Here’s how it will work: If you’re browsing on Amazon but decide not to buy that DVD of “Star Wars,” Amazon will drop a tracking cookie on your browser. When you go elsewhere in Amazon’s exchange network — which includes Amazon, IMDb, DPReview, and various ad exchanges and publishers that Amazon has a relationship with — you might see an ad pop up offering you another chance to buy “Star Wars.”
It’s pretty much exactly what Facebook has done with its FBX RTB exchange. Some analysts believe that Facebook may be able to generate $1 billion a year from FBX.
The advantage Amazon will have, however, is that it can use its vast trove of shopping data to target users with ads based on their purchase histories. Neither Facebook nor Google (which also does RTB retargeting via DoubleClick) can do that. Adweek says:
The self-serve RTB platform would hypothetically function similarly to Facebook’s Ads Manager in terms of how buyers could target their ads. Sources said Amazon is extremely protective of its data and wary of providing outside access, so like Facebook, Amazon’s platform would enable buyers to create targeting segments such as “men; aged 25-34; in Califo! rnia; in terested in high-definition TVs; who have purchased how-to books and home improvement tools.” But Amazon is not about to hand over its customer’s names or individual buying histories.
The three giants — Amazon, Facebook and Google — now face off in RTB like this:
Amazon: Owns the best database of actual shopping history and purchases. This type of data is like gold for advertisers. Clients have long awaited the day when “the sleeping giant,” as it is known in the ad biz, finally wakes up to advertisers. That day has dawned, it seems.
Facebook: Owns the best database of personal information about consumers. 1 billion users strong, with all their interests and friends, it’s terrifically useful stuff for marketers.
Google: Has traditionally dominated the “purchase intent” sector of the category. When people search for “Star Wars DVD” online, that’s a pretty good indicator they want to buy said movie. Google has been serving ads (and retargeting ads) against such requests for years. But its data on shoppers and their histories has never been as good as Amazon’s or Facebook’s.
Disclosure: The author owns Facebook and Google stock.
This holiday season, small retailers are leaving Groupon off their lists as far as sales strategy goes.
This shopping season is the biggest one of the year, and small businesses often rely on sales made during this period to bring them into the black as the year comes to a close.
A sales strategy that didn’t work during the rest of the year is out of the question for the holidays, says Pamela Springer, CEO of online small business network Manta.
This doesn’t bode well for Groupon and other daily deals sites. Only 3percent of retailers got repeat customers out of daily deals promotions, according to a survey Manta released Oct. 30.
“They’re doubling down on things that work, and leaving things that are less proven or they’ve had experience with and didn’t work off to the side,” says Springer.
If businesses aren’t getting repeat customers out of Groupon deals, they’re losing money, says Anthony Bruce, CEO of retail data analyzer Applied Predictive Technology. Groupon often charges businesses as much as half the revenue of a deal sale, which is usually a drastic discount already.
“If there are future purchases that occur because of a Groupon, that’s great,” says Bruce. “If it’s an incremental visit I wouldn’t have gotten anyway, it’s bad. If it’s a visit I would have gotten anyway but did it with a Groupon, that’s terrible.”
Jennifer Untermeyer says she won’t use Groupon this holiday season, because she lost money on the five daily deals she ran last year for her business, TravelKiddy, an online store that sells toys and games to keep kids busy during road trips or plane rides. She ran her first $10 deal for $20 of merchandise on Eversave last November, trying to snag holiday travelers, and ran four more similar deals on niche mom-! themed d eals sites, hoping to score new customers.
It didn’t work.
“We can tell how many people we’ve had repeat, and it’s eight or nine out of 3,000 deals,” she says. “We ended up in an overall loss, even factoring in the marketing benefits.”
Sales chief Kal Raman says Groupon helps businesses retain customers through its reward program, which is sort of like a frequent-flier program for customers. The program helps businesses track purchases a Groupon customer has made, and after a certain level of spending is reached, Groupon automatically sends the customer a free deal.
“We effectively become their loyalty-management company,” says Raman, who sees Groupon as a great way for retailers to sell inventory they’d otherwise be sitting on. “As a small-business owner, you can aim high, and we can hedge that risk.”
Will Ander, senior partner of retail strategy firm McMillan Doolittle, says liquidation is the only good thing Groupon does for small retailers. “It’s more effective than giving it to the Salvation Army.”
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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