It's interesting that you mention Amazon could do it [automation] in more streamlined fashion, but they want a certain level of engagement from their partners. In a way, it’s rewarding the ones that put a lot of effort into it, right?
Right. And those companies will even go out and hire other companies to do it for them. There are companies out there that specialize in AMS optimization for brands. Would Overstock ever get to that point? I don’t know, but that’s made Amazon a lot of money. Was it necessary? Probably not. They could have made a little bit less money and made it easier for brands to create more effective campaigns.
How can you take a customer lifetime value (CLV / LTV) into account in performance advertising? Should you?
LTV is really the big buzzword these days. You have a lot of companies doing well and learning to do it better and better. As a company, we closely watch LTV and find new and more efficient ways to measure it more accurately. We’re also working on incorporating that same technique into the co-op and sponsored product world. You’re always iterating on it to make it better, but yes, we think about and focus on LTV and with that focus, we make a constant effort to improve and innovate as leaders in the industry.
What about predictive LTV – is that also something you’re working on?
Yes, we look at that as well. We consider LTV as we create ML models and when deciding how to segment and personalize for each customer. Some of the biggest drivers of LTV, are loyalty program, such as our Club O. So, optimizing to drive engagement with these predictors, trying to get customers to do that action you want them to do because it will increase their LTV, we think about that all the time.
How do you see the brand's media buyers working with multiple retailers? Each retailer is on a different platform, and then there are the networks and marketplaces. How do they handle such complexity?
It depends on the size of the brand. If they are large enough, they essentially break out their business. We typically work with account managers. These account managers are, in a sense, a business owner for the products sold with a retailer. I believe this is a great way for brands to approach working with multiple retailers
When considering how to work with retailers, brands should consider if they should be offering sponsored products, promotional site sales, and/or review programs. With such a vast number of marketing options available to online retailers, it’s important to select the most efficient direction for your brand and the option that offers the best experience for customers.
They have so many levers within every retailer they can pull, some more than others. Overstock typically has a lot more levers to pull than most other retailers, there’s really no one else out there that has as many levers they can pull as they can with us. This can be both a good and a bad thing, and we’re looking at ways to simplify it for them.
But going back to your question of “how do they handle this?”, they’ll usually dedicate someone to one retailer – and that’s all they live and breathe. But the smaller ones, they’ll have someone or a team that manages their entire online business. They will touch all those different platforms, and in some ways it can complicate things. For example, if I want to do sponsored products for Overstock, I must go into this tool. If I want to do sponsored products for another retailer, I must go into a totally different tool. The Network-approach brings that together, it normalizes data. It does all these things, but it still takes away that one-on-one relationship. Because it’s the communication through the tools that really sets retailers apart. Being able to provide more data or better data. So, when you talk about normalizing the data, you go to what’s common across everybody, but you lose a lot of things that each retailer can provide. Our team is very focused on providing partners with actionable data and data that tells them they are getting an incremental return. You won’t see that with a lot of retailers. If you hear from other retailers, you’ll probably hear about struggles around providing partners with good data. Overstock excels in that arena, so we would never want to dumb that down for a Network-approach to make it easier for the partners when we can give them more value than they could ever get from a Network UI.
What do you think it is about Overstock that allows you to do this so well? Is it a cultural thing, how you think about the brands, or is it a result of your technical capacity?
At its core, Overstock is a data-driven and innovative technology company. This focus stems from Overstock’s founder and CEO Dr. Patrick M. Byrne. He founded this company by using technology in a way people hadn’t, and, after 20 years, we remain at the forefront of innovation by understanding how to use data to evolve with this ever-changing industry. This is very much a culture thing, employees in all roles must employ analytical skills. We leverage 20 years of data to create the best, and most modern online shopping journey. We also place priority on the use of data as we market, personalize, and design.
How do brands respond to your team when they ask them for ad budgets? Do you have to win them over, or has it become common practice in the industry by now?
It really depends on the brand. There are some brands we’ve been partnered with on co-op advertising for 10+ years. It’s common practice for us to talk with them every single month, week, or quarter, depending on their size and level of involvement and for them to work with us, to make beneficial decisions for their business. When presenting budget plans to partners who have not spent on ads before, we have the opportunity to leverage some of the data I mentioned previously to show the value in working with us to grow their businesses. This creates an open line of communication for the partner and is mutually beneficial.
Four or five years ago there was only Hook (Criteo), now Microsoft and Google have entered the space. How do you feel about the idea you have to select one? What if budgets and accounts shifted between the networks or you are leaving money on the table if you are not working with every possible network where your brands are spending?
What you are describing is a header bidding solution. This brings all the networks together, they bid against each other, and the top one wins. If you’re going to go the network-route, that seems logical. That would be the right way to do it. When you look at the history and progression of display ads, you know why header bidding came into play, and why there’s so much value in header bidding. Header bidding created more of a transparent auction, where you received the highest bidder. So, that must happen within the sponsored products world as well. It’s just a natural progression of that space and industry…
So, you see Sponsored Products as simply being at an earlier stage in the evolution and progression, compared to other marketing channels?
Do you believe brands are still interested in the branding vs. performance dichotomy? How do you cater for that on Overstock?
That’s a great question. We have found it is easier to deliver a branded message. In the homegoods and furnishings industry, we’re not particularly brand driven. Aside from a few prominent brand names, many brands in the category are not immediately recognized by the casual consumer. However, through co-op advertising we are able to boost many of our partners brand names and familiarize our customers with quality companies they have not previously explored.
We have many valued partners that have successfully built brands. We can view the number of times Nourison or Safavieh is searched on our site. There’s value there. Take Best-Buy as an example, very brand-driven, Sony, Samsung, all major brands. Being in a space like ours where the many brand names are not as well known, provides opportunity to shift our focus to sponsored products. There is also the option of taking the hybrid method and adding value by using the brand name and sponsoring the products. We understand that our partners love their brands and want to see them succeed on Overstock.com. That is why the answer is that we council with individual partners and find the solution that offers them the most success whether that be through sponsored product campaigns or branded plays.
Stay tuned to nyknowgo.com for more interesting content like this!
NY KnowGo is back for 2019. If you like our website, why not follow us on Instagram, Facebook, LinkedIn, and Twitter?