deerfield, Ill.
310.9
239.9
29.6
Drug
12
Amazon
Seattle
298.7
219.4
36.2
Web
13
Fry’s Electronics
San Jose, Calif.
247.9
217.5
14.0
Electronics and appliances
14
Signet Jewelers
Hamilton, Bermuda
214.8
216.3
-0.7
Jewelry
15
TJX Cos.
Framingham, Mass.
188.8
171.0
10.4
Discount
16
Rooms To Go
Seffner, Fla.
181.3
164.9
9.9
Furniture
17
Kroger Co.
Cincinnati
178.3
163.5
9.1
Food
18
Safeway
Pleasanton, Calif.
150.0
157.5
-4.8
Food
19
Ashley Furniture
Arcadia, Wis.
126.4
123.3
2.5
Furniture
20
Luxottica Group
Milan/Port Washington, N.Y.
124.6
124.3
0.2
Optical
21
Ikea International (Ingka Holding)
Leiden, Netherlands
121.2
102.2
18.6
Furniture
22
CVS Caremark Corp.
Woonsocket, R.I.
119.0
97.0
22.7
Drug
23
eBay
San Jose, Calif.
116.5
136.4
-14.6
Web
24
Toys R Us
Wayne, N.J.
112.3
119.6
-6.0
Toy
25
PetSmart
Phoenix
96.8
96.8
0.0
Pet
$7,881.5
$7,521.2
4.8
Total top 25
Department
Source: Ad Age DataCenter analysis of data from Kantar Media. Measured-media spending figures include 18 media from Kantar Media’s Stradegy, including network TV, spot TV, cable TV networks, syndicated TV,
Spanish-language network TV, local radio, national spot radio, network radio, magazine, Sunday magazine, local magazine, Spanish-language magazine, business publication, newspaper, national newspaper (New York
Times, USA Today, Wall Street Journal), Spanish-language newspaper, outdoor and internet display. Categories are designated by Ad Age. Figures shown include all advertising by parent company regardless of category.
6 · SEPTEMBER 30, 2013
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AMAZ-ING AMAZON: A STORE (AND A BIT MORE)
Amazon is the elephant in the dressing room when it
comes to retail.
It’s a huge retailer that doesn’t advertise and market like
most huge retailers. It doesn’t have a single physical store.
It sets market trends in supply-chain management, digitalrights management and shipping-delivery services.
Amazon is not only the largest online retailer in the
world, but a destination website, shopping search engine,
consumer-review site, consumer-electronics maker (Kindle),
media company selling online ads and a top provider of
cloud computing services. Not exactly breathing the same
air as Macy’s, Walmart or Target.
Amazon reported 2012 North American product and services
sales of $34.8 billion. The company last year had U.S. measuredmedia spending of $298.7 million, ranking it No. 12 among
retailers based on Kantar Media data (see P. 6).
If you isolate shopping data, Amazon’s singular status in
retail is quickly evident. Consider these stats from a 2013 joint
study by two WPP units—GroupM Next and Kantar Media’s
Compete (now Kantar’s Millward Brown Digital)—that show
Amazon’s shopping influence among digital consumers:
■ 37% of the time, Amazon starts a consumer down a path
that ends somewhere else.
■ 35% of the time, the consumer purchase path ends at
Amazon.
■ 22% of the time, a consumer starts and ends somewhere
else, but uses Amazon in the middle.
■ 6% of the time, Amazon is the only destination in the
consumer purchase path.
As noted in a joint report by Compete and GroupM: “Amazon
has joined Google as the two most important digital properties
in consumer purchase behavior. … When consumers go to
retailers, one out of every three goes to Amazon. On its way to
becoming the largest retail site, an interesting thing happened:
Amazon became a trusted source of research at all stages of the
conversion pathway.”
SALES OF THE 10 LARGEST RETAIL ADVERTISERS
Company’s U.S. retail sales. Company’s share of overall U.S. retail sales.
RANK
2012
RETAILER
1
Macy’s
$27.7
$26.4
4.9
2
Walmart Stores
330.9
318.0
4.1
11.5
11.5
3
Target Corp.
72.0
68.5
5.1
2.5
2.5
4
Sears Holdings Corp.
35.5
36.9
-3.8
1.2
1.3
5
J.C. Penney Co.
13.0
17.3
-24.8
0.5
0.6
6
Home Depot
66.4
62.4
6.3
2.3
2.3
7
Lowe’s Cos.
49.4
49.3
0.3
1.7
1.8
8
Kohl’s Corp.
19.3
18.8
2.5
0.7
0.7
9
Best Buy Co.
36.8
37.0
-0.4
1.3
1.3
Gap Inc.
