Wednesday, May 20, 2015

Digital Shops Get Boost as Clients Embrace E-commerce

Gap Between Brands' Online Sales and Online Marketing Narrows

By Published on .


Mondelez wants to more than double its e-commerce in the next couple of years.
Mondelez wants to more than double its e-commerce in the next couple of years.



When Mondelez, the marketer of brands from Chips Ahoy to Trident, asked Razorfish to help revamp its e-commerce strategy and more than double online sales within a couple of years, it was only the latest call along those lines to reach a digital agency. Top marketers have tripled the e-commerce requests reaching Razorfish over the past 18 months, according to agency executives, and other shops are reporting growth in the same area.
A narrowing gap between online sales and online marketing is fueling the trend, agencies and marketers say, as retailers such as Walmart emphasize e-commerce, social media grows as a viable sales channel and more people buy goods on mobile devices. "Increasingly, the CMOs are aware that the e-commerce store is actually becoming the front door to the brand," said Shannon Denton, North America CEO at Razorfish. "We are seeing a reorganization to some degree of e-commerce and sales moving under marketing."
Indeed, Mondelez recently assigned its e-commerce operation to Media Chief Bonin Bough, a veteran marketer. In addition to hiring Razorfish, Mondelez has partnered with ChannelSight to build a "buy now" button for Mondelez websites and social feeds. The button offers up a number of third-party sites selling the marketer's products.
"A bunch of folks that have gone through the first wave of e-commerce are now stepping back and doing a couple of things," said Jeff Maling, U.S. co-CEO at Isobar. "They're trying to drive as much traffic as possible to e-commerce experiences and they're rethinking those experiences."
Isobar is seeing an uptick in e-commerce business from consumer-packaged goods as well as players like travel companies. E-commerce represents about 20% of the agency's revenue, but Mr. Maling said he expects that proportion to grow. "We have a couple big projects in the travel space and three to four more cued up around nontraditional e-commerce -- stuff that doesn't fit in a box and ship out to you," he said.
There are also more e-commerce assignments coming in as part of media-agency briefs, Mr. Maling added.
Packaged-goods companies are particularly aggressive. In the next five years, the sector's total global retail sales from e-commerce will exceed $3 trillion, said Cindy Chen, global head of e-commerce at Mondelez. In the same amount of time, 3% to 10% of CPG companies' revenue will come from e-commerce. In the coming years, more than 50% of CPG growth will come from online, said Ms. Chen.

"It's huge. It's why Mondelez will put so much emphasis and focus behind e-commerce," said Ms. Chen. "We cannot miss. It's not whether we should do, but how and how fast we can do."
For digital agencies that previously handled only design or system integration for an e-commerce build, there's now an opportunity to do both. As a result, e-commerce, which accounts for about 25% of Razorfish's revenue, will likely account for more than 40% in the coming years, Mr. Denton said.
The agency is now building owned commerce platforms on its own, as well as supporting media buying, search, merchandising for third-party-site partnerships and optimization to drive transactions. In some cases, it's leading to new e-commerce AOR relationships, said Mr. Denton.
The rush for marketers to implement omnichannel commerce -- an approach that links up commerce sites and targeting efforts across physical stores, desktop computers and mobile screens -- really took off about 18 months ago, Mr. Denton said. "It drove the need for all of the retailers and any company that sells products to redesign and rethink commerce," he said. "It's an ecosystem play now, whereas a few years ago -- and all industries have gone through this -- there was a view that we had one sales channel."
Social media is playing a part as its commerce capabilities grow. Clickable campaigns on sites like Facebook and Twitter can now actually sell Oreos.
E-commerce briefs are on the rise and social commerce is one opportunity, said Joe McGlynn, head of North America new business for Wunderman.
Wunderman has talked to Facebook and Twitter about driving clients' sales through hashtags that, when used, land the product in a consumer's Amazon shopping cart, Mr. McGlynn said.
Using media and marketing to drive consumers to sites owned by marketers is still the best way to control the experience, said Aaron Shapiro, CEO of Huge. "There's buzz on social commerce, but it's not like people are buying on Facebook now," he said. If consumers see a "buy" button on a social site, it's ultimately taking them to a retail site to purchase, he said.

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