It’s a little-celebrated fact that e-commerce led the growth at the business end of the internet as we know it. Amid all the hype around martech and ad tech, it is easy to forget that advertising revenues are dwarfed by e-commerce.
Global e-commerce currently sits at $1.672 trillion this year. By 2019, eMarketer expects it to more than double to $3.578 trillion. By comparison, total global ad spend hit just over $500 billion in 2016, and will total around 640 over the same period. At the last count, digital was still only about 30% of that.
Retailers are currently the top digital ad spenders – you could even attribute much of digital advertising’s growth over the years to e-commerce. For better or worse, that symbiosis is also a big part of why the digital ad industry is so inextricably linked with performance spend.
But what are the lessons for advertising in the world of retail? And is there any way that co-dependency can be used to everyone’s benefit?
The devil’s in the detail, or more appropriately here, in the data.
Data disillusionment
For too many people, data sits in the trough of disillusionment, somewhere between ad blocking alley and various walled gardens.
Several years ago, data applied to display advertising – or more precisely what was then called ‘behavioural targeting’ – was seen as a panacea that might fuel the growth of the entire media organisations. No one is making those claims anymore.
The reality, as it worked out, was a little different. Real-time bidding brought some transparency to the world of data-driven display. And you can’t underestimate the benefits of that. But in the shift of focus from context to audience, it also ended up starting a race to which ad company would have the highest delivery frequency and buy the cheapest inventory – sacrificing user experience in the process on the altar of good last click performance. What we ended up with is a lot of disgruntled users, juicy margins for middlemen, questionable incremental revenue for retailers and a big hole in the middle of publishers’ revenue forecast.
And although some would still have you believe activities such as retargeting in its current form is a silver bullet for retail, I would say consumers have voted with their feet – look no further than the correlation between searches for ‘ad blocking’ and retargeting.
The original native
Alongside the growth of display, another less publicised business that grew up in the wake of e-commerce was affiliate marketing. While it suffered from growing pains of its own along the way, it is now emerging as a renewed area of focus for many of the smartest publishers on the block, from Business Insider to Buzzfeed and Vox. All are embracing ‘comtent’ or commercial content. Why? Simply because they are always looking for smart, data-driven ways to monetise content without alienating their audience. And in a sense, affiliate marketing is also being rediscovered as something akin to native advertising – fitting seamlessly within the user experience, through well-researched, relevant and useful links to products people want to read about, and often buy too.
In fact, ‘comtent’ is probably more akin to search than display in a number of ways – live and unobtrusive, well-researched and relevant, it may even be useful to the user – the holy grail as far as commerce goes.
But what is currently most exciting about this area is the data perspective. At the cross-roads of publisher, retailer and shopper, the combined insights of environment and intent tell us all kinds of fascinating things about who buyers are. Not just what they looked at while on a retailer’s site, but also what else they read, which brands they feel close to and what else they want to buy. And that’s just the start.
Winning factors
Terry Kawaja, CEO of Luma Partners calls out two things as key for winning in advertising and marketing: one is the accuracy of first-party data, and two is the “right time decisioning” of that data.
We couldn’t agree more but think that combining both requires a very special kind of approach that we do not see enough in the third-party data space: focus on declared first-party data at scale delivered in real time. Despite all the hype, you’d be surprised how a lot of the data out there still isn’t ‘real-time,’ yet when a lot of products sold online are impulse purchases, being real time is the key to succeeding.
Implementing this approach successfully requires to involve publishers, advertisers and agencies, as well as thousands of our customers. All are now contributing to what has been a massive development project, Skimlinks’ audiences co-operative.
As well as affiliate marketing and ‘comtent’ being a great additional revenue source for publishers, we firmly believe the marriage of content and commerce can bring a smarter, more creative approach to advertising. And one that benefits all parts of the chain, not just a few links in the middle
So there you have it: e-commerce, data, advertising – in that order.