12.2
11.4
7.3
0.4
0.4
663.2
645.9
2.7
23.0
23.4
$2,883.2
$2,759.4
4.5
100.0
100.0
10
U.S. RETAIL SALES (DOLLARS IN BILLIONS)
2012
2011
% CHG
Top 10
Industry total
1
SHARE OF U.S. RETAIL SALES
2012
2011
1.0%
1.0%
Source: Company financial filings; Census Bureau (U.S. retail sales); Ad Age DataCenter analysis. Numbers rounded. 1. Retail sales for the industry, from Census Bureau’s Monthly Retail Trade Survey,
for U.S. retail sales excluding motor vehicle and parts dealers, gas stations and fuel dealers.
ADVERTISING AGE
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10 LARGEST DEPARTMENT-STORE ADVERTISERS
By 2012 U.S. measured-media spending in 18 media. Dollars in millions. Excludes mass merchandisers, which are shown on P. 9.
RANK
2012
RETAILER
HEADQUARTERS
1
Macy’s
New York
2
JCPenney
3
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
PARENT
$761.0
$759.8
0.2
Plano, Texas
498.3
440.8
13.1
Kohl’s
Menomonee Falls, Wis.
354.6
329.5
7.6
4
Sears
Hoffman Estates, Ill.
326.6
344.8
-5.3
5
Dillard’s
Little Rock, Ark.
74.2
90.7
-18.2
Dillard’s
6
Bloomingdale’s
New York
72.3
71.6
1.0
Macy’s
7
Nordstrom
Seattle
40.1
36.4
10.2
Nordstrom
8
Neiman Marcus
Dallas
35.6
22.3
59.8
Neiman Marcus
9
Belk
Charlotte, N.C.
35.1
33.2
5.8
Boscov’s
Reading, Pa.
34.0
28.0
21.4
$2,231.8
$2,157.0
3.5
10
Total top 10
Macy’s
J.C. Penney Co.
Kohl’s Corp.
Sears Holdings Corp.
Belk
Boscov’s
10 LARGEST FOOD-STORE ADVERTISERS
By 2012 U.S. measured-media spending in 18 media. Dollars in millions.
RANK
2012
RETAILER
HEADQUARTERS
1
Kroger
Cincinnati
2
Safeway
3
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
PARENT
$101.3
$99.3
2.1
Pleasanton, Calif.
94.6
104.8
-9.7
Safeway
Publix
Lakeland, Fla.
61.2
61.7
-0.8
Publix Super Markets
4
Aldi
Batavia, Ill.
31.7
17.5
81.7
Aldi
5
SuperValu
Eden Prairie, Minn.
29.3
38.3
-23.3
6
Vons
Arcadia, Calif.
28.2
24.7
14.4
Safeway
7
ShopRite
Keasbey, N.J.
26.3
22.6
16.8
Wakefern Food Corp.
8
H-E-B
San Antonio
24.6
26.2
-6.0
HEB Grocery Co.
9
Wawa
Wawa, Pa.
23.6
17.6
33.8
Wawa
Albertsons
Boise, Idaho
21.7
20.7
4.7
$442.7
$433.2
2.2
10
Total top 10
Kroger Co.
SuperValu
Albertson’s LLC
Source: Ad Age DataCenter analysis of data from Kantar Media. Measured-media spending figures include 18 media from Kantar Media’s Stradegy; see P. 6. Categories are designated by Ad Age based on retailer’s
primary business. Figures shown include all measured advertising by the branded advertiser/retailer regardless of category. Some parent companies own multiple retailers.
8 · SEPTEMBER 30, 2013
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LARGEST ADVERTISERS IN OTHER RETAIL CATEGORIES
By 2012 U.S. measured-media spending in 18 media. Dollars in millions.
MASS MERCHANDISERS
RANK
2012
RETAILER
1
Walmart
2
3
APPAREL STORES
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
$621.7
10.9
1
Old Navy
Target
658.1
687.2
-4.2
2
Kmart
211.2
216.0
-2.2
3
Walgreens
2
CVS
3
Rite Aid
Best Buy
2
Fry’s Electronics
3
H.H.Gregg
RETAILER
1
Home Depot
2
Lowe’s
3
Harbor Freight Tools
1
RETAILER
1
Rooms To Go
2
3
79.4
78.6
1.0
T.J. Maxx
68.0
56.7
19.8
RANK
2012
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RETAILER
1
Kay Jewelers 2
105.1
91.5
14.9
2
Jared
47.1
45.9
2.6
3
Zales
2
$139.1
$147.9
-5.9
66.5
63.2
5.1
43.2
45.3
-4.7
SPORTING GOODS
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RANK
2012
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RETAILER
$314.9
$348.7
-9.7
1
Dick’s Sporting Goods
$81.7
$52.1
56.9
246.5
217.5
13.3
2
Big 5 Sporting Goods
62.1
66.0
-5.9
85.9
72.7
18.2
3
Bass Pro Shop
28.8
30.9
-6.7
OFFICE SUPPLIES
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RANK
2012
RETAILER
$461.6
$487.9
-5.4
1
Staples
351.7
339.7
3.5
2
Office Depot
65.3
66.8
-2.3
3
OfficeMax 3
FURNITURE STORES
RANK
2012
Burlington Coat Factory
30.5
HOME IMPROVEMENT STORES
RANK
2012
-9.0
$217.3
RETAILER
1
$221.5
$283.4
ELECTRONICS SUPERSTORES
RANK
2012
$201.5
JEWELRY STORES
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RETAILER
1
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RETAILER
$689.2
DRUG STORES
RANK
2012
RANK
2012
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
3
$87.0
$113.1
-23.1
59.6
46.1
29.4
31.8
24.6
29.7
PET SUPPLIES
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
RANK
2012
RETAILER
$181.3
$164.9
9.9
1
PetSmart
Ashley Furniture
123.8
121.7
1.7
2
Petco
Ikea
121.1
102.1
18.6
3
U.S. MEASURED-MEDIA SPENDING
2012
2011
% CHG
$93.5
$92.3
1.3
26.8
27.8
-3.6
PetMed Express/1-800-PetMeds 11.9
18.2
-34.5
Source: Ad Age DataCenter analysis of data from Kantar Media. Measured-media spending figures include 18 media from Kantar Media’s Stradegy; see P. 6. Categories are designated by Ad Age based on retailer’s
primary business. Figures shown include all measured advertising by the branded advertiser/retailer regardless of category. Some parent companies own multiple retailers. 1. Spending excludes Orchard Hardware
Supply, acquired in August 2013. 2. Signet Jewelers owns both Kay Jewelers and Jared. 3. Office Depot and OfficeMax in February 2013 announced merger; companies expect to complete merger by year-end 2013.
