Looking for Growth in All the Wrong Places
As cross-channel retailers descended upon Shop.org's Annunal Summit in Boston last month, one of the hotter topics was growth. After all, the e-commerce industry is showing an average growth rate of 28 percent over the past year. But according to the Forrester Research report released at the conference, The State of Retailing Online, 2011, “retailers maintain conservative growth plans that largely don’t match up with the year-over-year growth of web retail overall.”
Any digital-based business, whether it’s advertising, commerce or publishing, is still saddled with the burden of potential. Growth is expected to be exponential. Therefore, it surprised me that more than a few experts are throwing in the towel on some important growth markets. One even seemed to be throwing in the towel on what's still the biggest consumer market in the world. In a recent article, Offering a Better Fit for Today’s Careful Retail Consumer, the Wharton School makes the case that the answer lies abroad. Yes, it seems to think the U.S. is all tapped out for online retailers.
Have the leading business schools given up on the United States? Have they succumbed to the most common denominator of erroneous human belief that the grass is greener on the other side? There’s an old saying in business: If your business is having problems, the things that need fixing aren't external, they’re internal. Yes, the economy is slow, but smart companies find a way to grow.
The answer doesn’t lie three continents away. According to Forrester Research, there's plenty of growth potential in e-commerce at home. The answer for an e-tailer's growth lies within.
Where to begin? With digital marketing. Digital marketing has become an audience and revenue growth machine. It will drive domestic growth for any company seeking to find it. Audience, behavioral and contextual targeting advancements aren't just shiny objects. They're the most efficient ways to find and exploit new audiences. I suggest that the stalled e-commerce community isn’t looking for the diamonds, which definitely do exist in its own backyard.
A big part of the problem is tracking the success or failure of digital marketing campaigns. The dirty secret of internet advertising is that it’s the most measurable of mediums, yet it often measures the wrong things. The flaw is last-click attribution. Online retailers often give 100 percent of a sale's credit to the last-clicked or last-viewed ad. Fixing attribution is important beyond media choices. Once fixed, attribution has real impact on marketers’ bottom lines.
My company's very first NYSE traded e-commerce client had revenue growth of low single digits. In the first year after switching from measuring online advertising by last click to measuring with attribution, sales grew from low single digits to 25 percent growth (with ad spend decreasing). The second year, online ad spend grew 12 percent and revenue grew 75 percent. Now that's growth. All our client did was pull its head out of the last decade and start recognizing huge growth by measuring online advertising with attribution models.
Once you know which media campaigns, keywords and sources are performing by bringing consumers into the funnel and driving them through it to the point of purchase, it’s easy to see where to allocate ad spend to maximize return on investment. It then becomes less of a risk to experiment with new solutions such as video and social because you can easily attribute the value they bring to your overall campaign and allocate budget appropriately.
Growth in e-commerce is out there and there's no reason for e-tailers to be misled to believe that big growth only lies abroad. The solution is right in your backyard; you just need to look and measure your efforts.