Trade marketing, as with most marketing disciplines, is not one for standing still. In this piece for RetailTechNews, Ankit Jain (pictured below), head of commerce product strategy, EMEA, Google, explains why he believes trade marketing will shift away from in-store displays and coupons, towards digital means.
As the market evolves, retailers are exposed to three significant trends. First, digital’s prominence in the retail industry is growing. E-commerce sales are increasing in double digits, with growth of 14.6% in the UK. Meanwhile, store sales have stagnated with only 1% growth in the UK. And digital is increasingly influencing physical store sales, too. Research from Forrester shows that 13% of retail store sales were impacted by a digital touchpoint in 2004, compared to well over half (58%) by 2017.
At the same time, the retail industry is challenged by huge margin pressure. Top multichannel retailers saw their earnings, before interest and taxes, decline between 2010 and 2016 – from 5.5% to 4.1% in the UK – meaning retailers need to find new ways of increasing margins.
Thirdly, and at the heart of all this, consumer expectations in retail are changing. Today, people are looking for simplicity and ease when browsing or placing orders. They anticipate exceptional customer service and – most importantly – personalisation, with 77% of consumers expecting products and offers that appeal to their personal tastes.
Taking consumer experience to the next level
For retailers and manufacturers facing challenges in a shifting landscape, leveraging the power of digital in trade marketing, itself a USD$500bn (£382.1bn) global industry, offers a unique opportunity to improve the customer experience. Rather than reflecting the omnichannel behaviour of today’s consumer, the majority of trade marketing budgets are still spent traditionally, on in-store displays, printed in-store media, and coupons based on products that the consumer has previously purchased.
Using data, retailers can show the right product to the right person, at the right time, in the right place, driving traffic, conversions, and sales. This allows retailers to provide exactly what manufacturers need – improved and measurable return on investment. Advertising also represents a high-margin, low-cost revenue stream for the retailer. In short, trade marketing is a way for retailers to stimulate their own growth.
The benefits go further than that, though. Digital provides the ability for a retailer to collaborate closely with the manufacturer and take consumer experience to the next level. By understanding their customers’ preferences more deeply, a retailer can assist the customer through the purchase funnel – from the moment product research begins, to when the final purchase decision is made. Technology enables that influence to be measured not only for e-commerce transactions, but also for physical store sales.
Putting digital trade marketing into practice
Sometimes a consumer is looking for a specific product online, while other times he or she is browsing more generally. Digital trade marketing tools can help manufacturers reach consumers in each of these mindsets.
For example, the consumer might be searching for a type of product on a retailer’s website. By making sponsored search ad opportunities on the retailer website available to brand manufacturers, those manufacturers are then able to promote their products in the search results. These results look just like organic search listings and click directly to the product page, driving consumers further down the shopping funnel.
While a consumer is browsing, the retailer can show highly relevant shoppable display ads promoting a manufacturer’s product, which click straight to the product page. When the consumer is browsing elsewhere on the internet, shoppable display ads in paid media can be used to direct the consumers to the product page on the retailer’s site.
In using these kinds of digital trade marketing techniques, many retailers are already collaborating with manufacturers to help both parties reap considerable benefits.
Walmart is a good example. The retail giant increasingly operates as an advertising platform, and gives manufacturers an opportunity to personalise ads to consumers who are already interested in a product. Not only can increasing ad relevance drive marketing effectiveness, but because Walmart is able to connect the manufacturer’s digital advertising activity with in-store sales, each manufacturer can also attribute their spend accurately.
Digital trade marketing gives retailers a way to increase sales and margins, fund traffic acquisition, and strengthen supplier relationships. For manufacturers, these tools are a way to increase sales, gain insights into campaign effectiveness, and optimise return on advertising spend. But perhaps more importantly, digital trade marketing gives both entities a way to capitalise on the monumental shifts taking place in consumer behaviour in the retail environment. Thanks to groundbreaking technologies and digital services, customers’ expectations have been elevated higher than ever. People want useful, engaging, assistive experiences from all the brands with which they interact. With the ability to personalise ads, digital trade marketing is a powerful way to meet the needs of today’s demanding consumer.