The Dual Engine of E-Commerce Growth

Brand & Performance: The DuAl Engine of E-Commerce Growth An R3 Report

DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

Finding the Balance Between Branding & Performance In our years of experience helping major advertisers adapt to marketing challenges, nothing has changed so drastically and profoundly as the retail experience. It’s safe to say, the evolution of e-commerce (EC) has been one of the main contributors to how people discover, engage, and shop offline and online.

Like many other disruptive mass-market phenomena before it, a consumer brand’s e-commerce strategy and its actual performance is not only impacting the way marketing, media investment and sales are done, but also how product strategy, corporate policy and structure are designed.

Instead of exploring technical aspects of “how to drive sales online,” this report addresses the challenges of e-commerce from an organizational and strategic standpoint, and discusses the following pressing concerns:

How to balance branding and performance? How to integrate them?

How to build a marketing team and agency structure for optimal efficiency?

What are the key metrics, traffic sources and content types to focus on when trying to maximize e-commerce ROI?

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Brand & Performance: The DuAl Engine of E-Commerce Growth

Choosing the Right Content Types Among all popular content types listed in the following chart, it is easy to see why live streaming is gaining popularity and absorbing more marketing budget. Depending on the brand, product and audience, each one of the following formats has the potential to yield lucrative returns.

Content Type

Engagement

Permission

Value to Consumer

Interactive LeveL

Personalization

Text/Banner Feeds Short Video

Live Streaming

Social Posts Retargeting Banners Low

Medium

High

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

1 BRAND BUILDING VS. PERFORMANCE A discussion point when developing an e-commerce marketing strategy is how much to invest in branding and how much to invest in sales. This is a common issue for young and small to medium brands. For bigger, more mature brands, the argument is often settled with the funnel model and its numerous variations, where marketing works in parallel and ‘before’ sales by driving prospects deeper into the funnel and boosting conversion at the zero moment of truth.

However, the emergence of e-commerce conglomerates like Taobao has tipped the balance and brought new complexity to this debate. With internet penetration reaching almost every mobile phone user, sophisticated data technology platforms and models, and an ever-growing variety of media and content options, consumer brands are investing more budget into EC performance-based campaigns. Furthermore, brand strategies are heavily influenced by, if not based on, performance goals and actual sales data.

Awareness Affinity Purchase Intent Conversion Loyalty

Advocacy

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In the traditional funnel, e-commerce only happens at the bottom with other point of sale activity.

Today, you can do everything in the funnel within the Alibaba ecosystem. The links created outside of the platform are also deeply impacted by EC performance and data.

Brand & Performance: The DuAl Engine of E-Commerce Growth

The Not So Distant Future of E-Commerce & Marketing Change is already here. We are seeing AI and machine learning-powered innovation sooner than expected. Apart from computer vision to do automatic stock-taking and product quality control, drones and self-driving cars for logistics, these are the marketing aspects that are being revolutionized.

Ad/Marketing Automation • AI-generated brand positioning based on massive macro-level data on consumers, competitors, sales data and social sentiments • Automatic optimize media mix model and creatives to maximize ROI (e.g. JD Haitou) • Automated campaign management

Automatic Content Generation • AI-generated image, text and video contents, multilingual and multi-formats • Personalized copy and creative generated on the spot • Product catalog automatically generated with automatic photography and high definition 3D scanning • Virtual models and virtual fitting rooms

NLP + NLG • AI customer service • AI sales • AI-based social CRM and private-domain traffic generation/conversion • Voice search, voice detection based demographics and interest mapping

Next-Gen Data Integration/ Analysis • Reliable attribution model with integrated data supported with face recognition and IOT • Per person psychographics profile • Consumer demand prediction instead of mechanical recommendation based on history • Real-time optimal pricing/promotion suggestions

• This begs the question, how much human involvement can be removed before marketing is no longer ‘marketing’?

• When machines generate campaigns that generate more effective campaigns, for at least a short period, human marketers have to raise the bar in terms of establishing emotional connections and create beauty.

• Eventually, marketing will become an arms-race of big data and AI technology rather than human creativity. If we look at the various ’data headquarters’ of the major brands such as L’Oréal or Unilever, the inevitability is hardly up for debate.

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Brand & Performance: The DuAl Engine of E-Commerce Growth

Case Study: POP MART Strategic Alliance Leading to High EC Performance POP MART has been tremendously successful with its ‘blind box’ products, which engage young consumers with cute cartoon figurettes and small toys.

Many brands have tried duplicating the success by attracting the same young crowd with their own ‘lucky-draw’ campaigns, but none have been very effective as a) the lucky-draw mechanism and merchandise design is becoming quite complicated; b) target consumers might not be readily familiar with the ‘blind box’ concept and interactions.

With the help of the agency Data Interlink, POP MART collaborated with Tmall Black Box and nine brand clients to launch the 715 Hip Fun Street campaign, where consumers access online virtual stores through a WeChat mini-program to register as VIP, play games and collect vouchers for special lucky-draw opportunity. The stores were elegantly designed to be consistent with POP MART’s look-and-feel with popular characters acting as virtual shopping assistants. This is also the first mini-program of such function and complexity ever since T-Mall closed their HTML5 interface earlier this year.

The result for the 2-week campaign: 1M+ mini-program users, 2.68M store visits, 200,000 new members.

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

Case Study: Levi’s EC Data-Driven Strategy to Penetrate the Gen-Z Market According to Alibaba’s Databank Analysis, Levi’s online consumer structure needs to be reinvigorated. The young consumers (age 18-29) that enter their Awareness-to-Interest funnel is considerably less than their total consumer distribution. This is an alarming discrepancy seeing how the post 90’s generation has become a pillar revenue source and a rapidly growing customer base for competing brands.

The Levi’s campaign designed and run by Baozun epitomized the adage ‘using sensational data to empower rational creative.’

1. Levi’s identified the young idol KUN as the spokesperson and co-created a

unique design with his album slogan.

2. The pattern on the back of the design, when scanned, leads to exclusive content, fan event opportunities and special discounts.

3. An online live streaming design launch event was organized with links to ‘buy on the spot.’

This campaign made Levi’s the #1 top seller in the male apparel category of the day and #1 in-store growth. 82% of the co-created design was sold. The brand’s GMV benefitted from the store’s escalated popularity and quality ranking for weeks after the campaign.

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