New customers, old customers, and browsers.
The difference between a new customer and a returning one boils down, largely, to how they get to you. New customers need to decide where to shop, what to shop for, and how they'll get to the best items--and advertising will strongly impact all of those decisions. Which means that the path a new customer takes to her conversion can flow through TV, radio, magazines ads, and outdoor displays. She's in touch with advertising at every step.
But as new customers grow to become store regulars, habit and loyalty play a greater role than conscious decision-making. And so once customers find a store they like, they (largely) stop interacting with the advertising that could otherwise drive store-decision-making choices. Of course, there's still the phenomenon of interstore poaching--but as long as loyal customers decide to live within an advertising vacuum, pulling off that poaching tends to be hard. And so, at least to a limited extent, your advertising job is finished once you've brought a shopper in.
That's Point #1. Point #2 is that an increasing number of Internet users use search engines as the new browser bar. Rather than remembering URLs or bookmarking, visitors type Web sites into search engines. That's why, for example, the Yahoo search network saw nearly 1 million searches in May for "amazon.com": rather than typing "amazon.com" into browsers, people searched for the household-name site in the engines, and proceeded from there.
Put the two points together, and you'll see why the search-engine-as-browser-bar trend has tremendous bearing on e-tail sites. It means that, unlike in the bricks-and-mortar world, repeat customers arrive at e-stores via an advertising medium. Offline, you arrive at a store in a car; online, you arrive at a store through a search engine. So advertising is essential in e-tailing for both drawing in new customers, and for getting your repeat customers to buy from you.
Things don't have to be so difficult for e-tailers. One helpful approach is behavioral search retargeting, a new SEM phenomenon that Bill Wise, my firm's CEO, wrote about in this space a few weeks back. Behavioral search retargeting follows former search visitors across the Internet--delivering display ads to them as they go, and drawing them back to your site to convert. Behavioral search retargeting draws old visitors back because of your dual relationship with them: they're interested in the things you sell (after all, they've clicked on your search ad); and they're familiar with your brand (since they've already come to your site).
Behavioral search retargeting means that, rather than waiting for repeat customers to return to you through the engines, you can proactively bring them in via banner ads. Banner ads are far less expensive than comparable search ads, and so behavioral retargeting means avoiding the high costs of search for repeat customers. And it also means avoiding competition--unlike the other advertisers on the content page, you're delivering highly targeted ads.
By using search to bring in new customers, and behavioral retargeting to maintain the relationship, you're getting the targeting capabilities of search, plus the lower-cost customer relationships of bricks-and-mortar.
I'll be happy to discuss theses issue further at the Search Insider Summit on Saturday, July 22nd (I'll be on the 11 a.m. panel).