Online retailers, including Overstock.com and Amazon place ads on their product pages, but can this be a good idea?
The argument for suggests that advertising can allow online retailers to monetise traffic and profit from those visitors who were not planning to buy anyway. Can it work, or is it an unwelcome distraction for shoppers?
WinBuyer recently launched its Shoppers Audience Network, which allows advertisers to place targeted ads on e-commerce sites. This has been going for a month in the US on sites including Overstock.com and Bidz.com.
According to Winbuyer CEO Miki Balin, these ads are effective, as they are targeted at visitors when they are in research or purchase mode, and therefore more receptive to ads. In addition, since customers have been looking at particular product categories, the ads can be targeted and relevant.
Balin believes that this is one way that retailers can become publishers and monetise their traffic:
Since 98% of traffic typically leaves an e-commerce site without buying, retailers see these ads as a way of monetising this traffic, and relevant ads can be seen as a service by visitors. While they are there, and of they are going to head elsewhere, then why not give them some relevant ads? From a retailer's perspective, it is a no-brainer.
I asked Balin about the possibility of competing retailers advertising on sites, but at the moment the ads are restricted to brands, while retailers have the say over which ads appear on their websites.
Ads on product pages is something I have noticed before on Amazon, a site which surely has plenty of traffic to monetise. Since its product pages are relatively busy, the ads don't stand out too much:
On Overstock.com, the Winbuyer ads are in a prominent position on the page:
Since retailers are looking to convert visitors into buyers on product pages, it seems odd to place an ad in a prominent position, one that could take that customer away from a potential purchase and onto another site.
On this page, the Dell ad is probably the most prominent feature, certainly more so than the call to action to buy an item, which should be the clearest link.
According to Winbuyer, the ads are designed to target the 98% of visitors that would have left the site anyway, and conversion rates are monitored for any negative effect caused by ads. In addition, early stats from Winbuyer(the ad network was launched a month ago in the US) show that click through rates for these ads are between 0.3% and 1%, higher than the average for online display ads.
Whether this tactic is one that will work for online retailers remains to be seen. There is logic in making some money from the vast majority of visits that don't result in a purchase, but it seems counter-intuitive to place anything on a product page that could distract customers from a purchase and take them away from the site.
I'd love to hear some more opinions on the issue - can showing ads on product pages work? Have you tried it on your site? Let me know below...
Reader comments (13)
Client Services Director at Webgains.com
2:55PM on 7th December 2010
I would argue that merchants should try to ensure they convert that lost 98% of their traffic by utilising better marketing methods/channels and by improving their sites. Dipping their toes in becoming an affiliate for other companies is creating confusion for the consumer and, ultimately, jeopardises the merchant's brand perception.
This is especially important for merchants with an affiliate program - they can't ask their affiliates to promote their store on a performance basis, only for them to utilise the traffic and monetise it elsewhere. These leakage points need to either be addressed for affiliate traffic (removed), or they need to pay their affiliates for the traffic instead of sales.
Using Amazon as an example is quite misleading - Amazon has marketplace and resellers, so it's more than a direct retailer.
Retailers can't be good at 2 things - they either get customers to buy or they refer them somewhere else. The combination of the two just gives average results at both, at the best of times. Usually it just compromises both.
3:02PM on 7th December 2010
Looks like Mattel is taking this approach as well on it's web properties:
http://www.clickz.com/clickz/news/1899704/mattel-designs-web-properties-advertisers-mind
3:13PM on 7th December 2010
I have always been strongly against this. It's hard enough to convert users into purchasers without an assisted sale anyway without tempting them to go elsewhere. Almost without exception a conversion will be worth more than any CPM advertising revenue unless you have absolute massive traffic and relatively low margins like Amazon and if it's on a CPA basis merchants are better off trying to convert there and then.
Digital Auditor at ABC
4:31PM on 7th December 2010
I think it is overkill!
marketing manager at WinBuyer
8:04PM on 7th December 2010
My name is Michal and I’m WinBuyer’s marketing manager.
Thank you, Graham, and the Econsultancy readers who took the time to comment.
WinBuyer’s optimization technology ensures that ads do not cannibalize product sales. Beyond this, our initial Shoppers Audience Network retailers, an Ecommerce pioneer like Overstock, would not be working with us if their ad sales cannibalized merchandise sales.
