Just 4% of brands are marketing 'geniuses'

Dive Brief:

Successful brands in this retail age, no matter their age or size, share some common investments in marketing that help foster visibility and sales, according to new research from digital research firm L2 emailed to Retail Dive. The firm ranked 2,303 brands, but only 94 — a mere 4% — earned their "genius" moniker.
"Genius" brands leverage tech and data to personalize not just marketing but also products; render content like blogs and lookbooks shoppable; partner with e-retailers (and not just Amazon) to boost search and reach; evolve desktop display to mobile display and desktop video; and integrate online and store experience.
By way of example, L2 calls out Macy's, which displays excellence across social platforms, including debuting shoppable tags on Instagram; Nordstrom, a consistent leader in organic visibility; Sephora, a strong retail presence across platforms including advanced Messenger chatbot; and Boots UK, which maintains the largest ad publishing platform among UK peers with the highest volume of impressions.

Dive Insight:

Most of the companies in L2's extensive study are brands or consumer product conglomerates (or brands in the stable of conglomerates), whose marketing and commerce needs often differ from retailers. A department store's social media strategy, for example, will differ greatly from detergent brand Tide's.

Despite all the differences, though, a few trends of note emerged by L2's reckoning — including that marketing has moved significantly to mobile: In 2017, desktop ad impressions fell 10% while mobile rose 36%. Brands are accommodating other changes in consumer behavior online, too. Desktop video impressions are up, "indicating that brands are making a conscious effort to adapt their strategies to changing viewing behaviors among consumers," according to an L2 blog post on the study from L2 editor Grant Phelps.

It doesn't take a genius to figure out that shoppers (especially younger ones) experience their online and offline experiences without much distinction, but it's only a few "genius" brands that are taking care to make conversion possible. "When it comes to content, Geniuses never lose sight of the ultimate goal: conversion," write Phelps. "They make content shoppable wherever possible, even on social media."

It may come as no surprise to find that L2 deems Amazon a genius onto itself, but the firm also sees Amazon as a major conduit to other brands' genius as well, at least when it comes to marketing. (L2 nods to other e-retail relationships, but Amazon is the big one.) Setting aside brands in the luxury sector, nearly 80% of merchandise-oriented "Genius" brands are official distributors on Amazon, L2 found. "Their product descriptions are armed to the teeth with high-volume search terms, which not only boosts visibility within the platform, but also gives them a better chance of showing up in Amazon search listings on Google," Phelps said. "They're looking beyond Amazon, too. Local and specialty retailers may lack Amazon's scale, but they can help brands tap into target demographics."

What may be impossible to measure is the limits of even "genius" marketing in this turbulent age of retail. Macy's and Nordstrom, for example, are doing all the right things when it comes to personalization, visibility, checkout and delivery, but there's no real indication that any of it is sparing them the intense pressures in the department store sector. Despite holiday sales that beat expectations, the decline of department stores in particular is expected to continue, according to a report last week from Moody's Investors Service emailed to Retail Dive. Plus, the technology that makes it possible to become a "genius," as defined by L2, is expensive. That is helping e-commerce in general eat into retailers' margins.

Nordstrom, for example, has been increasing technology spend over the past five years, and Moody's estimates that Nordstrom will be expensing some 50% of its technology costs over the next five years. "In the current environment of pricing transparency, cutthroat pricing and more demanding consumers, retailers must have strong balance sheets if they're to remain competitive," Moody's noted. "The operating profit margins of companies that have invested heavily in online channels have come under pressure in the past few years, a trend most evident among department stores, apparel and footwear sellers, office supply stores, and discount and warehouse companies."