Marketers Emphasizing E-Commerce Over Advertising

For marketers, digital commerce is becoming a more critical element for business growth and retention, surpassing investment in digital advertising for the first time this year, according to a report from Gartner.

In the report, “2019 Digital Commerce Trends for Marketing Leaders,” Gartner says that marketing leaders now allocate 9.2 percent of their budgets to digital commerce, making it the largest area of marketing investment, ahead of even digital advertising.

“We were surprised by that,” says Jennifer Polk, a Gartner vice president and research director.

Those numbers were pretty much reversed in 2017, when digital commerce accounted for just 8.1 percent of the average marketing budget, according to the research.

The increase in digital commerce investment aligns with an earlier Gartner report in which 62 percent of marketing leaders said they have transformation programs or management initiatives to make their organizations more digital. But to be successful, companies need to have the right tools and capabilities, the firm suggests.

Among those tools, it suggests technology that offers voice and visual cues to deliver the personalized engagements that customers expect. The report recommends that companies integrate these technologies into their digital commerce road maps to align the customer journey with evolving customer preferences and to streamline purchases.

Polk points to the rapid adoption of smart speakers, for example, as a technology that led to growth in this form of conversational commerce.

With those devices, though, privacy is still a major concern, as several technology providers are coming under scrutiny for allegedly listening to conversations without users’ knowledge.

At the same time, customers are increasingly willing to share their personal information with companies, and their level of comfort with companies collecting and using their data grows as their relationship with those companies grows and matures.

There’s extreme value in that data, the report says, noting that data-driven insights enable companies to expand into channels where customers conduct the most transactions while also driving more transactions due to better customer experiences.

“Hyper-customization will be the next frontier for personalization,” Polk says. “It’s potentially a way to drive premium pricing.”

To date, hyper-customization has primarily been used for lower-margin products. Coca-Cola, for example, lets users create their own soda concoctions with the Freestyle machine, and McCormick can tailor spice choices for consumers through its FlavorPrint service, which identifies consumer tastes based on recipes viewed and ratings posted to the company’s website.

Companies still need to be careful how they use consumer data so that their personalized marketing doesn’t feel “creepy” to the customer, Polk cautions.

Gartner also recommends that companies can also strengthen consumer trust through transparency with reviews, technologies like artificial intelligence-driven content curation, and product recommendations.

The report also finds that omnichannel experiences that link digital commerce to physical stores can increase sales conversions and inspire consumer advocacy, like social sharing, that can improve search results. This is important, it finds, because consumers today turn to search engines, marketplaces like eBay or Amazon, and people they trust for inspiration or research before making purchases.

It also recommends that companies expand their personalization efforts beyond targeted campaigns and offers by using artificial intelligence and chatbots to deliver more relevant recommendations and interactions.

If they haven’t already done so, companies should develop a road map for building a digital commerce strategy, staying relevant by continuously evaluating market trends and updating customer journey mapping and segments.

Polk says that if marketers feel that consumer buying tastes are shifting, they should test-market their theses to determine if the shift is indeed occurring and adjust their marketing plans appropriately.

The report adds that marketers should differentiate digital commerce by piloting and, based on the results of any pilots, expanding into omnichannel, subscriptions, and marketplaces to improve convenience. Polk adds that there is a significant untapped business-to-business market for subscription and omnichannel marketing.