Trend Spotting: Online (Part 2)

by Peter Koeppel on Oct 20, 2016 12:00:00 AM D2C Convention, Digital Marketing, e-Commerce, Consumer Behavior

Trend_Spotting_Online_Part_2-273900-edited.pngAt the recent D2C Convention, I presented a session entitled, Trend Spotting: Benchmarking the Present and Predicting the Future of Marketing. My intention was a simple one: to synthesize the latest statistics, forecasts, and best practices in marketing from over 100 different sources to save my audience time and to provide insight that will help you today and in the future. In the second of this six-part series, I'll take a look at online. Given the presentation was limited to an hour, I have had to limit my focus, but hopefully the learnings gleaned will prove helpful to the reader.

By the Numbers

Marketers know that media usage habits vary by demographic, but what are the real numbers? The chart below shows the percentage of online media consumption by adult age group as reported by the Nielsen Total Audience Report, Q1 2016.

Trend_Spotting_Online_Part_2_Chart_1.png

To make things easier, I’ve tallied the total of PC, tablet, and smartphone usage as a percentage of total media intake. The results are:

  • P18+ = 30%
  • P18-34 = 39%
  • P35-49 = 37%
  • P50+ = 20%

Not surprisingly, it is Gen X and Y (the latter also being referred to as Millennials) that are spending more of their time online. Yet, it is only in this latter group that the amount of time spent watching TV is eclipsed by second-screen behavior.

But what are people really doing? According to data from comScore depicted in the chart below from the end of last year, 19 percent of their time is spent on social networking, followed by multimedia at 12 percent. Retail—which presumably means shopping—comprises 5 percent of behavior. Over to the right, we have ”Other” at 34 percent, which sounds much better than the term “Porn.”

Trend_Spotting_Online_Part_2_Chart_2.png

Shop Till You Drop?


One thing we know for sure that consumers are doing is SHOPPING! A recent survey from comScore indicates 51 percent of shopping purchases were made online by those surveyed. The survey, now in its fifth year, polled more than 5,000 consumers who make at least two online purchases in a three-month period.

Now when you look at the overall numbers being reported, which include $4.87 trillion in overall sales (including brick and mortar) according to eMarketer, that claim seems a bit odd given overall e-commerce is still dwarfed by traditional retail sales. One thing is for sure: e-commerce is continuing to grow and siphon off sales from traditional physical retail. Think about it—you don’t have to wonder if something is in stock, or whether they have your size, and nowadays, with delivery turnaround continuing to shrink, more and more consumers are opting for the online option.

To which:

  • E-commerce sales reached nearly $351 billion last year.
  • That still only represents slightly over 7 percent of total domestic retail sales. However, if you factor out automobiles and fuel, which are not normally sold online, the e-commerce number rises to 10.5 percent.
  • What’s more, that’s year-to-year growth of 14.6 percent, but more importantly, 60.4 percent of total retail sales growth.

So the trend is clear and there is virtually unlimited upside potential for online retailers. Yet there are victims in this scrum, as some traditional retailers—especially mall anchor department stores—struggle for relevance. Macy’s recently announced plans to close some 200 stores, yet Macy’s ranks fifth in overall online sales among the leading retailers listed below.*

Trend_Spotting_Online_Part_2_Chart_3.png
Source: eMarketer

Take a look at Amazon. Its estimated annual sales sit at nearly $80 billion, while second place Walmart is at $13.5 billion. While everybody else is trying to catch up to Amazon, the online retailer continues to add millions of Prime members who are spending $99 a year in fees—fees that can be used to offset product margins that nobody else in the marketplace is going to be able to compete with. Think of it like Costco on steroids. Costco makes 75 percent of its $3.2 billion in operating profits from membership fees and vows to try to not mark up anything it stocks more than 11 percent! That’s why having a brand that means something to consumers is so important—we can’t have its private label—Kirkland—stamped on everything!

The Power of Video

Another trend I'm seeing in online marketing is, of course, the use of video. How effective can the use of video be? According to Unbounce, having video on a landing page can increase conversion by 80 percent. On at least one campaign I know of, the close rate when a prospect watched a video quadrupled. More and more of that video content is being viewed on YouTube, which is now the second largest search engine behind Google. It processes 3 billion views a month. Furthermore, nine out of 10 users say seeing a video about a product is helpful in the decision process.

But here’s the thing—it isn’t just your own video content you have to worry about. Now we’ve got vloggers who do product reviews, shopping haul videos, and how-to videos to contend with and many of these will be among the highest rankings on your keyword search. Therefore, marketers have to vigilantly monitor what is going on with regards to their brand and products, because these types of videos play a major role in the aforementioned influence.

Here are some more quick stats regarding the power of online video:

  • Forty-six percent of users take some sort of action after viewing a video ad, according to the Online Publishers Association.
  • More video content is uploaded in 30 days than ABC, CBS, and NBC networks combined have created in three decades!
  • Online video advertisers prefer pre-roll ads by a 3:1 margin over the next most favored format, according to Break Media.

Of course pre-roll ads are one of the ways that advertisers can use video, though the obvious challenge remains—how do you get someone to not skip over your ad? Perhaps the most clever example that emerged in the last year was GEICO’s “Unskippable” campaign, which uses humor to subvert the viewer’s expectations and get you to stay glued to the commercial. In the best example, a nuclear family at the dinner table is seen as the voice over announcer proclaims, “You can’t skip this GEICO ad because it’s already over…” The actors freeze and the family dog proceeds to jump up on the table and wreak havoc. Since GEICO is all about impression-based, in-your-face advertising, this is a brilliant tactic executed flawlessly. The campaign won Ad Age’s 2016 Campaign of the Year.

Online advertising is such as rich vein, there are obviously a multitude of other angles to explore, but hopefully this information will prove helpful. Next week in part 3 of this blog series, I’ll explore mobile advertising trends.

Peter Koeppel is Founder and President of Koeppel Direct. He can be reached at (972) 732-6110 or online at pkoeppel@koeppeldirect.com or twitter.com/DRTVBUYER.

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