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How to Refocus in the New Age of Retail Marketing

Why marketers need to understand media’s influence inside the consumer purchase funnel

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Changing consumer trends and technology advancements have created significant challenges for U.S. retailers, reportedly leading to a record level of store closings in 2017. This upheaval has rightfully created concerns for businesses about their future growth prospects. To meet customers' evolving needs, many retailers are adopting omnichannel models by pairing digital capabilities with high-quality, in-store experiences — but it won't be enough for most to become tomorrow's winners.

According to the Advertising Research Foundation, businesses seeking success in the increasingly competitive new retail environment must have a multiplatform marketing strategy to maximize ROI. But with more options for retailers to deliver their messages than ever before, marketers are finding it difficult to increase the efficiency of their media spend.

To ensure retailers optimize their marketing mix, they need to first understand the influence media have over how and why their customers buy. To help, the TVB recently commissioned market research firm GfK to quantify the influence traditional and new media have over retail shoppers' decisions across the five stages of the purchase funnel: awareness, interest, visit, consideration, and purchase.

The "Retail Purchase Funnel" study is based on responses from an opt-in panel of 1,500 adult consumers 18 years old and older. To qualify, study respondents had to be in the market — either online or in-store — for a retail category and have seen, heard, or read an advertisement for that product or service in any one of roughly 20 traditional and new media platforms.

Here are some key insights from that report that can help marketers better understand how media influences consumer purchasing decisions.

 

Media's Influence on Retail Shoppers

The GfK study finds that media has a tremendous impact on motivating retail shoppers, with more than 90 percent of respondents citing media's influence on their decisions in the first four stages (awareness through consideration). Media influence declines only slightly moving down the funnel to actual purchase, remaining significant at 87 percent at this final stage. As such, with an optimal media mix, marketers have the opportunity to influence consumer behavior from awareness to purchase.

Television dominates consumer influence throughout the funnel and has the highest level of importance among retail shoppers in the awareness stage, approximately five times greater than social media, the second-highest media source. Among millennial shoppers, TV remains the most influential medium across the funnel, though social media gained importance among this demographic.

FIGURE 1

Which Medium Influences Retail the Most?

source: 2018 GfK/TVB Retail Purchase Funnel study

GfK's findings are consistent with a 2017 Neustar MarketShare study that found TV was the most effective advertising investment in terms of reach and ROI, with lift seven times higher than paid search and five times higher than online display advertising.

 

How Shoppers Buy

Despite significant growth in e-commerce sales, GfK found that during the 2017 holiday season, most shoppers browsed and purchased merchandise at a physical store as opposed to online. This trend was consistent among all demographic groups, including millennials — though younger adults were more likely to browse and/or shop online compared to those over the age of 34. One-third of consumers shopped both at a physical store and online. It is important to note that 94 percent of adults 18 to 34 said television ads influenced their online search selections, further illustrating the medium's strong influence on retail consumers.

 

Ad Exposure Equals Action

Consistent with growing media consumption trends, roughly half of the GfK study's 1,500 participants were exposed to six or more media sources for retail ads. But does exposure affect action? Absolutely, the study finds, especially in retail.

According to GfK's findings, 78 percent of consumers initiated some kind of action after seeing an ad on television one to three times, including visiting a store or searching for promotions online. When retail shoppers saw four or more ads on TV, 86 percent took action, with 43 percent visiting a physical store and 40 percent visiting an online retailer.

FIGURE 2

Top Exposure for Retail Ads

source: 2018 GfK/TVB Retail Purchase Funnel study

The overall effectiveness of advertising is further supported by a 2018 study by Placed and Oracle's Moat, quoted in a MarTech Today article, that revealed when consumers were able to see an ad, they were 52.9 percent more likely to visit the advertiser's store location. However, according to agency execs interviewed by Digiday, some major advertisers using new digital auditing tools learned viewability rates for their Facebook video campaigns were as low as 20 percent, far below the Media Rating Council's 50 percent viewability standard.

To ensure the efficacy of their media budgets, retail marketers should be developing a unified strategy across traditional and digital media to optimize targeting, reach, and frequency.

 

Trust Is a Must

Measurement transparency is not the only challenge facing retail marketers. Trust in content also matters.

After YouTube spent more than a year addressing its brand safety problems, CNN found ads from Adidas, Amazon, Nordstrom, and more than 300 other companies on YouTube channels tied to extremists and controversial content. Restoring brand value once it has been lost is costly and time consuming. Therefore, retail marketers must align their ads with trusted, high-quality content to protect their brands.

According to the GfK study, legacy media dominates in terms of trust among retail consumers, with local broadcast TV news commanding the greatest share of trust at 86 percent, followed by local newspapers (79 percent), national broadcast and public TV news (76 percent), and radio (75 percent). In addition, local broadcast TV station websites and apps commanded the greatest share of trust among digital news platforms at 69 percent, while social, at 50 percent, was the least trusted.

 

Using Traditional and New Media Together Maximizes ROI

Procter & Gamble, the world's largest advertiser, re-evaluated its marketing budget after pressuring digital platforms to provide more transparent data. In the second half of 2017, as Adweek reports, P&G reduced digital spending by 20 percent to 50 percent of its overall spend and reinvested in reach media, including television and radio. As a result, P&G increased reach by 10 percent and grew sales.

According to several studies by the Ehrenberg-Bass Institute for Marketing Science, a global marketing research center, most brands lose when too much of their advertising budgets are shifted away from traditional media's proven reach and reliable metrics. Perhaps that is why some of the largest digital retailers, including Google and Amazon, are also some of the largest advertisers using traditional media, spending vast sums on television to reach customers at low cost per contact.

For brands to grow and prosper in the new age of retail, neither television nor digital media should stand by itself. Instead of shifting dollars from one platform to another, marketers need to build cost and reach into efficient media plans that optimize their digital and legacy investments, as this is a proven strategy that has delivered positive results for retailers of all sizes.

 

Hadassa Gerber is the EVP and chief research officer at the TVB. You can email her at hadassa@tvb.org.


 

 

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