How Targeted Merchandising Can Work For You
The evolution of online advertising has seen the transition from banner ads to keyword association to actual user identification. Online advertising can use data such as IP addresses to localize ad placement, but it still relies mostly on keyword association where it connects items to keywords. It's no question that these methods have worked — Google AdWords is all the evidence you need. But is there an even better method of accelerating consumption? Enter the next advertising evolution: targeted merchandising.
Amazon.com was a pioneer in the online marketplace by introducing behavioral marketing, a concept akin to targeted merchandising. Amazon was able to tap into a cross-section of products (how what book you purchased could impact your product preference in electronics) to deliver new, highly relevant content. This method has two main benefits: First, Amazon can move more merchandise by placing relevant products in front of users. Second (and most important), users don't mind because they're discovering product options they're predisposed to want.
Targeted merchandising will only succeed if it's relevant to real-time trends. Behavior needs to be captured and analyzed in real time, and subsequently merchandise needs to be targeted in real time. Businesses need to have a comprehensive view of consumers, taking into account every aspect of their behavior, not just a narrow vertical. By using targeted merchandising, online retailers can dramatically increase the likelihood of increasing consumption while pleasing their customers. Here are some of the benefits of targeted merchandising:
- exposes customers to products and services that have a higher relevancy to their personal tastes;
- improves the overall shopping experience for visitors;
- improves conversion rates and average order values; and
- maximizes revenue and profitability from advertising spending.
Not every online business has Amazon’s infrastructure. But the question remains: How can businesses take advantage of targeted merchandising?