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Confusion reigns on best digital channels for retail, SMI data reveals

Analysis of data collected by the Standard Media Index (SMI) on retailers using digital has revealed a market confused about which channels are delivering the biggest bang for the buck, even as retail spending in digital continues to grow.

Jane Schulze believes retailers are still testing the digital market

Data for the first quarter revealed more and more retailers are moving to programmatic solutions, with department stores leading the charge with growth of spending through programmatic quadrupling compared to the previous quarter.

While overall SMI figure released last week reflected a drop on spending across the board as a result of last year’s federal election and Olympic Games, SMI reported that key retail sectors were increasing their digital spends.

The research covered major retail brands including David Jones, Myer and Harris Scarfe, Big W, K-Mart, Country Road, Witchery and Marcs.

Looking at department stores, discount stores and apparel/luxury/fashion/shoes retail sector, the research revealed the luxury sector, previously a small investor in digital, was leading the way with total growth of 73.6%.

Growth across all three sectors was 34.4% with spending from SMI measured agencies up to $11.9m.

Discount stores saw digital investment rise by 45.7% and department stores rose by 19.3%.

Jane Schulze, SMI managing director AU/NZ, said it was clear that within the digital space advertisers were still struggling find what was working and what was not, leading to wild fluctuations in where money was being invested.

“It’s clear everyone is still testing what they are doing in digital, what is the best digital channel and what works best for them,” Schulze said.

She noted that there had been a flight away from “content sites” (websites supported by journalism) by department stores as they moved more money into programmatic exchanges driven by algorithms.

Source: Standard Media Index, Q1 2017 v Q1 2016

Department store investment in content sites dropped by 24.6% year on year while spending on programmatic leapt 405.8%.

Spending on pure-play video (websites such as YouTube) by department stores also dropped by 64%, although Schulze said that while the data predated recent concerns raised over brand safety it may still be a factor.

“Within SMI’s overall retail category data it’s clear there are distinct retail ecosystems, each with their preferred method of approaching digital media,” she said.

“For example, department stores spend the greatest proportion of their digital media budget on social sites; discount stores spend the greatest proportion on search marketing while apparel retailers prefer quality content sites.

“The only commonality in ad spend trends we’ve seen in the most recent data is the reducing in spend onto pure play video sites, which may reflect some of the recent debate around advertising on brand-safe websites.”

Luxury and apparel brands grew spend on content by 64.9% compared to the first quarter of 2016, while they upped investment in pure-play social sites by 207.9%.

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