According to research from Yahoo! and comScore, a 53% increase in page views occurs when pre-shopping consumers are exposed to online ads.
Some of the responses in the comments aren’t surprising. WinBuyer’s Onsite Comparative Pricing solution, which enables offering users comparatively priced products directly on the product page, is also counter-intuitive. But with more than 300 retailers and growing, the increase in revenue and conversion rates is proof of the value WinBuyer provides. And now, the Shoppers Audience Network is the next phase in our effort to enable retailers to monetize page traffic while increase revenue without negatively impacting merchandise sales.
9:33AM on 8th December 2010
Using Amazon as an example is quite misleading - Amazon has marketplace and resellers, so it's more than a direct retailer.Retailers can't be good at 2 things - they either get customers to buy or they refer them somewhere else. I think it is overkill!
Founder & Lead Consultant at L3 Analytics
9:57AM on 8th December 2010
My instinct says that this is not a good idea for retailers (sorry Michal). I can understand retailers trying it and continuing to use it - there is a proven revenue stream there against what I expect would be an uncalculated/unproven drop in sales (unless that retailer has a good web analyst on their team). And without being given numbers for both sides of the equation, most people would take the money.
The key things I would be looking at if evaluating the impact of this (as a web analyst):
My instinct may say no but the numbers may say that it a sensible tactic, find out these numbers and then make an informed business decision
3:01PM on 8th December 2010
Just as in-store marketing has its place on the high street influencing shoppers and helping them make purchasing decisions, in the world of online, advertising on an ecommerce site can also be extremely effective. Our research has found that far from being a distraction, 60% of shoppers are actually receptive to adverts placed on e-commerce sites. This indicates that there is a real opportunity for brands to start looking at online shops as a place to promote their goods and services. The overwhelming benefit of advertising on an ecommerce site is that it gives brands the opportunity to engage with consumers in a purchase mindset. This could be at any stage of the purchasing cycle - whether as part of their initial shopping research; when they’re looking for a specific product or brand; or when they’re ready to buy, making ecommerce sites prime real estate for advertisers.
8:30PM on 8th December 2010
Earlier in 2010, I conducted a usability study on an eCommerce website to evaluate the impact of usability on a website where multiple revenue channels were taken into consideration. The revenue channels considered were product sales, advertising on the storefront and advertising on the blog/community section. The study produced some fascinating results, one of which was that users balked at advertising in the storefront area and every single test subject was opposed to the advertising. In the first test, users were found to have been affected by "banner blindness" and whilst moving the advert positions and changing the types had an effect on this in the second round of testing, the most positive effect was that, after removing the adverts altogether, and then analysing the site traffic, sales revenue, advertising revenue- pre usability and post usability testing (and changes) - product sales click through rates went from 0.4% to 10.59% - more than enough to cover the loss of revenue in product advertising. (CTR was measured from product detail page through to checkout) As a result the eCommerce site concerned has made a decision to have any advertising on the storefront portion of their website and all adveristing is relegated to the blog/community section, where is still generates a decent amount of income based on. Based on what I've experienced on this site and a few other UK eCommerce sites, I would say ads on an eCommerce are a bad idea and appear to negatively affect revenue when served up with product pages.
11:21PM on 8th December 2010
It's one way or another.
You either keep people on your ecommerce site and drive them THROUGH the shopping funnel, or you create content, sell ads and lead them FROM the site.
You can't have both at the same time.
2:53PM on 10th December 2010
Hello, I'm the CEO of Electric Shopping, a UK-based WinBuyer customer. I can say that while WinBuyer solutions appear counter-intuitive, they have increased our conversion rate. The company’s Onsite Comparative Pricing Solution is providing a lift in revenue for us at Electric Shopping. We plan to use their Shoppers Audience Network ad solution is available in the UK, too, in Q1 2011.
3:37PM on 13th December 2010
If you're after repeat custom then this might be a fail. If you tell customers they can find the product cheaper elsewhere then surely they'll not bother coming back to your site again?
Head of Online at Pharmacy First
4:29PM on 13th December 2010
98% of customers not buying? I think that that is a very high drop off rate! Our site converts arou 12-15% of traffic nto sales and sometimes more, so I would not dream of advertising our competitors or even the brands on our site as this could further reduce this. It would only make sense if the profit margin on the item is lower than the EArnings per click of the adverts.
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