Brands Targeting Shoppers - Not Just Consumers - On Retailer Websites Says HookLogic CEO Opdyke

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Shopper MarketingJonathan Opdyke is CEO of HookLogic, an eCommerce media company.

Opdyke provided an update on HookLogic's business following the announcement of the hiring of Jeff Griffin as the company's President of Retail. Read the release.

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AdExchanger.com:  What are you seeing currently from e‑commerce retailers and their willingness to get into the data game of advertising?

JO: First, it's the same monetization opportunity that publishers work on every day. Retailers are basically joining in on the publishing game.

In terms of what we see, about a year and a half ago, it was an interesting idea to many ecommerce retailers, but it wasn't a priority. And, it was something that retailers feared - and for good reasons. The primary business model for retailers is to sell products. Anything that potentially gets in the way of selling products is going to be looked at with trepidation. On the other hand, if you do it right, if it's contextual and relevant, it may not even look like advertising.

What retailers are seeing is that what we do complements a number of factors. For one, there are a number of us out there that are proving that media within a retail environment is acceptable. We are a good analog to media placements in physical stores - online has actually been pretty late in that game.

The second thing is profitability. Some retailers make large margins, but most retailers are running on thin margins. When you consider adding media to a retail website, it can add a significant amount to the bottom line and reflect the total value of the site’s audience.

When you look at the conversion rate of an e‑commerce site and recognize how many people are visiting it, but some consumers are using it only as a research vehicle, you recognize that, like it or not, retailers are publishers. With [HookLogic’s] hire of Jeff Griffin and his work on the Zero Moment of Truth Initiative, it's a testament to why we exist.

Retail sites sit at the confluence of the Zero Moment of Truth and the First Moment of Truth. The First Moment of Truth is the shelf - an online retailer is a shelf. People are looking at products with an opportunity to buy right then.

But, online retailers are also at the Zero Moment of Truth where so many people are using online retailers as research vehicles before making their purchase decisions. Consumers then may go into a store, or to another site in order to buy.

A lot of things are happening in the industry right now that are pointing in the direction of being closer to shoppers and their decision points.

With some ecommerce publishers, do you see a content strategy that makes sense for them?

Certainly. We talk to a lot of retailers today that are thinking about content strategies. They've built up great content, particularly around social reviews, product information and images. Much of that content is re-purposable into content that helps with buying decisions overall.

Retailers are beginning to partner with other publishers so they can provide that full decision experience. It’s not just about the order-taking place; it's about a bigger part of the decision process.

And that makes retailers even a bigger publisher where you can combine both the informational publishing aspect, as well as the full-decision process. It's one thing when a brand buys media to influence the top-of-funnel activity. It's another thing when a brand can buy media and see the conversion against media directly attributable to their ad. Most brands are looking at things more than on an audience basis. In this case, you're talking about not just an audience, but also an audience that is sitting at a decision point where we can measure what happens at that point.

Bringing it back to the media today and your clients, what are the budgets that marketers are bringing? Are these trade marketing dollars that are flowing through you?

It's a mix of budgets. There's a bit of ambiguity in the digital space because many trade budgets were clearly defined for offline buying activities like free standing inserts (FSIs), in‑store displays and end caps. Online is more of a mix because you have agencies that typically spend brand dollars.

There are trade budgets that go toward a particular retailer. We help on a number of fronts there because our platform helps a retailer sell its own inventory.

Also, we’re seeing the growth of that third bucket in-between, which is the shopper marketing money that brands control. They look for programs focused on shoppers. Trade is always assigned to a retailer, but also more focused than the brand budget. Instead of just consumers, they're actually focused entirely on shoppers.

In regards to shopper marketing, is this a phenomenon? Or?

I think it’s a phenomenon.

“Shopper marketing” is a nebulous phrase because it's been defined in a number of different ways. The way I like to simplify it is: there's the general consumer that hasn't yet said they're in-market for something and that's where some of the stimulus marketing happens – by making them consider new models.  But, because it's easy to tell if your data is in the right spot when someone is saying they are in fact a shopper considering products, marketers flock to it because that's where direct ROI happens. That's where you can see conversion happen against your marketing.

If you boil down shopper marketing to the digital environments, it's as soon as you can identify somebody as an active shopper. They become that much more valuable to you as an advertising target. When you look at what we're doing, we're not only identifying the shoppers, we're targeting them in the context of making their decisions.

