Word-of-mouth tops online reviews and traditional advertising as the top influencer of purchase decisions, finds a Razorfish survey [download page] of online consumers across 4 key markets. The study is the latest to demonstrate the importance of word-of-mouth, which has been found to be a key influence among various groups ranging from college students to female empty nesters.
In the Razorfish study, the ranking of 5 measured purchase influencers (ranked by percentage of respondents rating them as influential) broke out as follows for US and UK consumers:
- Online reviews from other consumers;
- Online reviews from industry experts;
- Traditional advertising (TV, radio, print); and
- Social media posts from friends/family.
It’s interesting to note that these respondents rated online reviews from other consumers as being more influential then expert reviews, following a theme seen in other research.
We’re coming up on the all-important holiday season, in which retailers will be giving away coupons and special promotional offers in hopes of boosting awareness and selling out their wares. But for those retailers, what’s the best way to actually reach consumers?
Based on Accenture data charted for us by BI Intelligence, email is still the most effective method for consumers receiving and using coupons — by a wide margin. Around 44% of US shoppers said they prefer all their offers to come through email, and surprisingly, physical printed “snail” mail is the second-most preferred method. In-store offers can be somewhat effective, but if you want customers to take advantage of a special deal, relying on texts and social media might not be the way to go.
There’s been so many billion-dollar startups these days that it’s almost starting to feel routine in tech.
Slack, an enterprise work collaboration app, is the latest one to join the club. It announced on Friday that it’s raising $120 million at a $1.1 billion valuation.
It’s hard to imagine a company as young as Slack — it launched publicly in February — to be worth more than a billion dollars. But when you’re growing as fast as it is, especially in the enterprise space, anything is possible.
When we asked Slack CEO Stewart Butterfield about it, he agreed his company’s numbers are still small in absolute terms. But the $1.1 billion valuation has more to do with the rapid growth it’s been seeing, and the fact that it hasn’t spent a dime in sales and marketing, he said.
“We still have a long way to grow to justify the valuation,” Butterfield told Business Insider. “But it’s largely on the basis of the trajectory that we’re on, and most of all, because that’s just been happening organically.”
According to Slack, more than 30,000 active teams send over 200 million messages each month. It has more than 73,000 paying customers, and it’s adding $1 million in annual recurring revenue (ARR) every month. At that pace, Slack would surpass $10 million in ARR this year, and become the fastest-ever software-as-a-service (SaaS) company to do so.
For comparison, Butterfield m! entioned Workday, a publicly traded enterprise SaaS company that’s now worth $17.8 billion. Butterfield said it’s not an entirely fair comparison, since Slack and Workday are in different businesses, but it took Workday about three years and roughly $30 million in sales and marketing — while losing about $75 million in total — to get to $10 million in ARR.
“We’ve established that people would pay for us. Slack is being valued based on its ability to make money rather than something more speculative,” Butterfield said.
Omnicom Group, the world’s second largest advertising holding company by revenue, just gave the market another major indication that TV dollars are moving to digital.
Speaking on the company’s third-quarter earnings call Tuesday, Omnicom Group CEO John Wren explained how the rise of programmatic advertising and the increase in quality inventory becoming available online over the past few months has seen a “rapid shift” in the way clients have been booking advertising.
Referencing the move from TV and traditional advertising to digital in particular, Wren said:
“Marketing budgets continue to grow and clients, especially when it comes to TV, there has been I’d say a shift when you look at traditional areas like the upfront and scatter market. If you went back a couple of years there was an urgency on the part of clients to make certain they didn’t miss out on the programming they want.
“With all the various choices of audiences you want to reach today and the ability to do it, there just wasn’t that urgency going into the upfront this year. And with respect to the scatter market, you are seeing money being diverted into other areas.
“I believe that trend will continue. I don’t believe TV is dead, but I believe there is going to be a shift.”
The upfront refers to the time of year when TV broadcasters sell all their advertising for their most attractive Fall programming ahead of time. The practice keeps the price of TV advertising high because it creates a short, limited window in which brands feel they need to lock in the best deals they can by buying in bulk.