ADVERTISING AGE
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RETAIL AD SPENDING BY MEDIUM
How U.S. measured-media spending by retailers has changed over the past 10 years.
WHERE RETAILERS PUT THEIR MONEY IN MEASURED MEDIA
RETAIL AD SPENDING, 2012 VS. 2003
Spending has risen since 2007-2009 recession but is still below pre-downturn levels.
Newspapers get a smaller slice. Stores
spending more on cable TV networks.
$20 BILLION
Internet (display)
Magazine
Outdoor
Newspaper
Radio
Cable TV networks
Syndicated TV
Network TV
Spot TV
Outdoor
Radio
Internet (display)
6.97%
2.42%
10.59%
Syndicated TV
15
10.11%
26.44%
Spot TV
3.24%
2012
Retail spending
Network TV
$17.0 billion
Cable TV networks
10
12.65%
Newspaper
11.56%
16.01%
$7.4 BILLION
Retail ad spending
in newspapers
peaked in 2004.
5
$4.5 BILLION
1.58%
4.83%
8.57%
12.38%
Measured-media spending
by retailers in newspapers
has tumbled 39% since 2004.
1.33%
2003
Retail spending
Magazine
$18.3 billion
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: Ad Age DataCenter analysis of data from Kantar Media. Numbers rounded. Magazine includes consumer magazine,
business publication, Spanish-language magazine and local magazine. Newspaper includes print-edition ad spending only
for newspaper, national newspaper (New York Times, USA Today, Wall Street Journal), Spanish-language newspaper and
Sunday magazine. Network TV includes Spanish-language TV networks. Radio includes local radio, national spot radio and
network radio. Internet includes display only and excludes paid search and broadband video.
10 · SEPTEMBER 30, 2013
2012
14.49%
39.13%
12.46%
5.23%
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RETAIL AD SPENDING BY CATEGORY
Share of U.S. measured-media spending by retail category in 2012. Spending in 2012 vs. 2011 and 2003.
Pharmacy and
personal care
Other
2012: $1.83B
2011: $1.74B
2003: $1.64B
2012: $671M
2011: $525M
2003: $527M
Sporting
goods, games
and toys
2012: $722M
2011: $738M
2003: $757M
Food
2012: $1.27B
2011: $1.20B
2003: $1.18B
10.8%
4.0%
2012: $4.29B
2011: $4.28B
2003: $4.42B
4.3%
7.5%
25.3%
2012 Total
$16.95 B
2011: $16.50B
2003: $18.33B
14.9%
9.4%
Consumer
electronics
and appliances
Home
improvement
and garden
10.1%
13.8%
Apparel,
shoes and
jewelry
2012: $2.53B
2011: $2.58B
2003: $2.23B
2012: $1.60B
2011: $1.49B
2003: $2.96B
Mass
merchandisers
2012: $1.71B
2011: $1.65B
2003: $1.29B
ADVERTISING AGE
Department stores
2012: $2.34B
2011: $2.29B
2003: $3.33B
Source: Ad Age
DataCenter analysis of
data from Kantar Media.
Categories are
designated by Ad Age.
Numbers rounded.
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WHY RETAILERS AND SHOPPERS LIKE
GOOGLE’S PRODUCT LISTING ADS
Product listing ads are changing the picture for Google’s
search-engine results pages as simple photo-with-price search
results supplant standard text ads.
Google began selling photo ads—called product listing ads—
last year, and the volume of such ads has surged in recent
months. From March to July 2013, the number of advertisers
jumped 25.2% and the number of ad impressions rose 86.7%,
according to AdGooroo, a digital-marketing research firm owned
by Kantar Media. In comparison, the number of Google AdWords
text ad impressions rose a tiny 2.5% over that same time period.
