E-Commerce Insights from HookLogic CEO Jonathan Opdyke

Welcome to the latest installment of Catalyst’s Digital Tech Innovation Series, in which we interview the technology movers and shakers in the digital marketing industry. Today’s interview is with HookLogic Co-Founder and CEO Jonathan Opdyke.

HookLogic is a leader in e-commerce performance marketing solutions, powering integrated, native advertising and promotional programs across many of the internet’s most recognized e-commerce sites. As an early advocate of ecommerce media, Jonathan helped make the practice of blending digital advertising sales with traditional commerce models standard among many online retailers and travel agencies. His vision also led HookLogic to pioneer the development of the first search advertising programs embedded within e-commerce sites. Prior to HookLogic, Jonathan led internet strategy for Xerox Corporation and international operations for online ad pioneer, Beyond Interactive.

Read our interview of Jonathan below, and uncover insights into the integration of e-commerce and advertising. Enjoy!

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Please tell our readers about HookLogic and what sets you apart from competitors.

HookLogic has created a unique ad exchange deeply embedded in e-commerce sites. We enable companies that sell within e-commerce stores, such as product manufacturer brands, to bid to have their product featured more prominently on the sites, including at the top of the search results. It’s like paid search, but completely native for retail searches. The program has a pay-per-click model and brands get to see closed-loop sales attribution due to our data sharing agreements with retailers. For example, if someone searches for “disinfectant” on Target.com, “Featured Products” like Lysol and Pledge may show at the top of the page. Clicks on those ads go to the product page within the retailer site and if someone purchases one of those products, we report the success back to the brand.

Jonathan Opdyke

Brands love it because they can instantly sell more products in retail channels with performance metrics like return on ad spend.  Retailers love it because they have a turn-key form of media monetization where they don’t have to send traffic away to other sites. And it’s entirely seamless for the customer experience since the ads are entirely transparent and link exactly as a consumer would expect – in fact, most consumers view our ads simply as merchandising / promotions.

In terms of uniqueness:

  • Nearly all advertising exchanges and networks are built around standard media formats, such as IAB banners, which don’t always fit as neatly into the shopping experience. Our product ads are entirely native and adapt to each individual store layout and digital medium, including mobile and tablet.
  • Nearly all other advertising providers link away from the site the ads serve on, whereas our ads keep the consumer within the store/publisher.
  • Most product manufacturer brands depend on their retail channels to sell their products online (with some exceptions where brands have large direct to consumer businesses). Also, retailers are generally shy about sharing sales attribution data. So it is difficult for most brands to buy digital media and see the kind of granular sales attribution and shopping insights we can provide.
  • There are a number of companies that sell banners and sponsorships on retail sites, but most have a limited number of sites to sell and media buyers must work with each individually.  With our universal product ad format and sophisticated exchange, we have secured ad inventory on a large number of the top retail sites, giving us unparalleled reach and scale.

Target

How do your solutions cater to the retail industry vs. travel and auto?

The model in travel is nearly identical to examples shared above for retail, but focused on hotels. For example, an Orlando hotel can bid to be the first product in Orlando search results at top online travel agencies like Expedia.com and Priceline.com. We provide one of the most successful ways for hotels to quickly fill rooms, in lieu of aggressively dropping their nightly rates. Our success in travel is actually what led us to launch our exchange in retail.

In the auto industry, our model is a bit different as we focus on stimulating test drives from digital and analog channels, with closed loop reporting. We have created sophisticated ways to target in-market consumers and incentivize them to visit dealerships. Most of the auto industry focuses on driving leads, but given nearly all sales happen at a dealership, a lead isn’t really worth anything until the person shows up. We like to say we deliver “shows” to dealerships. The program has been so successful in increasing traffic to dealerships that several auto manufacturers, including Chrysler, Kia and Subaru, now endorse or co-fund the program with their dealers.

What do you see as the leading online retail trends of 2014 so far?

Like every other digital sector, the world is quickly turning mobile. Mobile traffic is up big on both phone and tablets. Conversion rates for phones are still lagging desktop considerably, although tablet performs comparably well.  The disparity in conversion rates is a challenge for online retailers and it is also causing headaches for various publishers that depend on performance ad dollars from retail, yet can’t monetize their growing mobile traffic as effectively.