The scatter market refers to TV advertising sold closer to the broadcast date. It is sometimes referred to as leftover advertising and is often sold at a far higher rate if the TV show pulls in bigger ratings than previously forecast.
Wren called to the move from traditional media buying to digital practices as “the shift from mass marketing to mass personalization.” That shift isn’t new advertising money coming into the market. It’s TV advertising money (and other traditional advertising money) moving into more-measureable online advertising. That move from one pot to another was also referenced by Omnicom Media Group CEO Daryl Simm earlier this month when he said he was advising clients to shift as much as 25% of their TV budgets to online video.
Meanwhile in recent months Omnicom, which represents more than $50 billion in annual ad spend for clients like Apple and Pepsi, has signed huge global upfront advertising commitments with Instagram, Twitter, and the now Disney-owned YouTube content creator Maker Studios and became the first advertising network to trial Facebook’s new Atlas advertising platform.
All these stories compounded together ought to frighten TV broadcasters. They need to change their approach to selling, optimizing, and measuring advertising if they are to prevent this “shift” from rapidly decaying their businesses.
A shift is happening. But TV isn’t at all dead yet.
However, to put this into some perspective, TV advertising is projected by eMarketer to make up 38.1% of total US ad spend in 2014. Digital, meanwhile, is estimated to make up 28.2% of the total advertising outlay.
So even though eMarketer also predicts digital spend will overtake TV spend in 2018, there is still quite a way to go before we stop seeing 30-second ads on our TV sets. It’s also worth bearing in mind that broadcasters are ! also off ering digital advertising opportunities across their websites, video-on-demand platforms and apps, which can make up for some of the traditional advertising shortfall.
Omnicom also revealed on the earnings call that programmatic media buying — which makes the buying of media far easier than TV because the process is automated —accounts for just around 2% of the company’s revenue. However, with a recent Forrester study forecasting programmatic ad spend across North America will double to $39 billion by 2019, Wren said the company was ” rapidly evolving” its business to ensure it had the capability to serve clients in this area. There has been a “meaningful increase in demand” from clients for the company’s programmatic services over the last year, he added.
Omnicom Group’s third-quarter net revenue rose 7.4% to $3.75 billion, while net income increased 24.4% to $243.8 million. The company was boosted by strong advertiser demand in its home US market.
The earnings report came six months after the company’s proposed merger with Publicis Groupe to create the world’s biggest advertising group collapsed. The company said the pre-tax impact of the abandoned transaction in the year to date was $8.8 million, which was mainly spent on professional fees.
A slim majority of marketers and salespeople from around the world say that their lead generation effectiveness is improving, while just 1 in 10 see it worsening, finds Ascend2 and its Research Partners in a new study[download page]. While that may be the case, respondents (chiefly B2B-focused) were more likely to say that their costs-per-lead are increasing (25%) than decreasing (19%).
Data quality appears to be a significant problem area in the report. In a worrisome juxtaposition, improving marketing data ranked last on the list of important lead generation objectives, even though lack of quality data and list resources tied with the lack of an effective strategy as the most challenging obstacle to lead generation success. Slightly fewer said that inadequate marketing budgets are most challenging.
Budgets, however, have been blamed for not meeting sales lead generation targets, according to a recent study from 360 Leads. Respondents to that study were more apt to blame budgets than data quality issues for missing their targets. Interestingly, marketing and sales respondents to the 360 Leads survey pointed the finger at internal company issues as a chief obstacle.
Card-not-present transactions include e-commerce and mobile payment transactions, online bill pay, over-the-phone transactions, and the like — basically any card-based transaction made without presenting a physical card to a merchant.
- Total general purpose payment card transactions, including credit, debit, and prepaid card-present and card-not-present transactions, will increase at compound annual growth rate (CAGR) of 6.2%, from 80 billion in 2013 to 108 billion in 2018.
- Card-not-present transactions will grow at more than double that rate, at a CAGR of 15%, from 13.6 billion transactions in 2013 to 27.3 billion in 2018.