PRODUCT PLACEMENT
Tips for optimizing Google product listing ads
■ Test different images, product descriptions and
promotions to boost your clickthrough rate.
■ Bid price is also important as it can affect your average
position (but at a minimum, it should be high enough to
ensure your ad appears regularly).
■ Manually target specific placements for your top
keywords for product listing ads. That can result in a major
improvement in your advertising ROI since it cuts down on
wasted clicks from individuals outside of your target
audience. It also provides better transparency since
AdWords will report your product listing ad statistics for
manually targeted keywords down to the individual
keyword, allowing you to see which are working and which
should be deleted.
■ Use negative keyword matching to avoid having your
product listing ad appear for the wrong terms (example:
Jaguar car vs. Jaguar cat).
Source: Richard Stokes’ book, “Ultimate Guide to Pay-Per-Click Advertising, Second Edition,”
to be published in spring 2014.
12 · SEPTEMBER 30, 2013
Welcome to the new search-engine shopping where picture
listings trump text listings, and pictures with price listings trump
just about everything.
Google strategically places these product listing ads above the
web page “fold” where they can’t be missed.
“It’s a chunk of incredibly valuable real estate on the search
page, and they’ve effectively turned one spot into eight,” said
Richard Stokes, CEO of AdGooroo. “Any kind of contrast with the
rest of the page, in this case, images in smaller boxes, will draw
the eye, and where the eye goes, the clicks go.”
Google has added search advertising space but done it in a
way that’s not only inoffensive to consumers, but also helpful.
If searching for Sperry shoes, for instance, consumers no
longer have to go to each retail site that comes up in search
text to see things like color of the shoe, and more importantly,
price. That information is all right there in the product listing
ad, easily comparable side by side, right on the top of the first
search page.
What’s not to like for consumers? They just saved a bunch of
clicks. Every click is a decision point, to continue down the purchase path, so the fewer the better. Not to mention studies have
revealed click-anathema, with users exiting a website if there are
too many clicks.
The product-listing-ads placement process works a lot like
AdWords. Instead of keywords, though, retailers bid on targeted
product categories or even specific products. Once a retailer
uploads images of the products it wants to sell through product
listing ads, AdWords dynamically creates an ad. Shopping
searches then are “matched to your ads based on your product
data,” according to Google, with product listing ads appearing
when the bid is won.
The cost of product listing ads varies by product and category demand, but Mr. Stokes said his understanding so far has been
that product listing ads are actually cheaper than equivalent text
ads. AdWords text ads range wildly depending on the brand and
keyword, but top-selling ones such as insurance, loans, mortgage and attorney cost well over $40 a click.
In general, product listing ads are estimated, for competitive
pricing, to fall in a range of about 20 cents to 40 cents a click.
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The discrepancy is due in large part to the fact that not a lot of
retailers are using them yet, and so demand and price bidding
wars are still relatively contained. But the picture is changing.
The 18,514 U.S. retailer users in March 2013 surged 25.2% to
23,171 in July, AdGooroo found.
Almost every major online and offline retailer—Walmart,
Target, eBay, Best Buy, Overstock—has adopted product listing
ads. There’s one glaring omission: Amazon. It used to place
Google Shopping ads but pulled them last fall.
Mr. Stokes offered the theory that the sales funnel of yesterday is gone and has been replaced by a cloud of dominant shopping habits. In that cloud, Google, Amazon, Twitter and a few
others sites such as Yelp, Pinterest and Facebook command most
direct-shopping searches.
Amazon also has its own image ads, called Amazon Product
Ads, and may perceive itself as equal or superior to Google as a
search engine for shopping. A New York Times story last year
reported that shoppers tend to do two things when searching for
a product: Go to Google search or straight to Amazon’s website.
Amazon took top share, with 33% of shoppers starting there,
versus 13% going to Google first.
What are the rest of retailers supposed to do? Try out product
listing ads. And soon, before the prices go up, Mr. Stokes advises.
“The party is still going on now, and it seems like there is
still a lot of room for retailers, but things will begin to
change,” he said. “As the market matures, certain advertisers
will get smarter and figure out how to get more and better
placement. With Google, we tend to see a democracy at first,
then consolidation and then those with power—and money to
spend—take over.”
He mentioned Etsy, for example, which is buying a lot of product listing ads. However, the home-crafting congregator also used
to do a lot of AdWords advertising, before it got too expensive.
“A lot of internet advertising doesn’t work in all markets or for
all products, but product listing ads work around the world—and
for lots of products,” Mr. Stokes said.
“IMAGES IN SMALLER BOXES
DRAW THE EYE, AND WHERE
THE EYE GOES, THE CLICKS GO.”
— Richard Stokes
CEO of Kantar Media’s AdGooroo
BIGGEST USERS OF PRODUCT LISTING ADS
By U.S. impressions, March to July 2013.
