Web Marketing’s Inefficiency Problem

I’ve just been confronted by another pop-under advertisement. By now, you know what I’m talking about. It’s usually an ad that’s either for the travel company or the wireless Web camera, which pops under my browser window after I’ve just spent an incredibly long time filling out an uncooperative Web shopping cart form. Things weren’t supposed to be this way.

In the beginning, when we were still inventing a completely new medium, we saw unlimited possibilities. The Web was not TV. This was a new environment, which combines advertising, marketing, and commerce in the same medium. The old rules would not apply here, we thought. This medium could be made much more efficient for marketing purposes than any that preceded it. Consumers would win, because they wouldn’t be annoyed by irrelevant (and, therefore, inefficient) advertising.

Unfortunately, it hasn’t worked out that way. The Web has become incredibly inefficient, which is bad for every constituent — marketers, advertisers, ad agencies, retailers, and consumers.

As the time for Christmas shopping approaches once again, customer data suggests another season of missed expectations. A recent study released by Odyssey found that those who purchased online during the first half of 2001 are significantly less likely to purchase online again in the second half of the year. You can almost hear the clang of shopping carts being abandoned.

According to another recent study by Vividence Corporation, up to 75 percent of online shoppers abandon their shopping carts before making a purchase. Why? Some were just comparison shopping or thought the shipping prices were too high. But for others, it was the process itself that turned them off. Forty-one percent of respondents said the checkout process was too long, while 35 percent said the process required too much personal information, and 34 percent said the site required registration before purchase (respondents could name more than one reason).

This medium is not efficient.

Web marketing has failed to live up to initial expectations and instead delivered obtrusive banners, pop-ups, and pop-unders and interminable shopping carts from retailers who actually expect you to register — essentially, make a commitment to a relationship with the company — before you even make your first purchase.

In my opinion, the problems of obtrusive ads and inefficient shopping carts stem from the same place. A number of barriers have prevented Web marketing from evolving to a state of efficiency. These include the arrogance of marketers and the misguided activism of consumers themselves.

Arrogant marketers have prevented the worlds of Web advertising and commerce from merging by treating them as separate silos to master. On the Web, a marketer is capable of guiding your experience from the time you first see the marketer’s ad to the time you click on it to visit a Web site to the time you select a product to purchase and go to a shopping cart to buy it. In this way, the medium is built like no other, in that the customer experience can be tracked and made more efficient over time.

But Web marketers have preferred to treat the advertisement world separately from the retail world. What is broadly defined as the “consumer experience” is still managed by many parties, often with conflicting interests, resulting in a poor consumer experience. Think about this next time you click an ad banner that delivers you to the retailer’s home page rather than to the specific offer that was advertised.

Although Web marketers have not taken advantage of the medium’s inherent benefits, they are not solely to blame for their failures. Consumers, or activists speaking on their behalf, have retarded the evolution of the medium in their focus on privacy concerns. Though many privacy concerns are legitimate, they have also frozen Web marketers and prevented them from integrating capabilities to take advantage of the medium’s efficiencies.

The tools that are used to dynamically serve advertisements can also be used to make the shopping experience far more efficient. Testing of the entire consumer experience to eliminate inefficiencies can be very helpful. Dynamically serving entire consumer experiences is not only more efficient but also more profitable.

Interesting efforts are underway to integrate the front-end ad serving architecture with the back end of retail shopping carts. Companies such as Paramark on the West Coast, which tests several offers dynamically, come to mind. Large marketers, such as NextCard and USA Networks’s Ticketmaster unit, will continue to push the envelope, blurring the distinction between advertisement and commerce. But the medium still has a long way to go before it can deliver on its promise of an efficient customer experience.

So the next time you get annoyed by a pop-under advertisement, keep in mind that it exists simply because marketers haven’t figured out how to make a profit any other way. Increased obtrusiveness is directly related to the inability to integrate the back ends of Web advertising and commerce to improve the efficiency, and the profitability, of the medium.

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