Category Archives: retail

Groupon vs. Advertising? Response to Bernhard

Of course, I disagree with Eric Bernhard’s simplistic view of advertising posted on TechCunch.

It echoes the obsession with media decisions that are simply easier to measure (vis-a-vis conversion rates) alluded to in my prior post about defining viewthrough. Rule #1 of analytics: Just because it is easy to measure doesn’t mean you should – although there are some cynical arguments about job security.

Effective advertising is dangerous as Jeff Molander put it, but potentially very powerful – it always has been as it continues to evolve. Unfortunately, executing and measuring advertising is *much* more complex than pushing a button and signing up for a Groupon promotion: there are media choices to plan and buy as well as serious creative and messaging decisions.

Compare that to Groupon’s appeal: “No one makes it happen faster”,”savvy young audience”,etc…

Sales pitch aside, Eric is onto something deeper in his primal mistrust of brand advertising. The perception that a Groupon is inherently less risky than advertising alternatives is actually a clever meme that is apparently being well-tapped by Groupon’s sales force and marketing. 
That a business can actually tangibly see people (customers as they are buying) coming in the door (profitable transactions or not) is new, powerful and real. Less easy to measure is the long-term impact of this Pavlovian bell. Naturally, business owners assume some will be sticky to make up for the price-sensitive deal shoppers. Basic accounting should clue the business owner in as to the actual cost of the promotion.
Meanwhile, it is just not that easy to measure the impact of branding on an ephemeral mass of people that didn’t come in – to the point about conversion rates. 
What is going on here? Game Theory proves over and over again that most people are VERY risk-averse. Ultimately, if we reframed the opportunity instead by offering each of the $20K advertising deals for FREE to business owners – what do you think their response would be? 
Many will prefer take the certainty of free advertising over a specific and likely loss.

Retail Online Media still Under the Radar

Happy New Year! Very interesting piece by Christopher Vollmer in Strategy & Business, Major Media in the Shopping Aisle. Since my background spans retailing (offline at Walgreen’s) and online media (agency, media and ad server software side) this caught my eye while browsing in Borders last night on Michigan Avenue.

However, S&B did not dig very deep! They totally missed the nascent Retail Online Media programs out there for a few years now and continuing to grow.
Such promotion and merchandising act as the front-line tactic for achieving retail sales. I had the opportunity to learn this up close and personal while I was in store operations with Walgreen’s early in my career…it is also probably why I chose to focus on marketing while attending Loyola’s GSB.

On the other hand, it’s understandable and not likely that, Sam’s Club and
CVS others are looking for trade coverage while they work out the kinks in these very high-margin (advertising) programs. These programs are akin to store circulars and local co-op ads (think Intel isnide or auto delership ads) but online; they are methodically bringing a brand message to targeted consumers as they are proceeding down the purchase funnel. For CPGs, the main media partner is their retail distributors and the funds are pulled from co-op marketing, MDF (market development funds) or trade allowances.

Retail online media is still under the radar although firms like Triad Digital Media are expanding the possibilities. Triad is a fast growing unit of MARS Advertising and functions like a rep firm, ad ops service provider and production studio rolled into one.