RANK
WEBSITE
NUMBER OF
IMPRESSIONS
IN MILLIONS
NUMBER OF
UNIQUE
PRODUCTS
ADVERTISED
NUMBER OF
UNIQUE
ADS*
1
walmart.com
877.0
177,982
557,637
2
ebay.com
544.0
864,195
2,376,921
3
target.com
436.0
68,880
175,857
4
bestbuy.com
279.0
10,010
37,624
5
overstock.com
234.0
112,422
367,822
6
newegg.com
208.0
84,131
184,954
7
macys.com
185.0
46,757
291,207
8
staples.com
159.0
54,956
123,068
9
sears.com
123.0
97,317
196,037
10
homedepot.com
108.0
45,199
105,427
11
walgreens.com
104.0
19,901
96,334
12
drugstore.com 1
100.0
30,500
154,711
13
etsy.com
96.7
189,888
304,556
14
globalindustrial.com
96.4
61,698
125,686
15
soap.com 2
88.0
18,122
71,565
16
nordstrom.com
84.0
59,451
140,290
17
rakuten.com
83.0
57,719
189,953
18
dell.com
81.0
6,605
34,113
19
lowes.com
79.0
26,839
86,691
20
toyrus.com
76.0
19,343
53,114
Source: Kantar Media’s AdGooroo. *Defined as displaying a unique product name, price, image,
URL or ad copy. 1. Owned by Walgreen Co. 2. Owned by Amazon.
ADVERTISING AGE
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WIN THE WEEK,WIN THE WAR:
HOW TO KNOW WHEN TO SPEND
Think about how shoppers shop. They don’t make monthly,
quarterly or yearly trips for most products; they go every week.
For retailers, capturing consumers’ attention—and spending—is
about winning people over every week.
To that end, mass retailers, grocery chains, pharmacies and
even pet stores create new promotions every week, usually
including print advertising free-standing inserts, in-store shopper
marketing and digital loyalty coupons and rewards.
But what does it take to “win the week,” to come out on top
for the week? The key is to grab the most attention but not necessarily spend the most money.
Conventional wisdom, and simple math, indicates that spending the most money will guarantee the most attention. That may
be true sometimes, but data show that hypothesis generally to be
incorrect or incomplete. The weeks that retailers spend the most
money are not usually the same weeks they get the most bang for
their buck.
One key reason is that when marketers spend a lot of money in
a given week, so do their competitors. Think about holiday marketing blitzes. While a retailer might “win” the highest share of
spending, it may “lose” when it comes to the highest amount of
attention. Even if a retailer does win the most attention, it likely
comes at a high advertising cost during those competitive weeks.
Marx, a Kantar Media unit specializing in tracking, reporting
and analyzing consumer promotions, recently compared weekly
share of advertising and promotion budgets with the weekly share
of voice across several retail sales channels (that is, types of stores).
Share of budget is the individual retailer’s ad and promotion
spending for that week relative to its total spending for the year.
Share of voice is a retailer’s ad and promotion spending relative
to the total spending of a competitive retailer set.
Marx looked at data for 26 major retailers that spent a total of
$2.5 billion on ads and promotion in 2012. Across major retail
channels, only club stores had the same winning week for share of
budget and share of voice. Other retailers—mass, food, drug, pet
and value—varied widely in which week they spent the most and
which week they got the most impact for their ad dollars.
Consider the seven days ended Dec. 3, 2012, when mass retailers such as Walmart and Target spent more than $60 million on
14 · SEPTEMBER 30, 2013
ads and promotion—more than double their spending on a typical
week—to court holiday shoppers.
Did mass retailers win the week? Not according to Marx. While
budget spending ranked a 229 on Marx’ comparative index, mass
retailers’ overall share of voice indexed at just 131. That means for
more than double the spending, mass retailers only received a 31%
increase over an average week’s share of consumers’ attention.
DO SOMETHING DIFFERENT
“If everyone is doing the same thing, it may not be as effective as
doing something different,” said Dan Kitrell, VP-account solutions
at Marx. “While winning such an important week may seem critical
to many retailers, it’s clearly an expensive initiative, and smaller
companies, or those who need to restrict their budgets, may want
to seek out less crowded times during the holiday season.”
There are specific ways retailers can increase their share of
voice and overall effectiveness. Mr. Kitrell advises retailers to do
one of two things: Schedule advertising and promotions during
other less spending-intensive weeks, or keep spending during
those weeks but change the product category being promoted to
a less traditional one.
The first strategy shifts and concentrates promotions and advertising in less “noisy” weeks. Retailers, for instance, could move
some of the holiday kickoff week budget to earlier or later weeks.
In the case of mass retailers, the best weeks depend on what
they’re trying to accomplish. If a store is looking to move electronics, it might make sense to shift spending to the weeks before
Father’s Day or the weeks after the winter holiday (when teens
and college students are flush with post-holiday gift certificates
and cash). Retailers also can turn to brand-marketer partners to
co-create special deals or promotions during some of those “off”
weeks to further spur interest.
