Marketing

Overview of the UK Market

In the UK in 2015, e-retail revenue was largely derived from natural, paid and direct marketing, which together accounted for 75% of this revenue. Interestingly, though, this figure has decreased in recent years to make way for other methods growing in popularity. Email marketing continues to grow in popularity, with almost 50% growth in penetration between 2010 and 2013. The development of mobile commerce has been identified as one of the key drivers of this growth. Natural search provides by far the biggest share of revenue, at 33%, for an e-retail website according to IMRG’s Quarterly Benchmark. Interestingly, this also remains true irrespective of device; desktop (37%), tablet (34.8%) or smartphone (33.7%). Direct traf c, at 22% is the next biggest source of revenue and obviously the most cost effective. Revenue from paid-for traffic accounts for 19.4% of the total and whilst having a direct cost, still provides a strong Return on Investment (ROI). For example, for every £1 spent on Pay-Per-Click (PPC), the average ROI is £5.51. [1]

Social Media

Revenues derived from social marketing are negligible, accounting for just 0.2% of total e-retail revenue in 2014. In comparison, revenue derived from social marketing in the UK is currently limited, accounting for just 0.3% of total e-retail revenue in 2015, down from 0.8% in 2010. Social media marketing has had a mixed effect for many brands. Data from the IMRG Capgemini Quarterly Benchmark in 2015 reported that it was only responsible for driving 0.2% of total e-retail revenue. The challenge for this measure however is that it averages out over different verticals and business sizes. Perhaps the best measure for social is actually around brand awareness, customer interaction and as a promotional tool. There is evidence where businesses have driven commercially successful promotions through social media and as a tool for having conversations with your customers, it is unparalleled. Whilst it is currently hard for many brands to see social media’s direct effect on sales in the UK, it is still considered to be a valuable marketing and brand-education tool.

As with other territories, it is important to understand the demographics of the users of each of the social media platforms. Facebook is by-far the most popular social media platform in the UK but is it more widely used by older generations. Part of the challenge is that youth audiences don’t want to be on the same platform as their parents. The younger audience’s demands from these platforms are also different, with messaging being a key component, along with immediacy

Major Shopping Categories

Clothing and fashion is recorded as the top-selling retail category in the UK, followed by electrical goods. IMRG recorded 114.5% growth for the clothing and fashion sector between January 2009 and January 2014. [2]

Major retail Holidays

Black Friday – the fourth Friday in November; a commercial import from the US where ‘Black Friday’ is the day after Thanksgiving. Black Friday now accounts for more sales than Cyber Monday and pulls forward ‘peak’ into November. Online, Black Friday week is worth £4.3bn. ‘Cyber Monday’ - the rst Monday in December and the two weeks starting on Black Friday and moving into December now constitute online peak sales period. [3]

Email Marketing

Email marketing is renowned as one of the most effective and developed methods for driving sales in the UK. From IMRG / Capgemini data, one clear emerging trend is that email marketing continues to grow in popularity and become a more important tool for the online community. The development of mobile commerce has been identified as one of the key drivers of this growth and a strong correlation has been identified between the growth in mobile commerce over recent years and the increase in visits and revenue generated from email marketing. IMRG / Capgemini data indicates that during 2010, revenue generated from email marketing accounted for 7.7% of UK e-retail sales, and by 2015 this had reached 12.0%, representing almost 50% growth in terms of penetration in just four years. Visits to e-retail websites through email marketing have decreased, from 14.5% in 2014 to 14.4% in 2015. [4]

Direct Mail

Although online retail is very much a digital activity, given the influence of all channels mail still has a place in winning and keeping online shoppers. In fact, as a means of bringing customers to web sites and to cross sell after an initial purchase, it still proves to be an ideal partner with digital, making it a medium that is enjoying a renaissance. Mail remains central to UK consumer’s lives, homes and behaviour. 83% of consumers open all or most of their mail. And it has staying power - 80% of adults have kept some mail that companies sent them in the last four weeks.

Specifically, mail can be used in the following ways in the UK e-retail market;

  • Direct mail communications and catalogues add another dimension to online shopping, allowing more relaxing browsing time.
  • Consumers still like receiving mail from retailers. It reminds them about brands, brings them new information.
  • Importantly, there is ample evidence that mail drives e-retail sales in the UK market and that customers shop more and spend more when they receive mail from a retailer.
  • Mailed catalogues are opened and read; 71% of consumers open a catalogue from a company they have ordered from before and over half, 54%, say they will open one from a company they don’t know.
  • Catalogues drive consumers to buy more and more often. 40% of consumers report that they buy more than they originally intended to when shopping from a catalogue and 50% say they buy more frequently if they regularly receive a catalogue.
  • 74% of consumers who received a catalogue bought from the retailer within 6 months and 81% said their purchase was influenced by the catalogue. [5]

TV & Radio

On average, 90% of the UK population tuned into the radio each week in the 12 months prior to March 2012, and radio marketing revenue grew 7.2% to £575m in 2014. Interestingly, in the OFCOM Communications Market Report of August 2015, it was reported Radio’s share of overall ad-spend is up marginally at 3.2% in 2015. National ad revenue for commercial radio stations has also increased, up by 17.3%, to £243m. This spend is by brands with a national footprint. Ad-spend by local brands is down 6.6%, a reflection on the growing importance and cost effectiveness of targeted, localised, internet advertising. Data from OFCOM has shown that one recent development in radio listening has been substantial growth in listening via a mobile device as a proportion of total listening - an increase from 13% to 20% over the last year.

GroupM, part of WPP, was reported as forecasting TV advertising spend to increase by 9% in 2015, to £4.2bn; Overall ad-spend is also expected to increase by 6% to £15.9bn.(www.ft.com). The same report also talks about the overall fall in TV audiences, down 5% in 2014 on the previous year. However, the availability of Video-on-Demand and ‘catch-up-TV’ is replacing much of this as viewers now consume programming at a time to suit them, rather than by schedules set by broadcasters. Rather than being a challenge for advertisers, many of whom were worried about audiences skipping past the adverts, GroupM estimates that brands will spend about £300m this year advertising on these channels. [6]

Affiliate Marketing

Affiliate marketing is also becoming an increasingly developed method of marketing within the UK. Affiliate marketing and lead generation channels generated an estimated £16.5bn worth of sales in 2014 according to IAB UK. On an ROI basis, performance varied depending on digital channel used. For example, on the desktop / laptop, an ROI of circa £19.96 was achieved whilst on smartphone this was higher at £20.94, as reported by IMRG. In total, UK businesses spent £1.1bn on af liate marketing in the UK in 2014 according to IAB UKVia mobile channels, affiliates still provide valuable traffic, averaging a 7% contribution to total revenue contribution. Affiliates are particularly strong in the fashion vertical, with nearly 12% of revenue coming from this marketing channel; pointing to the strong role that these sites have in building range awareness and facilitating transactions. [7]

Sources

  1. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
  2. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
  3. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
  4. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
  5. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
  6. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
  7. eCommerce Worldwide. United Kingdom Country Guide. "eCommerce in the United Kingdom"
Population:

65.6 million

Median Age:

40.5

Internet Use:

94.8% (11th)

Most Popular Social Network:

Facebook (44M users)