Online retailer Overstock.com is planning to open up self-service ad options to brands to bid on ad placements on Overstock’s site.
The idea is to ramp up Overstock revenue from marketing and advertising, a high-margin way to make some money on the side. Overstock will now offer multiple types of advertisements to brands. In “tier one,” brands can have tailored native banners on high-visibility spots on either the Overstock.com homepage or category page. For “tier two,” placements are more transactional: on search pages, in a carousel format or product listing ads. For “tier three,” Overstock will focus mostly on gleaning search budgets, offering advertising on product detail pages.
The retailer, which is working with PromoteIQ, an automated vendor marketing platform by Spotfront, will offer brands data on click-through rate in a cost-per-click pricing model and tell them things like how many shoppers made a purchase, as well as what they bought instead, creating an attribution play very attractive to performance-minded marketers.
“Overstock is always going to be a retailer first, and nothing we do will disrupt the selling,” said Jonathan Craner, who heads cooperative advertising and media partnerships. “But we’re a publisher, too; we have unique content and traffic.”
The company gets about 30 million unique visitors to the site a month and also offers third-party ads for non-Overstock companies.
Spotfront co-founder Alex Sherman said the push for retail media has emerged mainly because of Amazon. Amazon has made waves by investing heavily in Amazon Media Group and Amazon Marketing Services and makes multiple ad products, from sponsored search to product listings, available for brands that sell on Amazon — and even some that don’t.
Initially, most retailers like Walmart and Overstock used ad networks, asking for pixels on a page to sell to advertisers. But after Amazon, more retailers have woken up to the fact that they own both the ad space on their websites and crucially, buyer data, so they could do it in-house. “The biggest asks we got from retailers was transparency and hands-on keyboards. These people wanted to run and target campaigns on their own time,” said Sherman, “and ultimately, allocate marketing dollars away from Googles of the world and into these programs. E-commerce marketing really has come into its own.”
The interesting thing is the “gap” these retailers want to exploit. Because these brands sell on Amazon but also elsewhere, the pitch for places like Overstock or Walmart is “only advertising on Amazon won’t work.” Overstock made $1.8 billion in revenue last year and spent most of the fourth quarter and the first of this year testing advertising channels and bringing many of those systems in-house.
Sherman said the retailer is trying to solve for more granular things, like extending an attribution window from its traditional 30 days to 60 or 90, noting that most of its purchasing patterns take longer and aren’t impulse buys. And it’s trying to solve for more cross-device attribution questions.
Of course, one disadvantage is Amazon or Walmart can theoretically link purchases in physical retail with online advertising, too. Overstock seems to have ambitions there: Speaking on its first-quarter earnings call, CEO Patrick Byrne said internal testing has found Overstock.com can beat Amazon on pricing by a small margin and sees a success story with how Walmart has coupled with Jet.com to combine physical retail with online retail. “We will find our way to being some hybrid model like that,” he said.
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