The second strategy retailers can adopt is to continue advertising during the same weeks but change the products promoted. If
most mass retailers are pushing Christmas toy deals one week,
then think about promoting high-end beauty products, wrapping
paper or groceries, for example.
Walmart has done this to some success, said Mr. Kitrell.
Looking at advertising and promotions in fall 2012, Marx noticed
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WHEN RETAILERS ADVERTISE
Retailer advertising and promotion activity varies by week, directing shoppers to different retailers, different aisles and different
brands. In 2012, mass merchants accounted for 72% of retail ad and promotion spending in early December but just 28% of retail
ad/promo spending in the post-holiday lull of late January. Retailers spent more than 3% of their annual ad/promo budgets each
week from Thanksgiving leading up to Christmas but just 1.3% during a slow week in late July.
WEEKLY AD AND PROMOTION SPENDING BY CHANNEL ($ MILLION)
MASS
FOOD
DRUG
ALL OTHER
$100
80
60
40
SEVEN
DAYS
ENDED
1/2/12
2/6
3/5
4/2
5/7
6/4
7/2
8/6
9/3
10/1
11/5
12/3
12/31
Source: Kantar Media analysis of $2.5 billion in annual advertising and promotion activity across 26 leading retailers in the mass, food, drug, club, value, pet and convenience channels.
This chart aggregates club, value, pet and convenience as “all other.”
that Walmart created aggressive pet-care promotions for no obvious reason—that is, not around a holiday or pet month theme.
“They did it as a different way to get people in the store.
Rather than going head-to-head with the other retailers on food
items, they took a different approach to attracting shoppers,”
Mr. Kitrell said.
FOLLOW THE MONEY
Those strategies also can be applied by retailers and brand
marketers to cyclical trends in week-to-week advertising and
promotion.
Consider the general spending uptick at the beginning of the
month. Retailers know that anyone who gets a paycheck, whether
it’s monthly, weekly or biweekly, will generally have cash at the
beginning of the month. Marketing spending by both retailers and
brand marketers follows that money, with Marx data showing that
the first week of the month is usually the highest advertising
spending week of the month.
While following the crowd and the leaders is tempting, Mr.
Kitrell recommends further evaluation. Procter & Gamble Co., for
instance, puts out its “brandSAVER” coupon booklet every month
during the first week. A retailer could piggyback on the fact that
those premium-brand beauty and personal-care coupons are in
consumers’ hands by either featuring them or taking the opposite
tactic and offering sales on store-brand personal-care items.
Another monthly trend retailers can strategize around is the
mid-month fill-in trips. That’s when consumers need replenishable
ADVERTISING AGE
items like produce, milk and diapers. While wallets may be thinner
than the first week, those weeks may be opportune times for discount advertising and digital coupons.
Grocery retailer Kroger Co. uses digital couponing throughout
the month, Mr. Kitrell said, allowing customers to print or load
them to loyalty cards. At the beginning of the month, the brands
tend to be national high-end brands; mid-month coupons and
promotions feature more private-label and bargain brands.
Looking beyond retail spending and the habits of weekly consumers, more valuable information can be garnered by analyzing
share of budget and share of voice.
For example, the product category most frequently mentioned in Target ads is apparel, a category that Target advertises
consistently and throughout the year. Meanwhile, Walmart’s
most frequently mentioned ad category is wireless phones and
services, but its wireless promotion switches on-and-off
throughout the year, spiking during graduation, back-to-school
and winter holiday time frames.
This type of analysis makes it easier to see what categories
play into a retailer’s year-round and more tactical promotional
strategies.
“Retailer-specific analysis provides insights into which categories are strategically important throughout the year,” Mr. Kitrell
said, “versus which categories are tactically important during key
weeks.” He said retailers and manufacturers can use that information not only to devise competitive strategies, but also to create the
greatest combined “brand influence” with shoppers.
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RETAILERS SPEND MORE ON TV ADS,
BUT DO VIEWERS GET THE MESSAGE?
“And now a word from our sponsor.”
That used to be the cue for TV watchers that a commercial was
about to start. It also often served as the cue for viewers to get up
for a snack or take a bathroom break.
In today’s world, where advertising is content and content contains advertising messages, the line between content and commercial is much blurrier. But marketers still need to know how, when,
where and even if their message is being seen by consumers.
Retail is the largest U.S. ad spending category with nearly
$17.0 billion in measured spending in 2012, up about 3% over the
previous year, according to Ad Age DataCenter’s analysis of data
from Kantar Media. TV is retail’s biggest medium, accounting for
$7.4 billion of retailers’ 2012 spending, up nearly 4%, including
network, cable, spot and syndicated TV.
GET THE MESSAGE
But are viewers getting the message? To determine that, Kantar
Media tracks second-by-second audience behavior both during a
show and during commercials.
To measure effectiveness with that data, Kantar Media created
the Commercial Tuning Index, or CTI, that compares the rating of
a commercial to the rating of the show on which it appeared. A
related index, CTI Live +3, is the CTI plus the three following days
after a commercial airs, capturing consumers who delay watching.
