Contextual Commerce

8/14/2019 Contextual Commerce

http://slidepdf.com/reader/full/contextual-commerce 1/4

Contextual Commerce

By Augustine Fou

As budgets get tighter, more accountability is demanded, and consumers wieldever more choice and power, advertising as we know it must change. No longer is it viable for advertisers to spend millions of dollars on TV spots or full-page adsonly to get estimates of how many people might have seen them. In the near future, advertising must have more tangible calls-to-action, more detailed dataabout customer response and interactions, and, of course, more scientificevidence of results. This article will explore trends already seen in the advertisingindustry and the economic forces necessitating its evolution. We will alsopropose "context-based clustering" as a new marketing methodology whereseveral advertisers "cluster" their products in joint marketing programs based onconsumers' "contexts" rather than their own.

Context Today In many ways, the advertising being done today attempts toput a frame around or give context to some product or service. They attempt toassociate desirable attributes to the product or service and thus help customer make purchase decisions. For example, Target creatively features a wide varietyof products which they carry in stores to color themed television commercials --e.g. the green TV spot showcases Sprite soft drink, Irish Spring soap, Swiffer household mop, Trident gum, and Cascade dishwasher detergent. Magazinessuch as Seventeen use written articles and related content to provide the contextfor their readers to select which items to buy because they are trendy, stylish,etc. Celebrity endorsements are another well-established context-based

advertising technique – by association, they imply to the customer that they canbe athletic like Michael Jordan if they wear Nike shoes; stylish like James Bond if they wear Omega watches; and beautiful like Cindy Crawford if they wear Revloncosmetics. Cause-related marketing like Avon sponsoring breast cancer awareness is also a tried-and-true advertising technique that associates positiveattributes to a particular product or service. The diverse advertising techniquesmentioned above have “context” as a central thread which ties them together –i.e. they all provide the customer some sort of context for considering andpurchasing particular products and services.

Economic Forces Today Beyond the tried-and-true techniques of traditional

advertising, strong economic forces are also at work reshaping advertising as weknow it. As competition continues to increase, budgets continue to get tighter,and technologies continue to give consumers more power and choice,advertisers must employ more and more creative techniques to “stay alive” letalone get ahead. Overt product placements are now prolific in mainstream TVand film – from Frito Lay’s Doritos as food rewards on CBS' Survivor, to Tony’sMotorola StarTac cell phone on HBO’s Sopranos, to Ford vehicles on ABC’sAlias, to a can of Dr Pepper prominently placed on Spider Man’s nightstand. Not



only do the programs show products being used “in their natural environments” –i.e. “context” – but such product placements are also much cheaper and arguablymore effective than standalone advertising spots. Traditional 30-second spotsare costly to produce, must establish their own context in the short amount of time, and can easily be skipped by consumers armed with a remote control or

TiVo.Other recent examples of advertisers seeking to save costs include Pepsi andFrito Lay’s joint TV commercials, KFC’s “meal deals” which feature Pepsiproducts, and MGM’s 20th anniversary James Bond, Die Another Day, whichemployed cooperative advertising – Revlon ran Bond-themed TV spots featuringHalle Berry, Braun ran TV spots featuring James Bond’s shaver of choice, andFord touted the pink Thunderbird driven by Jinx in the movie. MGM effectively“offloaded” large chunks of advertising expenditures to their partners and got alot of mileage from such cross-marketing tie-ins which touched differentconstituencies.

Behavioral Roots Behavioral psychology and studies of consumer behavior reveal that “context-based” decisionmaking also pervades other aspects of life.For example, religion, social circles, political parties, place of work, and even thegym to which one belongs provides the context for decisions and actions asdiverse as finding someone to date, buying “in” clothes, or summering in theHamptons. “Context” provides the necessary filters which help individuals narrowdown their choices and ultimately make the choice, whether it is who to go outwith, what to buy, or where to vacation.

