What's E-Commerce Media, and Why Do I Need a Strategy?
The stakes are too high to take a tactical approach, so embrace an e-commerce media strategy. That strategy must begin with your shoppers — who are they, how do they shop, and what kind of experiences do they expect and value. Every element of your strategy should be challenged with the shopper in mind. A media program that keeps shoppers happy will also be exponentially more effective for the brands that participate — i.e., higher returns for both the retailer and the brands.
From that basis, there are many choices to make. Should the program target vendor co-op funds, vendor brand-budgets, third-party advertisers or a combination of these? What types of media placements and programs should be created, and how might these placements appeal to different types of marketers? How should paid placement be balanced with unpaid merchandising? Should paid placement be contingent upon value-adding discounts and promotions for consumers? Should there be a dedicated person responsible for the program? Who will sell the media — merchants, a dedicated in-house team, third parties or a combination?
A successful program also depends on having clear goals and metrics. While it's important to have annual media sales goals, the fundamental goal of any business is profit. Media revenue is highly profitable, often yielding 60 percent to 90 percent margins after factoring in cost of sales and service. The contribution to the bottom line will likely be disproportionate to its total revenue contribution.
An excellent way to normalize media and product revenue is to make profit per shopper a key performance metric, essentially dividing the net revenue from both sources by the total number of visitors to the online store. A successful media program should significantly increase profit per shopper over time by adding new media revenue while also contributing to the growth of product sales.