Nearly all retail sites are embracing media as an additional and integral form of monetization. To effectively compete in online retail, site owners are recognizing they need to maximize total profit per visitor, which includes both conversion metrics and media sales. We have been on the vanguard of this movement over the past few years and it seems to have finally tipped over.

More large retailers are investing heavily in digital, with dedicated research teams or “labs”, offices in Silicon Valley, and more homebuilt technologies. Competition, particularly from Amazon, demands it. Traditional retailers continue to have an advantage of having stores / showrooms and technology will be a key way of bridging the “omnichannel” experience between various digital and physical media.

What new things do you expect to see in online retail in time for the upcoming holiday season?

As the holidays are approaching fast, I’m not sure if any new technologies or trends will have time to emerge. This holiday season will have similar timing dynamics to last year, with a late Thanksgiving compressing the time between Black Friday and Christmas. Retailers will attempt to push online sales in the weeks ahead of Black Friday to compensate. We were told by several brands that the shopping period continues to compress closer to Christmas as consumers gain faith that delivery promises will be met and put off shopping. I also think we’ll see less store traffic as more people choose to avoid the stampedes and more mobile purchasing as people get comfortable with the medium.

What were some of the most innovative online retailing techniques you uncovered last holiday season?

Several retailers made aggressive pushes over the holiday, such as Target’s big iPad promotion, that spiked online traffic. The traffic spikes increased the Retail Search Exchange site monetization opportunity for our retail clients, while giving brands boosted exposure. In addition, last year there were closer ties between commerce and social media than we’ve ever seen before, with site like Pinterest driving a great amount of traffic to online retailers. It was exciting to watch all of the action as activity swelled throughout our network, and this year will be even bigger and better.

What are effective ways to boost your product placement in retail search results?

Product placement in retail sites is not all that different from SEO and SEM in the search world.

Most sites rely on algorithmically driven search results that look at purchase rates of products, recent discounts, ratings and review, and other factors to determine product sort order. Many retailers also reward aggressive promotions with manual elevation in search results. So from a search engine optimization perspective, brands should focus on factors that improve their online product presentation and conversion – competitive price/promotions, effective product description copy and specs, strong imagery, demos/videos, and any other content that may sway a consumer’s opinion. We recently released a white paper on this topic.

Our program, the Retail Search Exchange, is a way to jump ahead of the site algorithm and pay to be more prominently placed, not unlike search engine marketing. We optimize by quality scoring the products for click through rate and conversion, so many of the same factors that drive SEO can also improve SEM. However, the additional factor of a high bid can outweigh some other factors to ensure a brand can get placement for the right price. Our goal is to make it possible for brands to gain the placement and traffic they desire, at the targeting grains desired, to reach their ultimate sales goals.

How does video impact online purchases?

Video can have a big effect on online purchases as it is a very engaging medium. The context and usage of video is important, however. Some brands simply repurpose TV advertising, which is generally seen as non-objective or unhelpful in making a product decision, since it’s primary purpose is interruption and branding.

The most effective video tends to be video testimonials from other customers, how-to / buying guides that provide some objective advice even if provided by a brand, and product demonstrations particularly for products with unique features or some other less familiar attribute where a demo is needed. For example, the features of a new kind of smart watch is best shown through demonstration whereas no one would need a demonstration on how to use milk. However, a how-to video about choosing the right milk, that talks about the cow’s diet and lifestyle, the effects on proteins of certain types of pasteurization, the detrimental aspects of hormones and antibiotics, the health benefits of organic, and the importance of cleanliness of the dairy facility, could indeed influence milk purchase toward a brand that illustrates these attributes.

You conducted a survey with Qriously a few months ago, asking consumers where they go first when shopping online. What did you uncover?

We found that only 37% of online shoppers say they go to Google first when shopping online, leaving the other 63% to Retail Sites and Amazon (29% and 33% respectively). It’s no secret that Google is penetrating the retail space with shopper-friendly ad units (Product Listings Ads) within search results, but consumers still don’t seem to see it as a place to make buying decisions.

Can you share any aspects of HookLogic’s future product roadmap with us?

Our goal is to help our advertisers sell more products. As such, we are pushing aggressively to be anywhere that we can create more prominence and bias toward our brand partners. This translates to more retailers, more and uniquely targeted placements on retailers, more mobile, new partnerships, and international expansion.

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