Despite continuous headlines about the retail apocalypse, U.S. retail sales are experiencing the fastest growth since 2006.
The retailers that are struggling are those that have failed to adopt innovative marketing solutions and scale their personalization strategies.
However, most marketers are not using these tools.
In a study the StitcherAds team conducted late last year, we uncovered some of the top challenges retail marketers are facing today, and how leading retailers are utilizing the platforms to overcome them.
Here’s an overview of what we discovered.
Challenge #1: Personalized content is difficult to execute and scale.
Personalization is at the core of retail marketing success in 2019. In a recent Evergage survey, 98% of marketers said they believe personalization plays a role in advancing customer relationships. However, only 16% said they were "very" or "extremely" satisfied with their personalization efforts.
Marketers know that without leveraging first-party data, personalization is impossible.
The big takeaway here is that marketers aren’t tapping into all possible data sources to personalize and scale content. There’s more to it than placing a pixel on a web site. Marketers should be using in-store transactions, previous purchases, product data (e.g. size, color and price), store data (e.g. name, location, local product availability, price and promotions), and creative (e.g. user-generated content, product ratings, multiple product images, seasonal themes, etc.) to open the door for personalization at scale.
By leveraging this data in the right way, brands gain the power to create content that resonates strongly with consumers. Retailers that are doing this effectively are overlaying product-level promotions, offers and other on-brand elements onto their images and videos. Depending on location, shopper preferences, availability and other factors, these marketers are applying rules to control the type of creative Facebook and Instagram users see. They are able to do things like retarget a cart abandoner with an ad letting them know that the jacket they have in their cart is in stock, in their size, and in a store a mile away that’s open until 9 pm.
Another trend we are seeing in the creative space is the transformation of print circulars onto social. While print circulars are targeted to zip codes, digitized versions on Facebook and Instagram allow for personalized, individual targeting based on store proximity and provide several effective means of measurement — all at a fraction of the cost of print.
We are seeing a number of retailers — from groceries to drugstores to department stores — invest in the digitization of their circulars onto social. They are targeting customers within specified store radiuses with offers and promos for that store.
Recent solutions on Facebook and Instagram enable retailers to target customers around thousands of stores from a single ad, thus removing one of the major barriers to digitizing the localized circular. Each personalized version of the ad contains relevant products (e.g. based on gender); optimizes promotions featured based on those driving the highest conversions; and provides the name, location, opening times and even directions to that store.
Facebook's Instant Experience ad format delivers an in-feed browsing experience similar to that of the circular that allows customers to browse every single offer in the circular without leaving their feed.
Challenge #2: A major divide still exists between the online and offline world.
This comes as no surprise: Consumers are ever-moving targets — seamlessly shopping and transacting across channels.
With the introduction of Facebook Offline Conversions, Store Sales Optimization and Dynamic Ads for Retail, along with other retail-specific solutions, Facebook has made it possible for retailers to effectively create, optimize, and measure online-to-offline ads at scale.
Multinational retailer Lifestyle estimates that more than 15,000 customers walk into one of its stores every single hour. In a fall 2018 campaign, the team utilized Facebook Offline Conversions and Store Sales Optimization to optimize their Facebook campaigns for in-store sales. They responded to customers’ omnichannel expectations by including online and closest store options in the ad creative.
This campaign garnered Lifestyle a 32X return on ad spend on Facebook-influenced store sales.
To level up in the online-to-offline advertising game, retailers are beginning to leverage Facebook’s Dynamic Ads for Retail with local inventory intelligence. This offering is enabling marketers to run dynamic ads with localized pricing and product availability for stores near customers. One retailer that works with StitcherAds saw a 249% increase in omnichannel ROAS on a year-over-year basis as a result of adopting advanced omnichannel strategies and using local inventory information in ad creative.
Challenge #3: Lack of effective measurement is impacting ad spend.
There's one thing retail marketers want to know: Are these campaigns driving incremental sales?
In 2018, Facebook launched its Test & Learn interface to help advertisers measure lift. This gives advertisers insight into results that wouldn’t have otherwise happened without Facebook and Instagram campaigns.
With this tool, marketers gain the ability to understand:
- Which campaign causes the lowest-cost conversions to occur? (This test compares two campaigns to determine which one yields a lower cost per conversion.)
- How much impact are all my Facebook ads having on my business? (This measures how many conversions occur as a result of ads.)
- How much impact is my campaign having on brand perception? (This test runs a poll to measure how much a campaign is influencing consumers’ perceptions of the brand.)
- Will setting a campaign budget improve performance? (The test evaluates if campaign budget optimization leads to a lower overall cost per result compared to ad set budgets.)
Perhaps the most enticing aspect of these tests is that Facebook does not charge to run them. However, in order to glean meaningful results and statistical significance, advertisers must meet minimum spend thresholds.
Retailers that capture customer emails and phone numbers in-store can rely on Facebook Offline Conversions to measure sales. But another solution is to conduct a market match test. International retailer Primark did this last year and uncovered strong results. Our team worked with Primark to identify two stores in the UK with similar sales behavior. With one store as the control, we targeted users near the other store with online-to-offline creative. Primark was able to determine that online-to-offline creative drove a 4% incremental lift in revenue during the campaign.
Innovative Retailers Are Hitting The Bullseye
Facebook and Instagram are continuing to deliver more solutions for retailers to innovate and reach consumers where they are. From digitizing print mailings to narrowing the gap between online and offline to effectively measuring campaigns, a high level of sophistication is required to adopt these tools. Hence, we strongly recommend that retailers partner with specialists to help them understand what’s possible and to overcome all of the technical challenges related to the data and creative required to fuel these solutions.
Conor Ryan is the co-founder and CIO at StitcherAds. StitcherAds is a Facebook and Instagram Marketing Partner helping retailers and agencies scale full-funnel O2O marketing campaigns. Ryan leads the charge on effectively executing omnichannel media campaigns for brands including Finish Line, Saks Fifth Avenue and JOANN fabric and craft stores.