Consumers have their own set of “filters.” These filters are establishedthroughout each consumer’s growing-up process and influenced by their

“surroundings.” Consumers also have their own “contexts” – e.g. favoritecelebrity, TV shows they watch, magazines they read, gym they join, etc. Filtershelp individuals narrow down the available choices to the few that they are mostlikely to choose. Contexts help individuals make the choice based on comfort-level and trust-level. No matter how much advertising an advertiser does, it isunlikely to change or disrupt these individual consumers’ “filters” or “contexts.”Consider the following hypotheticals – “is a coupon from Pepsi really going to geta consumer to drink Pepsi instead of Coke, which he grew up drinking; or is a$25 discount offer really going to get someone to buy Banana Republic clothing if it is not her style; or is a loyalty program by Pizza Hut going to get a customer toeat pizza again at lunch when she already had it yesterday and really feels like

having a salad today?” Clearly, the consumers’ own choice rules.Another recent example that context is key is Budweiser’s Superbowl adfeaturing a zebra looking at “instant replay.” By many accounts, it was the mostmemorable ad of the entire Superbowl. It is likely that it struck a “contextualchord” with all the football fans who experienced an “ah-ha” moment when theygot what the commercial was all about. Other ads which tried to artificiallyassociate attributes to products (Cadillac as “fast” – car heating up because itwas driving so fast; Michelob Ultra as “sexy” – two sexy young people working



out and then cuddling; or Levi’s jeans as “bold” – two Levi’s wearing youngpeople facing up to an oncoming stampede of computer generated bulls.) or simply tried to be funny or “in-your-face” largely failed to communicate within theconsumers’ own contexts; rather, they “pushed” the advertiser’s perception of what the brand is or should be.

Given this realization that “context” governs such a large part of individualconsumers’ lives and decisionmaking process, advertisers should pay moreattention to and do more research about customers’ real “contexts.” No longer isit viable for advertisers to merely do focus groups and then go on to spend tensof millions of dollars on TV ads based on such artificial feedback or on thestatistically suspect Nielsen ratings system. No longer is it acceptable for them toforce their own contrived value proposition upon consumers. No longer is iteconomical for advertisers to advertise their own product by itself.

Context-based Clustering Companies currently still do their marketing bywhat might be called the “push” method – they try to convey what they think their

brand is or should be. If advertisers take the time to study and understandconsumers’ natural “filters” and “contexts” they would be better able tocommunicate the value proposition of their products or services in the context of the consumers’ needs and decisionmaking process, thereby making much moreeffective ads.

While in the past most advertisers would only advertise their own products, someare also starting to advertise together – mostly in pairs – like the Coach editionLexus, the Eddie Bauer edition Ford Explorer, or Frito Lay and Pepsi snackproducts for the big game. However, in most cases, these pairings or the jointmarketing efforts are defined by existing corporate lines, relationships, or

partnerships as opposed to being based on a true understanding of consumers’needs or contexts. For example, Pepsi and Frito Lay advertise together becauseor their corporate relationship, not because they studied consumers’ needs; butperhaps some customers prefer to buy Coke and Doritos for Sunday football,instead. In such a scenario Frito Lay may be missing out on a sale, which theywould have gotten if they had paired up with Coke instead. Again, it behoovesthe advertiser to study consumers’ contexts and base their advertising on suchcontexts, rather than their own corporate alliances.

If we take this trend further out into the future – given that budgets will continueto get tighter, more efficiency will be demanded of advertising, and consumerswill continue to get more power and choice, we can see that advertisers mustmove beyond “pairings;” indeed they may have to or want to advertise withseveral partners. We call this “clustering.” Clustering means the grouping of interrelated products and services based on some natural or logical context. For example, consumers instinctively know to buy flour, butter, sugar, and vanillaextract together when they are planning to bake a cake; consumers also naturallybuy soda, popcorn, and other snacks when they are preparing to watch footballwith their buddies on Sunday; consumers buy haircare, skincare, and makeupproducts, as well as fancy clothes when they are preparing for a big date. The



point is that consumers already do this naturally -- cluster products within their own contexts; and yet advertisers have not tapped into these “contexts” to maketheir advertising efforts more effective and save costs at the same time.

Conclusions So in summary, context is about trust and the simplification of the decision making process for the consumer. In this day and age where thereare a huge number of choices (i.e. products) with very little differentiation in valueproposition (i.e. orange soda from Coke – called Minute Maid – versus orangesoda from Dr Pepper – called Sunkist), “context” becomes ever more importantto a consumers’ choice. Consumers already have their own natural “contexts”and already make purchases of “clusters” of products based on such contexts.So advertisers should heartily embrace this trend towards “context-basedclustering” and advertise based on consumers’ contexts and not their own. For advertisers, “context-based clustering” represents a way to make the advertisingefforts dramatically more effective while sharing the costs amongst a larger number of advertising partners.

Dr. Augustine Fou is SVP Digital Strategy at MRM Worldwide

Documents

Contextual Commerce