Guest blog post by Jay Friedman, Partner at Ivy Pixel
I remember back in the early 00s (yes, that late) hearing car dealers say "Well, you can’t buy a car online so I don’t know why you’d advertise online." I asked if you could buy a car on TV, and so went the lead balloon. Now, one year from moving into yet another decade and the I’m hearing the exact same thing, this time from other large ticket retailers. There are two core issues here. First, in automotive there is plenty of data to support that the research is occurring online. We can look at that and see how it correlates to other large ticket items, like furniture. Second, advertising in its rawest form is about two things: share of mind and the place your brand occupies within the categorical hierarchy in the mind. If I ask you to name a furniture store, and then another, and then another, and you never mention my store’s name, there is a poor chance of you shopping my store. If you named my store first, there’s a great chance you shop my store. That chance lessens the later on in the string you mention my store’s name. (Advertising And The Mind Of The Consumer by Sutherland and Sylvester does a great job outlining this process if you’re interested in learning more.) There are a few select pieces of data worth highlighting in this blog to help suggest that, for those trying to sell big ticket items, online is an excellent place to be.
To start, the U.S. produces the highest number of searches for the term "furniture" in the world. China has nearly 5x the population found here in the U.S. but the U.S. still ranks first.
Next, ask yourself why those folks are searching. It’s unlikely it’s a hobby, right? Most often searches for specific categories like this are due to purchase intent. Next, less than two years ago in May, 2007, just over 400,000 unique visitors went to Ashley Furniture’s web site (the most searched and visited furniture store, not counting Ikea.) Yet in January of this year Ashley site traffic surged over the 1,000,000 mark for the first time. Like automotive, is the web site the new showroom?
Additionally, search traffic for Ashley and Rooms To Go has climbed steadily since 2004. The RoomStore has remained flat for four years. Certainly having sales numbers to back these trends up would be the most desirable scenario but due to the private nature of most furniture company data we can rely on the intuitive value of increased search and pageview data.
In automotive, the number of models a new vehicle buyer is shopping is between 1.0 and 1.5 for the six months prior to purchase. Only in the last month when the online shopping begins does that number jump to 3.1. (Source: JD Power and TNS Compete) The more shopping that occurs online the broader the consideration set for the consumer. So what if you’re third, or worse, fourth? How do you move up on the list? Pick a cliche: reach and frequency, message and medium, this is where the advertising kicks in. But why advertise online?
To start, it’s where eyeballs are now. TV is still king for reach and awareness and in most cases I’d recommend larger chains keep their TV. But online is the yang to the yin of TV. The two charts below illustrate nicely. First, more folks are increasing their time spent with online than any other medium comparing 2002 and 2007.
Second, online is second only to TV in time spent, but notice how overspent TV is compared to time spent! Equally, if not more, impressive is the job newspaper has done to keep a large portion of the media budget even with significant drops in readership and circulation.
Further answering the question, "Why online?" Simply put it’s the most targetable, cost-effective, measurable medium around. Here’s a quick look why:
|
|
TV |
Online |
|
CPM |
~$20 |
~$5 |
|
Target individual users rather than content alone |
No |
Yes |
|
Able to optimize based on actual results |
No |
Yes |
|
Measurable in real-time |
No |
Yes |
To be clear, I’m not someone who advocates online and nothing else. The traditional idea of a media mix is still very valid. However, unlike in years past where certain media like radio and newspaper were must-includes on a media plan, those have been replaced by online. So long as you have realistic expectations from your online and use it as part of an overall plan, you, like Ashley and many others, will see your business grow.
(Editor's note: click on any chart if you would like to see a larger version of it)
this is a good tip reminding us to sell in big products!
Thanks for sharing, this is a fantastic article.Really thank you!