Retailers are increasingly looking to exploit opportunities to generate revenue through on-site advertising.
But as they do so, they run the risk of bloating their sites and harming user experience.
As AdAge’s George Slefo explained, “Many large retailers are successfully generating ad revenue from marketers eager to reach their visitors, who are reasonably considered to be in a shopping frame of mind.”
But to generate that revenue, many are “doubling down on ad tech.” That means that the code for pages on retail sites increasingly resembles pages on publisher sites.
For example, an image from Ghostery, maker of privacy and ad-blocking browser extensions, compared the ad tags from the website of American retailer Kohl’s with the New York Times website.
The similarities are readily apparent.
Ghostery, which also offers consulting services, says that the number of retailers it is working with has doubled in the past year.
“It’s almost like retailers actually have the same problems as publishers. Performance matters a lot. The more stuff you add to a site, the slower it gets.
“And in retail, more so than publishing, the speed of the experience matters more than anything else,” Scott Meyer, Ghostery’s CEO, told AdAge.
Is it worth it?
Meyer is of course correct about the importance of speed to retailers.
Slow-loading websites cost retailers more than $2bn in sales every year, and retailers were already struggling to keep the growth of page load times in check before the ad tech gold rush hit the online retail space in a big way.
While there is no doubt that large retailers have an opportunity to generate not insignificant revenue by participating in the digital advertising economy, because advertising isn’t their primary source of revenue, the stakes are higher.
That raises questions about just how aggressive some retailers are getting.
For example, as AdAge’s Slefo details, some retailers are now adopting header bidding, which can help media sellers maximize revenue. But header bidding, which is currently typically implemented using client-side solutions, can increase latency, particularly on slower mobile connections.
Additionally, and perhaps even more importantly, as retailers get deeper into the programmatic ecosystem, they will likely lose control over their inventory, creating the possibility that ads detrimental to their overall user experience, and thus sales, will slip through.
So if the stakes are so high for retailers, why are they so eagerly embracing ad tech?
Beyond the real revenue opportunity, it’s possible that there is an Amazon effect at work. Amazon generates more than $80bn a year in ecommerce revenue. Its nearest competitor, Walmart, generates less than a fifth of that.
As major retailers come to depend more heavily on online sales, they’re competing in a market in which Amazon is dominant.
Thanks to its brand, wide selection and services like Amazon Prime, more than half of consumers now start their online shopping searches on Amazon according to a recently published report from BloomReach.
Put simply, for obvious reasons, the shift to digital is a real double-edged sword for many of the world’s largest retailers not named Amazon, and that means that some of them will increasingly face pressure to sell the individuals who visit their websites (to advertisers), not just to sell products to them.