You're seeing more brand money get comfortable moving online in the context of shopper marketing because they can actually see direct results happen from it, whereas a lot of the TV money… that would be more of the brand, consumer‑oriented spend not targeted at shoppers. Admittedly, it's harder to reach as much scale online as you can TV which remains a great mass medium to spend tens of millions of dollars and reach tens of millions of consumers. It's harder to do that online. But, if you can focus on shoppers, you can spend your money very effectively.

Can you drill down on real‑time bidding and how it’s a part of the HookLogic platform?

Basically, a brand can come into our platform, work with our retailers, and put in money. They see their products' categories. They see the SKUs that they have for sale. Then, they place pay‑per‑click bids in the platform that manifest as featured products or sponsored products on retailers' sites. If you think about the search results on a major retailer, you'll see a list of products that are served up in some kind of order. We take a portion of the real estate there. And we're serving up relevant products, but each of them is a pay‑per‑click ad. So, as that brand wins the auction, their products show up at top of store. They get clicks. Then, we're able to attribute each of those clicks to transactions of their product when people buy.

Brands see a real‑time dashboard that shows them how many impressions they’re getting on ecommerce sites of their products. Also, they see how many clicks [they’re getting] and how much they’ve spent. Then, as the attribution data comes in, which obviously comes in on some delay because people's decision cycles work into a few days or, depending on the product setup, a few weeks, they then see the transactions come in as a result of the users that clicked on their ads.

It's all self‑contained so that Brands see the full ROI set in the platform. Not to mention, when they do make a buy, they're influencing sales on other retailers just by virtue of being the product that somebody looks at. They may go walk into a physical store later and buy that product, too. There's a whole “halo” effect around it, too.

You received a round of funding back in September. How's profits these days or have you been concentrating more on growing the company?

We don't report our profits, but clearly we're making some big investments. Jeff Griffin is one, and there have been and will be several others in the future.

The big picture is sales and marketing is a huge focus for us. We began as a very heavily product‑based company, which has created a great technology platform. But, we also haven't been the first to trumpet it and get it out to market. So that's a big reason for our financing - it was to help take all the great things we're doing and make people aware of them. We've been investing both in media sales, retail sales and other parts of our business as well growing sectors such as automotive.

How does it work with the automotive sector?

We're solving a couple different problems in automotive.

We found this key problem that we were facing when we talked to dealers. The whole industry is based on leads and everybody fights over getting another lead off of another web form. Yet, the true nature of the automotive sale is an in‑person sale. Very few sales consummate without a handshake from an automotive salesperson. We focused on “the show.”

One of our key mantras is that we are a “show” provider, not a lead provider. Dealers and manufacturers apply our technology package to target incentives at in‑market shoppers. It's very much shopper marketing, but in a different sense. Shoppers take those incentives into the dealership and redeem in exchange for speaking with a salesperson. The core value proposition is that there are a lot of decisions people make in the shopping process. One of the biggest ones is "Where do I go to actually consider my purchase?" People only visit a few dealerships these days.  Driving someone into a dealership is a massive value proposition because once a salesperson gets to shake hands - that's where they work their magic.

At the same time, the other part of that is you don't want every mom and pop coming into every dealership in the country to claim a reward. That's where our targeting comes in, where we've partnered with companies like Polk and a number of other partnerships in order to combine datasets, target shoppers that are truly in-market and yield an extremely good ROI for dealerships to be able to drive traffic in.

Is using offline data and understanding the lifetime value of customers and what those segments look like - is that a key piece for finding success in the automotive vertical?

When it comes to data, there's a lifetime value in the automotive space, but at the same time it's understanding when you're going to focus your marketing dollars, and who you're going to focus them on and have a decent likelihood of buying a vehicle.

If someone's a BMW shopper, you really don't want to push Chevys. And, Chevy doesn't want to spend a lot of money on that guy.

Where do you see retailer tech going in the next two or three years? How does that relate with what you're thinking about with HookLogic's technology?

There's going to continue to be a lot of consolidation in retailer tech and a lot of venture money thrown at it. We came at it more organically and then added venture later. You go to the Internet Retailer Show, or some of the other big shows, and there's 800 vendors there now. But, the other component of that is ecommerce is growing. There is room for a lot of innovation particularly as small improvements can generate large amounts of money. I would say one of our core advantages is we're not going try and charge retailers money. Retailers are not giant ecommerce spenders when it comes to buying technology. When we come in to the table, bring them new revenue and send them checks - as opposed to charging them - that's a big value proposition.

By John Ebbert

Follow HookLogic (@hooklogic) and AdExchanger.com (@adexchanger) on Twitter.

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