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Australian retailers and the internet. Are we there yet?

06 June 2010

Audiences have moved online in droves. Upwards of 15 million Australians use the internet every month, spending an average of 17 hours per week online. While most marketers understand that they need to be online to reach their customers, the retail industry has been slow to embrace the medium...

Australia is number one in the world when it comes to advertising spend per capita. We dedicate 1.16 per cent of our GDP to advertising, more than the USA (1.11 per cent), Japan (1.04 per cent) and the UK (0.97 per cent).

Advertising is big business and our leadership position in spend means it is vital for Australian marketers to be on top of their game. Our media landscape is constantly evolving with the major change in recent years being, of course, the growth in online media.

In the US, the retail sector is the single biggest advertiser and the biggest online spender. In Australia, retail is likewise the biggest advertiser yet less than one per cent of retail advertising spend is invested online. Our retailers are lagging behind.

A traditional marketing spend for a retailer consists of television, radio and print, including print catalogues. Each medium plays an important and specific role in ultimately driving store traffic and sales.

Television ads reinforce brand positioning and event awareness, such as sales. Catalogues dropped in letter boxes drill down to a specific product offer. Lastly, newspaper and radio ads support the previous activity to make sure the message gets through. This has worked in the past but the landscape has changed dramatically.

The retail industry’s mindset has been that if they are not selling online, they don’t need a presence there. Now, retail customers are online – researching purchases, sharing experiences, seeking information. And if a retailer isn’t there to provide what customers are looking for, sales will be missed.

With print readership declining, personal video recorders taking over living rooms (allowing viewers to skip ads) and iPads about to enter homes across Australia, retailers simply must communicate to customers online. Traditional marketing is still very important, but online needs to be a significant part of the mix.

For the majority of retailers, catalogues make up their biggest singular spend, often up to 50% of the advertising budget. 8.5 billion catalogues are distributed in Australia each year. Of these, only around 20 per cent are ever read. But those that are read provide a vital service for consumers in letting them know exactly what product and prices are offered and a vital advertising service for retailers by increasing specific product awareness. 

Consumers are agnostic to whether they read a catalogue online or not. They still get the same information hit, which leads to intention to visit a store. And this is really what store retailers are after. 

With the number of consumers online, retailers are simply crazy not to have their most effective advertising vehicle also working for them online in every possible location, not just on their website.

When we talk to retailers, we find that their online catalogue is consistently one of the most sought after pages on their website. However, most retailer sites attract a very low share of internet eyeballs. Retailers need to roll their digital catalogues onto high-traffic websites to make them work online. Our iNC network, an advertising network of more than 4,000 Australia websites, works so well because it gives retailers an online reach comparable to a physical catalogue distribution.

Online advertising’s share of the total ad market is predicted to grow by 20 per cent this year alone. Internet penetration in Australia is already at 68% and soon nearly every single household will have internet access. Our network will be near omnipresent which means you’ll be able to pick up a catalogue from your favourite brand just about anywhere your are online.

Catalogues are the easiest marketing collateral to migrate to digital. Online catalogues first emerged three years ago and already 70 per cent of people aged 16 – 64 year are keen to look at catalogues online, according to Roy Morgan research. This equates to 9.2 million people – a mass market audience.

Online makes sense for retailers. Having a share of voice online will help retailers acquire new customers, drive store foot traffic and most importantly, will impact sales.

Robert Wong is founder and CEO of CC Media, a digital publishing business helping retailers reach millions of consumers through Australia’s leading web portals and multi-channel networks. CC Media we offer retailers the opportunity to engage consumers in a powerful, efficient and cost effective way through iNC, Australia’s largest retail advertising network, which is powered by flagship brand Catalogue Central. Robert founded online catalogue site Catalogue Central in 2006 to offer a cost-effective and strong ROI for marketers online, whilst helping reduce the 240,000 tonnes of paper used to produce junk mail each year. He successfully translated catalogues to online, providing retailers with the ability to showcase hundreds of products at once while deliver tailored messages to customers based on identified preferences. Robert also built technology to offer meaningful user data, research and analysis for retailers so the impact of online catalogues can be clearly tracked. Through its network of more than 4,000 partner websites, Catalogue Central now enables retailers to reach more than 3 million customers each month and has more than 300,000 active subscribers. CC Media continues on a strong growth trajectory as Australia’s only truly performance-based digital catalogue website. Robert Wong is also the chairman of the AIMIA (Vic) Retail Industry Group. Contact details Robert Wong CEO, CC Media www.ccmedia.com.au www.cataloguecentral.com.au

Written by: Robert Wong

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