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Retailers highly active in £4bn online ad market

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New figures released this week showed online advertising in the UK was now worth £4 billion per year, and CEO of Feelunique.com Aaron Chatterley suggests that within this there is an impressive catalogue of activity from the UK’s health & beauty retailers.

A study by the Internet Advertising Bureau and professional services firm PricewaterhouseCoopers found that online advertising spending in Britain grew 12.8 per cent year-on-year to £4 billion in 2010 - three times as rapidly as in 2009.

The increase is good news for Google - which I imagine has pocketed most of the added spend - as well as Facebook, which is benefiting from an increase in targeted advertising spend.

Within the health & beauty market, online competition is heating up. The big guys on the high street are ramping up their efforts to compete with the dedicated e-tailers and as a result, consumers are being bombarded by offers of discounts and other marketing initiatives.

Some high street retailers are doing a better job than others in the arena of online marketing.

As far as I can see, Holland & Barrett has no Twitter or Facebook presence to bolster its marketing efforts. They do have an email subscription list for consumers to be kept up to date with new product releases and a limited affiliate marketing scheme for different websites and blogs.

Boots by contrast has nearly 63,000 fans on its Facebook page (at time of writing), with links to blogs that have details about products, as well as photo albums and other content.

The high street chemist’s much admired loyalty programme is also prominent. Boots has teamed up with over 50 other retailers, such as Asos.com, The White Company and New Look to enable consumers to collect Advantage card points when they shop online.

Boot’s YouTube channel only has 442 subscribers, but contains good information on products, tutorials for hair, make-up and so on.

Superdrug is another example of a high street retailer doing a good online marketing job. Customers can use their mobiles to scan items they want to buy from Superdrug’s own magazine called “Dare” and then purchase them when they get online.

The retailer, which has recently opened the first of many new look high street stores, has an affiliate programme for bloggers and nearly 5,000 followers on Twitter and 38,000 fans on Facebook, where it offers discount coupons, and a successful YouTube channel.

It is an impressive catalogue of activity.

High street health & beauty retailers may be coming late to the online party, but they are now realising that consumers want an extra level of service that they simply do not get in a store. They want to know details of the products they are buying, health & beauty advice and interaction with experts. It is simply easier to provide that level of engagement online than it is on the high street where time pressure on inexperienced staff makes it harder for the consumer to get the level of service that they would like.

But for my company and all the other major players in the sector, Google is still the dominant channel for online marketing.

Paid for search is still the primary driver of sales for e-tailers in our sector. With the high street players piling into online marketing, the price of advertising for the most important key words is going up. Good for Google, not so fantastic for us. But H&B companies that are totally dependent on paid search to drive their business will fail while companies that ignore the importance of paid search are equally unlikely to succeed.

Whichever way you look at it, online marketing spend will continue to go into Google’s coffers. As far as I am concerned, the other search engines, such as Bing, are currently insignificant in the UK market.

But online marketing using social media channels is still important. Once health & beauty retailers have succeeded in building up an online fan base, then it is vital that this community is rewarded for their loyalty through exclusive discounts, product advice and so on. And when social commerce really kicks off through the development of a real marketplace on Facebook, then we may see the dawn of a sales channel that provides a real challenge to Google.

And mobile commerce is also becoming a significant part of the overall marketing equation. We have seen an exponential growth in web traffic from consumers accessing our site from their smartphones. So a customised marketing proposition for mobile should now be seen as an essential component of any retailer’s overall online strategy.

But for now, to sum up online marketing for the health & beauty sector, it is simply best to misquote President Clinton: “It’s Google, stupid.”

Note: The views expressed here are those of Aaron Chatterley and do not necessarily represent the views of Retail Gazette.

Published on Friday 01 April by Editorial Assistant

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