The best way to understand omnichannel is to work backward
Why has the idea of omnichannel marketing fallen from favor? Columnist Lewis Gersh says it’s because of inflated expectations, rooted in some fundamental misunderstandings of the underlying technology.
Imagine trying to drive around the U.S. with no directions, no GPS and no street signs. How frustrating would that be? America’s 2.7 million miles of paved roads could theoretically take you anywhere you wanted to go — but in practical terms traveling would be a frustrating experience since you would never know where you were, much less how to get where you wanted to go.
That’s sort of what omnichannel marketing has been like to this point.
If you think of marketing as a type of mapmaking, omnichannel’s underperformance is much easier to understand. From its outset, direct marketing was an attempt to create the shortest, straightest journey between customer and product. And from the days of Aaron Montgomery Ward, direct marketers have relied on regression analysis to document that journey. Who bought what, where, when and how? That’s been the direct marketer’s mantra. Do your research on the result then double down on what works and discard what doesn’t.
Digital marketing, for all its high-tech flash, isn’t there yet. And without a fully functioning digital component, true omnichannel marketing remains a mirage.
Amazon conquered digital by the book
To understand where omnichannel’s inflated expectations came from, let’s start with the world’s most successful purveyor of e-commerce, Amazon. And let’s start where Amazon did – with books.
Books are the perfect product for an online platform. There’s an enormous inventory, with more than 2 million new titles published this year. No brick-and-mortar location could keep that many titles in stock. Furthermore, books aren’t a big-ticket item, and you don’t need to worry about ordering the right size. You can effectively “try a book on” by reading a sample online.
Digital is the ideal platform for marketing books as well as selling them. If someone buys a book online from a particular author, for example, you can retarget them with offers to buy additional titles from that same author with a single click. That’s about as straight a path between marketing channel and purchase channel as you could hope for — and Amazon’s success reflects that. In 2016, 82 percent of all e-books in the U.S were bought through Amazon, along with 37 percent of all print books.
A flawed read
It’s easy to understand why so many marketers would attempt to mimic the Amazon model. But very few have had the same level of success. Here’s why: Book sales are an outlier. Almost 90 percent of all retail purchases are still made at brick-and-mortar outlets. That’s what digital marketers don’t get. Targeting people with online offers for products they will only purchase offline is folly.
Compare how you buy living room furniture to how you buy books and you’ll see the problem. Yes, you might do your preliminary research online, but chances are you’ll purchase your couch in a store — no matter how many times you’re retargeted with display ads trying to get you to order online. The only action you’re liable to take in response to those incessant pop-ups is to install an ad blocker.
The furniture marketer is getting their intent signals crossed. There’s a signal of intent to buy the product, but no signal of the intended purchase channel.
Now, a lot of marketers will say, “Digital ads influence people to purchase in all channels.” Maybe that’s true. And maybe it isn’t. Without true regression analysis, there’s no way to tell. What are you really connecting from that cookie and device and browser to the place where almost 90 percent of spend happens?
A lot of marketers thought mobile would provide the missing link. But it’s been another false flag, although for the opposite reason. When mobile first developed, everyone thought, “Ooo, you’re gonna have location now!” Yes, you have indication of the consumer’s presence in a store — but no indication of what they went there to purchase. Knowing someone went to a big-box store without knowing what they bought is of limited value. So you still can’t make a clear digital connection to the place where almost 90 percent of retail sales happen. If your blind spot is that large — that’s not a spot. You are blind.
Progression through regression
So does that mean digital marketing is useless? No, not at all. It just means that you need to tamp down your expectations of what digital can do. It can identify purchase intent among the vast universe of available retail products. You know someone looked at couches, for example, instead of lawn tractors. That’s useful for curation, to help prod the prospective customer along their journey to the store. But if all you’re doing is sending out a digital reminder, you’d better gear your regression analysis to that goal, and not toward click-to-purchase.
Regression is only as good as the data that supports it. And, odd as it may seem, Aaron Montgomery Ward had better supporting data than the most sophisticated digital marketer in the 21st century. That’s because mail order and direct mail are all predicated on a deterministic address — a physical location. An IP address, by contrast, is ephemeral and the underlying data is fungible.
Let’s go back to the scenario in the beginning. America’s 2.7 million miles of paved roads can indeed take you anywhere you want to go — but only if you have the right data, starting with the destination you want to reach. You plug a physical address into your GPS, and the GPS figures out the best path to get you there.
Omnichannel marketing needs to work the same way. You need to figure out exactly where you’re trying to go and work backward from there.