Should I Offer Advertising On My Ecommerce Website?
Something that I have noticed starting to become more and more popular is online retailers opening up an additional revenue stream of advertising on the website. This is a transition from a website which solely manages transactions, to one that can also be categorised as an ‘online media asset’.
But is it worth it for you?
There are arguments both for and against but the following is my thoughts on the matter…
The thinking behind it
Putting advertisement on your ecommerce site is not a new idea but it is worth taking some time to consider whether it could work for you.
An audience browsing and engaging with audience on a content platform such as The Guardian or Yahoo is very different to the audience on an ecommerce platform such as Amazon, who are arguably further down the buying funnel and more likely to purchase.
This is a tempting market for advertisers and armed with the knowledge that these users are more likely to convert, things can start to get interesting.
The numbers start to make sense as well. It is estimated that online retailers generate 7.5 billion page views per month, this is against 3 billion page views from news/content sites, more than double and with higher engagement rates.
As soon as advertising is discussed with online retailers however, they are often worried about cannibalizing their own offering but I am not sure if this is actually the case. You would obviously not advertise your direct competitors on your site.
Amazon displays a wide range of advertising but you never see adverts for Ebay, this can be controlled relatively easily within your ad delivery system.
Amazon & Advertising
In 2013, Amazon US generated over $600 million in ad revenue.
I found it a little more difficult to find any more recent figures however I feel it would be safe to assume that the above figures have increased in line with Amazon’s growth and I would expect this to now be in excess of $1 Billion a year in ad revenue (If anyone knows, please leave your thoughts in the comments below!).
Amazon have used advertising for a few years so let’s look at them in a little more detail.
We have all used Amazon and while they sell a lot of stuff, their depth in any category is limited. One of the core reasons they can offer you the best terms and price is because their retail operation is supported by their other business i.e. marketplace (which accounts for approx 40% of all goods sold), Amazon Prime etc..
I am not suggesting that you start to sell advertising space to anyone, but carefully selected ads that complement your business could actually improve the user experience of your website and introduce an additional revenue stream to your business.
Let’s see if we can draw some comparisons to the offline shopping experience.
It is not uncommon for a trolley to have adverts of a separate business or brand, and it’s a great idea; selling previously unutilised space to people who are currently in a buying mentality. If you are a brand this is a great place to be.
Or for brands to have merchandising agreements with a store, or chain of stores for priority placement, it is no coincidence that the majority of stores display branded goods at eye level.
Amazon are the leaders in ecommerce and are paving the way for the rest of us, there are signs that Amazon’s competitors are starting to follow with Walmart (particularly after their purchase of Jet.com), Macy’s and Sear’s then it is definitely something to consider and if it does interest you, this is how I would initially approach it.
You could use Google Adsense, however this would require some management in order for you to be confident that you are not advertising any of your direct competitors.
There are also a number of ad delivery networks you could look at implementing however at this stage we just want to ‘test the water’ so I would do the following:
- Identify what areas of the website you could rent ad space
- Create a list of complementary businesses and/or brands (if you have an existing relationship, great!)
- Identify metrics for a particular page i.e. visits, bounce rate, device etc almost like a mini media pack
- Offer this ad space for an initial period of time i.e. 1 – 2 weeks
- Depending on the outcome of the initial test to repeat and try again.
Ads should not be obtrusive to your user and are meant to complement their browsing experience, not get in the way. For this reason I would only test one or two ads sets initially to order to accurately measure any outcomes.
How you price your ad space will be determined by your levels of traffic and the quality of the ad space on page. This ad revenue could be a welcome addition to your online business or allow you to become more price competitive and subsidize a reduction in catalog prices (arguably something that Amazon has done).
As with any new change to your website you should test this first to ensure no adverse effects. I am not advising you start to filling your website full with ads. Instead perhaps identify some complementary partners whose presence you feel would add value to your user experience.
If any of you are running an ecommerce site and have tested selling ad space, I would love to know your story in the comments section below.