- Card-present transactions will grow much more slowly at a CAGR of 4%, from 66 billion in 2013 to 80.7 billion in 2018.
- Card-not-present transactions will account for a quarter of general purpose payment card transactions by 2018, up from 17% in 2013.
We arrived at our forecast based on data from the Federal Reserve, past growth trends, and our close tracking of the card payments industry.
Here is a look at share:
E-commerce has been upending the retail industry over the past few years, and retailers are desperately trying to figure out the happy medium of how many stores they need to operate and how much to invest in e-commerce.
And, if comScore’s latest U.S. e-commerce data is any indication of what to expect this year, e-commerce sales will continue growing at a rapid pace. BI Intelligence has prepared the chart below, showing how e-commerce sales have trended since 2008.
- PC-based e-commerce spending in the U.S. grew 12% year-over-year to $56.1 billion in the first quarter of 2014. This is the fourteenth quarter in a row that desktop-based e-commerce spending has grown by double digits.
- Mobile-based e-commerce spending grew 23% year-over-year to $7.3 billion in the first quarter.
- PC-based spending accounted for 88.5% of all e-commerce purchase volume in the first quarter. For comparison, PC-based spending accounted for 89.5% of all e-commerce spending in the first quarter of 2013, so mobile is taking up a bigger share of online purchases.
BI Intelligence, Business Insider’s premium research service, recently launched a new vertical dedicated to the e-commerce industry. Subscribe today to stay in the know on the rapidly changing e-commerce industry.
With all the talk of showrooming — consumers armed with smartphones, comparing prices in-store — little has been made of the phenomenon known as reverse showrooming. Reverse showrooming, in which consumers compare prices online, but then go to the store to buy, is actually more common than showrooming and offers bricks-and-mortar retailers a real advantage over e-commerce only companies.
In the U.S., 69% of people have reverse showroomed, while only 46% have showroomed, according to a Harris poll.
In a recent report from BI Intelligence, we examine the numbers behind showrooming and reverse showrooming, what’s driving each trend, and what the different showrooming behaviors look like. We also look at what in-store advantages retailers have, and what they are doing both to capture in-store sales from reverse showroomers and to drive up purchases across channels.
Here are some of the key ways bricks-and-mortar retailers are leveraging their advantages to drive more reverse showrooming.
- Free Wi-Fi: Retailers have begun installing free Wi-Fi in their stores. This would seem like exactly the wrong approach — why give consumers an even easier means of looking up product reviews and prices online? But providing free Wi-Fi is a way to keep the consumer happy in-store and encourage use of a retailer’s own mobile sites and apps.
- Smartphone Savings Programs: Retailers like Target are rolling out in-store smartphone saving programs, which provide consumers with discounts via the retailer’s mobile app. These are also often integrated with mobile loyalty programs in which consumers earn points for making purchases.
- Bringing Social And Online Trends Offline: Taking the online retail research people are doing and weaving it into offline promotions is perhaps the most overt way to capture the attention of reverse showroomers. Over the summer, Nordstrom rolled out an in-store program that promotes the retailer’s top-pinned items on Pinterest.
- Online Ordering, In-Store Pickup: A variety of retailers, from Target to Toys “R” Us and The Container Store, have integrated their online and offline stores to provide consumers with online ordering and in-store pick-up options. Sears has even recently introduced online ordering, with drive-thru pick-up. The idea is to offer convenience — giving consumers what they want right away, without dealing with in-store frustrations.
- Customer Service: Many retailers have started working to make sure their sales staff is knowledgeable and helpful. A better-informed sales staff was by and away the most likely reason shoppers said they would be more likely to buy in store, according to a Deloitte study. (See chart, above.)
- New initiatives for the connected in-store experience keep popping up: tablets and mobile phones used as register systems, robotic arms that deliver clothing into dressing rooms, and beacon hardware, which powers in-store maps and automatic hands-free payments.
- The key rationale behind all these changes: successful retailers are beginning to think of themselves less as purveyors of goods, and more as all-around consumer resources.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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