A CTI Live +3 score of 100 is very positive, meaning the same
number of viewers tuned in to the commercials as watched the
TV show. The average commercial score across TV—all shows, all
categories—was 87.6 in fourth-quarter 2012. The average CTI Live
+3 for retailer spots was slightly below that at 86.8. Put another
way, consumers didn’t see about 13% of retail TV commercials.
If advertisers fall behind the average by two points or more,
indexing at 85 or lower, and particularly in their own categories,
it can indicate a significant impact on ad effectiveness, said Jeff
Boehme, chief research officer for Kantar Media’s Audiences.
Retail categories have varying levels of success beating the 86.8
average. The largest share of retailers fall right in the middle—more
than 20 categories score in the 86-88 range—indicating largely
average commercial attention scores for retail.
However, there are a handful of categories that fall outside the
16 · SEPTEMBER 30, 2013
mean. At the top of list, scoring in the 90s for effectiveness, are
video rental and record stores. At the bottom for effectiveness,
ranking below 85 are food stores and supermarkets. (See P. 17.)
CREATIVE EXECUTION, MEDIA PLACEMENT
The reasons why a particular TV campaign performs well (or
poorly) relate to a mix between creative execution excellence and
correct media placement for the target audience.
Good data can help take the guesswork out of which one is failing or succeeding, when that happens and how far off the average
the ad fell.
For example, the CTI index for a TV commercial for pet food
might score an 89 when viewers see spot run on “Dogs 101” but
drop below 85 during “American Idol,” which would likely indicate a media placement issue. If the same pet-food spot ranks a
uniformly high or low index across all TV shows, that could indicate a creative hit or miss.
Kantar Media can track data over time, adding other variables
such as ad spending and the point when a commercial hits its
“reach” (when the ad execution has been seen by most of the
audience and few new households are tuning in).
Kantar Media then plots key metrics—advertising spending,
reach, the CTI score for that commercial against average CTI for
the category—to produce a graph showing overall effectiveness of
an ad across its entire run.
Mr. Boehme pointed to a Home Depot campaign on the DIY
Network last holiday season, “DIY Value Minute: Thermostat
Campaign” (see P. 17). Data show the spot hit maximum “reach”
about halfway through its run, with the CTI remaining higher than
average. This suggests that even though viewers saw the ad multiple times, the creative or subject matter held their interest. The
resulting overall ad tuneaway was lower than average across the
whole campaign and during its entire run, making it a success.
“We don’t ask people how they feel (about an ad’s effectiveness), but more importantly we measure it and we can test it,”
Mr. Boehme said. “The content of the program and the subject
of the ad can and should work well together. If they’re not, a
retailer can switch up the media placement or the creative, even
mid-campaign, to change the CTI.”
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HOW TO MEASURE COMMERCIAL REACH AND WEAROUT
A look at how one TV commercial performed over time. Commercial: Home Depot’s “DIY Value Minute: Thermostat Campaign,”
running on the DIY Network from Nov. 1, 2012, through Dec. 31, 2012. A Commercial Tuning Index (CTI) of 100 would mean the
commercial audience rating was the same as the program in which it appeared. This commercial over the entire campaign averaged
a CTI Live +3 score of 91.9. That’s five points higher than the average retail commercial CTI Live +3 of 86.8. Results indicate the
relevance of the commercial product and program environment worked well in retaining audiences during commercial breaks.
■ CTI LIVE+3 1
■ % BUILD REACH - DIY HOUSEHOLDS 2
■ % BUILD REACH - TOTAL HOUSEHOLDS 2
■ CUMULATIVE TV SPENDING 3
%/INDEX
$ THOUSANDS
RELATIVELY HIGH
CTI LIVE +3
140
AD SPEND
INCREASES
$140
120
120
100
100
80
80
60
60
BUILD REACH
STARTS TO PEAK
40
40
20
20
11/1/12
12/1/12
12/31/12
Source: Kantar Media. LEFT SCALE frames two factors: 1. Commercial Tuning Index (CTI Live +3, shown in gold), compares tuning to an ad relative to tuning to the entire program content in which it
appears. 2. Audience reach, or percent of unduplicated households that have tuned to commercial at any point. Specifically, the blue line shows percent of unduplicated DIY Network tuning households
(households tuned to DIY for at least one hour from Nov. 1-Dec. 31, 2012) that had seen this spot at least once; the gray line shows the percent of all TV households in Kantar Media’s RPD database that
were exposed to the spot at least once. 3. RIGHT SCALE: Home Depot’s cumulative measured-media spending in thousands of dollars for this commercial over this period from Kantar Media. Each tick
at bottom of chart represents one day when spot ran; spot did not run on all days over these two months.
TV CAMPAIGN EFFECTIVENESS BY RETAIL CATEGORY BASED ON COMMERCIAL TUNING INDEX
Based on Commercial Tuning Index Live +3 for retailer spots that ran in fourth-quarter 2012. An index of 100 would mean the
commercial audience rating was the same as the program in which it appeared that included spots from these retail categories.
