Expert Column: Getting the Best ROI From Digital Ads
In this age of online ordering and multiple options for grocery delivery, retailers are looking for new and better ways to reach their shoppers and deliver personalized experiences that bring shoppers into local stores and keep them engaged and motivated to buy.
As a result, spending on digital marketing is growing rapidly. According to an eMarketer report released in March 2014, digital spending by consumer products companies will hit $4.2 billion in 2014, and increase to $7 billion by 2018. Retail, the biggest spender in the digital ad space, will have allocated $11 billion in 2014.
In the United States, where grocery sales are typically promotion-driven, digital change is happening and innovative digital marketing programs are generating much success. Loyalty cards, e-coupons, social media, and mobile ads have had a major impact on brand loyalty and store sales. The movement among location, promotion and purchase is practically seamless. But despite these advances, and the move to convert online traffic into in-store shoppers, brands are still struggling to show the direct ROI from these efforts. While digital marketing offers insights and analytical data to measure success, tying store sales to digital advertising campaigns in real time is a major goal that eludes most brand marketers and retailers.
How can grocers get the best results out of their digital ad campaigns and accurately measure these results? When crafting a digital strategy to drive sales, it's important to create content that spurs action from local shoppers. Retail is quickly moving toward the customer-centric model, placing shopper engagement and a personalized experience as top priorities. Reaching the right neighborhoods online by using smart digital advertising technology that leverages complex algorithms and real-time data to pinpoint and reach consumers most likely to buy products is a start. But once shoppers reach the store, ensuring the right product is available and on store shelves when consumers are ready to purchase requires much behind-the-scenes collaboration, data sharing and execution by manufacturers, retailers and supply chain partners.
Take, for example, new product introductions. Companies often invest more than $70 million when bringing a new product to market, with 75 percent of retail, food and consumer packaged goods failing to reach $7.5 million in sales in their first year. With more than 20,000 new food and beverage SKUs introduced to the market each year, manufacturers and retailers have embraced inventory, point-of-sale (POS) and product management systems to help address operational issues and drive new levels of efficiencies across the value chain. By combining the Big Data derived from these systems with marketing efforts, brands, retailers and the agencies that support them are beginning to see new product sales lifts in excess of 10 percent.
The Data-Digital Connection
Advertising programs that combine inventory and POS data with consumer engagement metrics realize greater sales lifts and provide valuable cross-team insights. The connection of store-level data and digital advertising strategy can allow brands and retailers to maximize the impact of their new product launches, promotions and seasonal offerings, based on daily, store-level sales and inventory.
By connecting supply data to demand, grocers can target, optimize and measure the sales impact and ROI of digital advertising programs and achieve the following key business metrics:
- Increase sales while minimizing out-of-stocks and wasted ad spend
- Ensure ads are delivered to the right neighborhoods, near the right store locations, and get the product on their shelves — all at the right time
- Operations and product strategists can use the information to better inform stocking and assortment decisions
- Evaluate successes in real time, using that data to reallocate impressions to neighborhoods around high-performing, shelf-ready stores
- Gain new and valuable insights into product launch metrics such as halo effect, product cannibalization, and category lift