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(originally published by Booz & Company)


The Digital Commerce Revolution

A new study is revealing the opportunities and challenges in today’s marketplace, and how marketers, retailers, media companies, and other key industry players can compete to win.

The Target Corporation launched its fall 2012 apparel collection with a bit of romantic comedy. The retailer partnered with ad agency Space150 to create a four-part “shoppable” short film called Falling for You. As consumers watched the story unfold, they could purchase the clothes that the characters wore—along with their accessories and home furnishings—from a side reel in the same window. Each episode became a virtual runway for Target’s collection, complete with social sharing tools to increase buzz. By seamlessly integrating content and advertising with an engaging experience, Target drove both traffic and commerce to its site.

Shoppable content like Falling for You is just one example of how digital commerce is transforming the marketplace, specifically in the space where advertising and marketing meet retail. Growing sophistication in content, mobile integration, comparison shopping, and the use of reviews is creating new norms for key industry players. Some of these norms are already familiar: Media companies are investing in iPad and mobile apps in an effort to extend into curated commerce—leveraging consumers’ past purchase history to provide them with personalized product collections—in order to tap new revenue streams. Technology companies, including Google, and e-commerce companies, such as Amazon and eBay, are increasingly focused on powering end-to-end solutions. And marketers, in areas including consumer electronics, apparel, and consumer packaged goods (CPG), are investing in direct-to-consumer relationships to drive value across the path to purchase and close the loop between engagement and sales.

But with these developments also come unknowns. How much will industry changes affect your investment priorities as a marketer, technology player, e-tailer, retailer, or media company now and in the long term? How will the leading players, faced with an imperative to build and sustain winning digital commerce capabilities, stay relevant? Will second- or third-tier players build similar capabilities to stay competitive? Answering these and other looming questions is the focus of a new survey from Booz & Company and the Interactive Advertising Bureau (IAB).

As part of this effort to explore how the new world of digital commerce is unfolding, Booz & Company and the IAB convened an industry roundtable in December 2012 with executives from retail, CPG, media, and technology firms. The conversation led to some telling insights:

Mobile engagement, with differentiated approaches for the tablet and smartphone, is critically important to leadership in digital commerce. But adopting “mobile first” strategies is a more complex undertaking than many marketing leaders expect, requiring significant investments in technology, content, and people, and in identifying new partners to work with. Companies such as Starbucks, Nike, and eBay are taking this holistic view of mobile engagement and making real strides. Nike, in particular, has harnessed the mobile fitness experience with its Fuelband. This personalized wristband tracks your physical activity, automatically syncs with your personalized fitness profile, and seamlessly introduces you to other Nike products that can supplement your fitness experience.

Integrating deals and social sentiment into advertising is rapidly emerging as a way to magnify ROI and create “next generation” ad units for marketers, retailers, and technologists. Understanding social sentiment, which helps differentiate between positive and negative social feedback, is helping marketers more effectively capture their consumers’ “pulse,” and use language their consumers are using to deliver marketing messages. For example, Rubbermaid saw a 300 percent increase in digital coupon redemption when ads included quotes from recent reviews.

New technologies are enabling leading marketers to build branded experiences. Whether it’s with market-leading e-commerce hosting platforms by Demandware and GSI Commerce, or engines that capture and deliver consumers’ ratings and reviews, such as Bazaarvoice, these marketers are making use of content, insights, personalization, and smarter platforms to deliver strong emotional impact during e-commerce experiences across any format or device the consumer chooses.

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