Average CTI Live +3 score for all commercials in fourth-quarter 2012: 87.6. Average CTI Live +3 score for all retail commercials
in fourth-quarter 2012: 86.8.
HIGHEST-PERFORMING RETAIL CATEGORIES
LOWEST-PERFORMING RETAIL CATEGORIES
RETAIL CATEGORY/STORES
CTI
LIVE
CTI
LIVE +3
# OF SPOT
OCCURENCES
RANK
1
Video rental, CD, tape and record
94.6
92.6
385
2
Hobby and craft
93.8
91.4
3
Drapery and window covering
93.1
89.7
4
Nurseries, lawn and garden
91.5
5
Computer and software
91.8
RANK
RETAIL CATEGORY/STORES
CTI
LIVE
CTI
LIVE +3
# OF SPOT
OCCURENCES
5
Shoe
90.1
85.9
35,593
3,749
4
Office equip’t, furniture and supply
89.8
85.9
13,538
156
3
Automotive supply retailers
89.1
85.8
10,085
88.4
127
2
Home furnishings
89.9
85.7
27,396
88.4
642
1
Food stores and supermarkets
84.5
82.8
121
Source: Kantar Media. Commercial Tuning Index (CTI) compares tuning to (watching) an ad relative to tuning to (watching) the entire program content. CTI Live refers to audiences watching live.
CTI Live + 3 refers to audiences watching live and within three days of when program originally aired.
ADVERTISING AGE
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SOCIAL MEDIA IS THE HOT NEW THING,
BUT EMAIL IS STILL THE KING
Good old emails, do people even read them anymore? Yes,
they do. In fact, more than three-fourths (76%) of consumers
who get retailer emails not only read them, but also use them
for shopping.
In the excitement and buzz of the new, new thing, it can be easy
to get caught up in the hot tactic of the day (social media) and even
cast aspersions on the tried and true (email).
Yet, marketing tactics get to be tried and true by, well, you know.
And it turns out not only do consumers use email for shopping,
but they also turn to email much more often than social media to
research, find and buy the products they want.
“Email is not dead. People say no one checks email from retailers anymore, but according to our research, people clearly are
doing just that. And much more often than they’re using social
media for retail,” said Uyen Chand, senior analyst for retail and
consumer packaged goods at Kantar’s Millward Brown Digital.
Fewer than 8% of people said they “never” click through a
retailer’s email or go immediately to its site after reading an email,
according to a study by Millward Brown Digital (formerly
Compete). More than 77% said they do some of the time, with the
remaining 15% saying they “often” or “always” go to the retailer’s
site. Comparatively, almost half (46%) of consumers said they
“never” use social media for shopping.
Part of the reason why email is still more effective has to do
with human nature. Retail emails are pushed to consumers’
inboxes, while consumers have to actively seek social-media
retail interactions. Emails also are an opt-in message, with
retailer come-ons easily skimmed and ignored if a consumer
isn’t interested.
However, social media retail ads add unasked-for noise to the
place where consumers are trying to chat with friends or browse
Aunt Sally’s vacation photos.
Email wins in sheer numbers as well. There now are more than
3 billion active email accounts worldwide, or more than double the
number of Facebook and Twitter accounts combined.
That doesn’t mean retailers should give up on social media. The
data really should just serve as a reminder that email still works,
and works well for retail marketing, Ms. Chand said. Retailers,
however, should use different strategies with each.
18 · SEPTEMBER 30, 2013
RETAIL EMAILS STILL CLICK WITH CONSUMERS
How often do you visit a retail
site immediately after reading
an email from that retailer or
click through to a retail site
from an email?
How many emails do you
receive from retailers in a
week?
Always 2.7%
Often
12.5%
7.6%
31+
None
Never
4.8%
21-30
1-5
20.1%
28.4%
10.8%
31.8%
45.4%
15.2%
Sometimes
Occasionally
20.6%
11-20
6-10
Source: Millward Brown Digital study of 1,209 internet users, June 2013. Numbers rounded.
“Liking a brand on Facebook and engaging with a brand on a
daily or even monthly basis on email are completely different
things,” she said. “Many users initially ‘liked’ a Facebook page to
get a retail deal or special, and some haven’t returned since.”
A surprising finding in the Millward Brown Digital study was
the number of emails people receive from retailers. Nearly half
of consumers said they receive more than 10 retailer emails a
week, with 20% receiving more than 30.
Because the emails are easily unsubscribed from—retailers are
required by law to include an unsubscribe link or instructions—it
would appear consumers want to receive that volume of emails.
Or at least they’re not bothered enough to unsubscribe.
A potentially worrisome question mark for retailers is Google’s
new Gmail bucket system that categorizes emails into tabs: primary,
social and—segregating retailers’ pitches—promotions. “At this
point we don’t know what the impact will be,” Ms. Chand said.
“But for now, though, we do know that consumers are engaging
more with email than with social media.”
ADVERTISING AGE