This article can be found on AdAge.
Amid all the gloom and doom about a potential "retail apocalypse" and threats from digital-savvy challengers, it's clear that to survive, traditional brands desperately need to fix their leaky marketing funnels. The problem of a disconnected discover-to-buy consumer pathway is especially prevalent in the mid-to-high-end fashion category, where vulnerable old-school contenders are being outsmarted by young guns with social media chops.
Traditional brands have invested a ton of money on awareness and brand building, only to realize that they're not positioned for how people discover brands and buy products today. Companies make basic errors with their social media strategy, like not adding shoppable links to their posts or learning from challenger, indie, direct-to-consumer brands. The upstarts are often "shoppable-first," with brand discovery and purchase leading everything they do in marketing. Many traditional brands -- especially in mid-range and luxury categories -- are way behind in thinking about how millennial consumers actually want to interact with and purchase from brands.
Most upscale brands invest heavily in paid search. But this leads to unintended consequences when they end up not sending traffic to their sites but rather to resale or discount sites, which have outbid them on AdWords or out-priced them on Google Shopping. In a lot of cases, high-end brands don't actually "own" their keywords across every channel they need to be in. Search for any luxury brand, and you're going to find dozens of places to buy it.
According to a recent report from L2, 38% of brands don't own their search terms. For one luxury brand, 40% of the paid search traffic went to resellers; the brand's website only got 18% of the traffic.
High-end brands have traditionally been less sophisticated visualizers of the entire consumer marketing funnel. They put millions of dollars toward brand awareness programs, but less investment in mid-to-bottom-of-the-funnel activities. The legacy of this strategy is that brands may be good at driving discovery, but things then get out of hand. Consumers are becoming conditioned to learn about a product online, which they then buy at a discount rather than directly from the brand.
Brands could get ahead of this by going direct to consumers or by focusing on the upscale, exclusive market and eliminating all distribution channels.
Linking discovery to sale
But the right way forward is for brands to focus on building a top-to-bottom consumer funnel. This doesn't mean moving away from driving discovery, but rather enabling folks to use that discovery to purchase products on the website or a non-discounting retailer.
We know that brands do a pretty good job of plugging the gaps if they focus on better metadata around their products -- and better control over their branded keywords -- within social media.
Challenger brands, many of which sell directly to consumers, are much more nimble and less hidebound than traditional luxury retailers. They incorporate a constant feedback loop of insights directly into every facet of their business, and all parts of the marketing funnel. They spot trends as they happen, and send data to their product development teams, turning around products that are distributed just in time to consumers they engage on social media.
Upstart brands like Everlane, Outdoor Voices and M.Gemi are not constrained by history, and are less reliant on traditional marketing channels like paid media. While still laser focused on brand-building, they find more efficient ways to accomplish it. They have a built-in tilt toward using data-driven insights on how a younger, more plugged-in audience navigates the discover-to-buy process, as well as what type of content these buyers are motivated by and what type of influencers they respond to. Most of these brands are highly engaged in leveraging the power of earned media through smart marketing programs on platforms like Pinterest and Instagram, which can be critical purchase drivers.
The discover-to-buy consumer pathway has many twists and turns that can seem forbidding to those with a traditional marketing mindset, but with a few patches to that leaky marketing funnel, you can find your way through the retail apocalypse.