17 September, 2011
Q&A with Google’s Industry Director for Retail Todd Pollak: Getting Digital Marketing Right
What are a few of the top trends you’re seeing in digital retail this year?
In no particular order…mobile, social, deals and convenience. The cost of walking out of a store is cheaper than it has ever been. For the first time in history, consumers have the ability to save the absolute amount of time and money at zero incremental cost regardless of whether they’re standing in a store with their coveted merchandise in hand. When you have two-parent working families with kids who have more activities, an economy generating flat income growth relative to inflation and rising commodity prices, the pressure to adapt and find efficiencies to maximize your lifestyle accelerates.
Just as retailers are increasing productivity through adoption of technology like CRM, connected stores, recommendation engines, free shipping, site-to-store, etc., the vast majority of consumers are also using technology to steepen their value and efficiency curve and improve their lifestyles. Deals, recommendations, inventory availability and price comparison have become so accessible to Main Street that the traditional ways consumers look to save money more clearly than ever express their true costs of use.
Are digital technologies reinventing the relationship between consumers and advertisers? What does this mean for retailers?
Shopping tools that are always available, predicated on simplicity and elegant design combined with real mobile processing power have fundamentally changed retailing forever.
There are 330 million search results for “my 2-year-old can use an iPhone.” In short, technology is more accessible than it has ever been at a time when inventory, pricing, reviews and recommendations information have reached near 100% transparency for non-perishable goods. Today, we have easy-to-use tools that personalize, organize and filter information like Groupon, Facebook, Twitter, Amazon, and Google.
Consumers’ understanding of these tools is peaking and usage has become more sophisticated overtime.
Retailers should be focused not just on where consumers spend their time researching and buying, but on how best to tailor their tactics based on the transitions people make by device and by location. From desktop at work, to tablets after work on the couch, to mobile in the aisles, focus on transitions in mindset and context. Size of screen and location impact the kinds of information people seek.
I’d be remiss if I didn’t ask about one of the biggest social media announcements of the year – the launch of Google+. Will you share three tips for retailers looking to leverage the platform?
Social seems to have its most significant impact at the front – through awareness – and backend – through conversion – of the buying cycle. What deals are available? What brands or products do people who are like me buy and when it comes down to the final choice, which brand do people like me buy? It’s still very early days and retailers are investing in the promise of tomorrow.
Today, social signals are relatively one dimensional in that they express interest, but not necessarily intent. In the future, companies that make sense of these connections and influences by understanding their relationships will revolutionize the way retailers merchandise and personalize their stores for each customer.
At Google, our goal is to use social signals to improve consumer experiences across Google properties and partners. In the near term, we’ll enhance the relevance of intent-based queries which are already delivering the most qualified customers on the web to retailers. If someone is looking for barefoot running shoes and their friend endorses a specific result for barefoot running shoes, we believes this will improve engagement for brands, improve the relevance of generic queries and deliver higher conversion rates for our partners.
According to this year’s State of Retailing Online report, search is still the number one marketing acquisition tool for online retailers. I know you can’t tell us what’s in the Google secret search optimization sauce, but what common mistakes do you see among retail clients when it comes to optimizing their site for search?
For multichannel retailers, too many still optimize for an online conversion and view all other paid search visits to the website as waste. Many focus their investments on 2% of their traffic as though the only people who come to a website are online buyers. This happens because the organization views the website as one store, although a very profitable one, and not the gateway to the brand. The stores benefit far more from the website than the online division, they just don’t fully measure online to store activity. The first stop for any consumer – regardless of where they intend to buy – is a website. As long as online divisions are hyper-focused on converting every visit, the consumer experience, which is tied to the whole brand, will be sub-optimal. To create an optimal customer experience, online divisions need to focus less on converting every visitor online and more about the overall customer intention and experience.
The other piece of advice I’d give is to think differently about website visitation by category. People don’t buy sheets the same way they buy blenders so if you’re using the same layouts, information, attribution window for transaction across all your categories…there’s an opportunity to increase topline revenue by optimizing for each category.
As online and offline continue to blur, retailers are hoping to increase customer insight and build relationships between online and the physical world. What tips do you have for retailers looking to leverage this customer data?
The consumer has changed and as a result, retailers must structure themselves for the 21st century.
First, align your organization to optimize for delighting the consumer regardless of the channel. From the CEO down, the whole organization must commit to the idea of a single profit center where everyone is fairly compensated and media is optimized for any conversion regardless of channel. In short, start by eliminating internal friction. This is a must do, because consumers don’t see any difference between your stores and your website. Creating separate PnLs that compete for resources, media dollars, etc. creates confusion for the consumer and damages a brand. Most of our testing demonstrates that the stores benefit far more from a visit to the website than the .com.
Second, invest in continuous testing. I’m always surprised when retailers expect a single test with a positive or negative outcome to change a media mix that’s been built over 10 years. Make a long-term commitment to solving this because you have to believe that eventually 20%+ of commerce in the U.S. will happen online.
Third, invest in a single view of the customer. That means breaking down the data silos between stores, website analytics and online transactions. This will enable top line revenue growth for your company by truly understanding the lifetime value of your customers.
How are you seeing locality play out in the current customer shopping experience?
Location is still one of the most important factors for a traditional retail business. Today’s consumer wants instant gratification as a result of technology. Price transparency and inventory availability make local shopping more important than ever before. Your customers expect that they only have to drive to your store if you have what they need, when they need it.
I don’t think that retailing has changed all that much. The foundational things still apply, but technology that can identify a customer’s current location presents all kinds of interesting opportunities to encourage a visit that never existed before.
Mobile is accelerating the importance of a local strategy. There are over 100 million Google mobile maps users in the U.S. Some of our best performing ad units on a mobile device are brand searches and click-to-call. Consumers use their phones as shopping tools to save time looking for your store locations and calling for information. In fact, we have data that shows that mobile queries peak at the same time that offline sales peak. Those consumers who are a bit further ahead of the curve know they can find inventory availability and pricing information by store location on the web as well.
The easier the tools are to use, the smarter we become about who the shopper is and what she likes, the more opportunity there will be for advertisers to design an exceptional and personalized shopping experience for their customers.
What do you think the 2011 holiday season holds for retail?
Long lines and aggressive shoppers have been hyped by the media for the past three years. True or not, this stuff sticks with people. As a result, a greater share of transactions will shift to the web again in 2011. Shoppers will buy earlier and deal sites will see gains as consumers hunt for values. Increased use of technology in the aisles as a shopping assistant, as well as mobile and tablet usage will see exponential growth.
What is the number one recommendation you’d make for retail companies as they begin their holiday planning?
Don’t build another microsite. Increase your presence in social communities where consumers already spend time. You’ll activate a lot more users and benefit from network effects.