Why online retailers should embrace advertising across digital storefronts

Jerry Miller September 2019 Programmatic, Retail

More and more retailers are turning to digital advertising to complement their core businesses — and those who aren’t are missing out on a significant opportunity. U.S. retail ad inventory volumes grew at a rate of 48% in June of 2019, versus 10% for all other publisher verticals in the U.S.1 But retail sites in the U.S. sell the smallest number of ads compared to verticals like entertainment, news, games, and sports.2

Webpage icon with text that reads: U.S. retail ad inventory volumes grew at a rate of 48% in June of 2019, versus 10% for all other publisher verticals in the U.S.

Translating traffic into a new opportunity

It’s not exactly a mystery why retailers have been slow to embrace selling ad inventory. After all, the primary goal is to keep people on their sites, while ads often take customers elsewhere. And many perceive on-site advertising as a possible threat to their primary revenue source, something that requires too many resources or an investment that won’t pay off.

But in many cases, strategically folding ads into an online shopping experience can improve the experience for shoppers and help retailers grow their revenue. Retailers can promote products and offers across their website, driving more sales of products they sell. Or a retailer could advertise complementary products and services it doesn’t sell. For example, people shopping for bathing suits during winter months could benefit from discounted airline tickets to tropical destinations.

The hesitation to advertise across the digital storefront is leaving money on the table, especially considering the amount of traffic retail sites generate. We’ve identified three areas where retailers can help grow their own advertising businesses and extract more value from their audiences to make the most of their traffic and uncover new revenue opportunities.

Let machine learning do the heavy lifting

In the first quarter of 2019, U.S. online retailers blocked or blacklisted significantly more ads than other large U.S. publishers.3 This makes a certain kind of sense. Retailers don’t want to serve ads featuring products from competitors. And while blocking whole swathes of ads might seem strategic on paper, retailers may be missing out on substantial incremental revenue.

Even small adjustments can translate into significant revenue growth.

Google’s machine learning technology helps identify opportunities to improve revenue at scale by evaluating the ad performance of a retailer’s digital storefront and comparing it to the performance of its peers. The technology then surfaces insights and growth areas that humans may overlook. Some common examples of ad optimization recommendations include unblocking advertiser verticals, changing inventory prices, adopting different deal types, and improving page load times. Machine learning is built into Ad Manager, and retailers who use the platform can go into their dashboard, review their opportunities, and implement many of them with a few clicks. Even small adjustments can translate into significant revenue growth.

Use audience insights to secure more direct reservations with advertisers

Retailers are sitting on a trove of audience insights that can be used in countless ways. Using this data to develop segments based on combinations of unique signals helps connect people with relevant promotions across sites and apps at the right time, so they can quickly take action. It also helps retailers differentiate their ad offerings to secure more direct reservations with brand partners, manufacturers, or other key advertisers.

Over the first half of 2019, programmatic direct deals — direct reservations purchased through software — made up only 10% of retailers’ sales mix in the U.S.4 But retailers have a unique opportunity to secure more direct deals, because, unlike many other verticals, people are most often “in-market” when visiting retail sites. Using a platform like Ad Manager to package, market, and manage programmatic direct deals can make it easier for advertisers to find and secure retail inventory at scale.

Embrace new ad formats in storefronts

The average American spends over an hour a day watching video across mobile and desktop devices, according to eMarketer. But, throughout the second quarter of 2019 in the U.S., the ratio of display to video ads served in browsers on retail websites was 99:1.5 This imbalance represents a significant opportunity for retailers to tap into more ad dollars and deliver a richer user experience for their shoppers.

Out-stream video offers retailers a low-touch option to begin dipping their toes into video advertising. Out-stream video formats are easier to implement than in-stream, and, last year, offered retailers nearly 30% higher CPMs in the U.S. versus standard display ads.6 In many cases, sites with display ads in place can be retrofitted for out-stream video overnight.

And for those looking to bring video ads to shopping apps, try rewarded video. Although these ads have been historically found in games, reward options are completely customizable and can be set up to offer incentives like free shipping or deeper discounts.

The right tools for the job

Retailers have a lot to consider when it comes to selling ad inventory on their own site. Will it distract from the core business? What is the best way to manage relationships with suppliers? But digital and technical logistics shouldn’t be a roadblock. There are plenty of tools for the retailer looking to build its online advertising business as a secondary revenue stream.

To learn more about how Google Ad Manager works for eCommerce, download our guide, Rethink your eCommerce experience with Google Ad Manager.

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