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The Value of Brick-and-Mortar in an Online World

Last week I was searching for e-commerce versus brick-and-mortar statistics. Depending upon the source, brick-and-mortar retail is either thriving, making a comeback or dead and buried. Wading through the bias and hype, I found several white papers from reputable sources in our agency library.

Based on metrics from the US Government, in Q2 2016, US e-commerce sales represented approximately 8% of total retail sales. And, according to several national retail analysts, over 55% of shoppers would prefer to buy from a merchant with a physical store presence. Among younger consumers, 80% of Gen Z and 82% of Millennials prefer a brick-and-mortar experience to online shopping.

So, brick-and-mortar is still a viable channel in the purchase process, but does it provide any consumer insights in addition to the revenue stream? The value of digital in an omni-channel environment is fairly transparent. Digital provides a steady source of data and insights that refine and enhance the shopping experience. But, what does brick-and-mortar bring to the data table? Quite a lot, actually.

First, brick-and-mortar locations enhance 1:1 targeting and ROI. Every brand has a trade area. This trade area is where a brand's best responding customers and prospects reside. Brick-and-mortar locations anchor these trade areas, providing a strong geographic center. Targeting the top traffic-driving zip codes that surround a brick-and-mortar location can double or triple 1:1 response.

Second, brick-and-mortar visits are stronger predictors of loyalty. Online visits are great for measuring the potential success of a retail site, but a true brand interaction can only happen in store. The ability to touch and feel a product while having a detailed conversation with a knowledgeable brand representative increases conversion and satisfaction rates, which are key metrics in predicting customer retention.

Third, brick-and-mortar locations are better at driving net revenue per visit. Online returns are usually handled via free shipping and a return box. There is little to no interaction with the brand after the product is sealed and mailed. But, in a brick-and-mortar environment, returns provide an opportunity to cross or upsell a customer along with creating a positive brand experience. Within the group of retailers that I've worked with over the years, over 40% of returns resulted in net increase in revenue within the same visit.

 


What is Twitch, and Why Should I Care?

If you've heard of the game streaming platform, Twitch, you may be amongst those wondering, "Why would anyone want to watch a stranger play a video game?" The stereotypical persona of a "gamer" doesn't provide many answers - the word "gamer" can still conjure an image of a guy who hasn't bathed in months, lives in his parents basement, eats a lot of Cheetos and "trolls" other gamers on the internet. Who's watching that guy? With an estimated 9.7 million daily active users per day on Twitch, it would appear that a lot of people are.

That Cheeto guy is not the reality of the gaming industry's audience. Today's gamer is anyone. According to a 2015 annual report from Entertainment Software Association, 63% of all US households include at least one frequent gamer - and 41% of all gamers are women. If you play games on your Xbox or on your phone, you technically count towards that number. And Twitch covers all of those bases, with personalities and programming that appeal to a much broader audience than most might suspect.

Twitch, which was purchased by Amazon in 2014 and recently added into its Prime offerings (a.k.a. Twitch Prime), is the world's leading social video platform and community for gamers and video game culture. And it's not just "games" being streamed anymore - there's Twitch Creative, which has broadcasters streaming cooking shows, art tutorials and home-brewing shows.

But what is the appeal - as a viewer, a streamer or an advertiser? Let's break it down (drums please!):

A Twitch Viewer

Like any other popular social channel online, Twitch is a place where like-minded users can communicate and commiserate. Choosing a channel to engage with can lead a user to conversations about games they enjoy. Also, like professional sports or reality shows, this is a form of entertainment. Many streamers are highly skilled players, or have engaging personalities, or both. On top of all of that, Twitch users might just really love gaming and be looking to spend time with games they already love - or discover new ones to buy.

A Twitch Streamer

The "streamers" (or the users who choose to record and share video of themselves live for an audience) are growing in number and gaining ground as web personalities. For many streamers, Twitch broadcasting is a way to have fun and connect with friends (and fans) about their mutual love of games, cooking, sewing or other creative endeavors. It can also be an opportunity to entertain and engage with audiences for money. Whether it's through donations, advertising or channel subscriptions (which is where Twitch Prime comes in, giving members one channel subscription for free - but paying the streamer),there are popular streamers now making a living by playing video games. For real.

A Twitch Advertiser

Opportunities for advertisers continue to grow and expand as much as Twitch does. Each day, users watch and talk about games being played by more than 2 million streamers per month. Currently, Twitch claims to reach "half of millennial males in America" - 75% of its users are male, and 73% of them are between ages 18-49.

With these statistics in mind, the appeal for game makers and developers to have streamers play their games is obvious - attracting new fans and buyers to new and existing games and building buzz. For non-gaming brands, there's also a growing opportunity with everything from traditional display and takeover ads to having high-profile streamers act as influencers to their specific audiences. Amazon is actively growing this list of mainstream advertisers, and has already attracted brands like Coke, Bud Light, Pizza Hut, Old Spice and more.

Similar to YouTube and other native video platforms, Twitch also serves video pre-, mid- and post-roll ads. To make those video options even sweeter, Twitch is currently rolling out its SureStream video technology platform, claiming ads on it cannot be blocked by third-party ad-blockers.

Twitch's longevity and overall growth potential remains to be seen, and its unfiltered UGC nature certainly presents some concerns for many mainstream brands. However, with Amazon continuing to push this platform forward and find new ways to manage how content and ads are being seen, it's definitely setting itself up as a media powerhouse worth keeping an open mind towards.

Sources:
https://www.twitch.tv/p/about
http://essentialfacts.theesa.com
http://www.polygon.com/2016/4/29/11539102/gaming-stats-2016-esa-essential-facts
http://thehustle.co/get-rich-or-die-streaming-making-money-on-twitch-tv
http://www.cnbc.com/2016/05/13/amazons-twitch-streamers-can-make-big-bucks.html
http://twitchadvertising.tv
http://www.wsj.com/articles/amazons-twitch-angles-for-more-non-gaming-advertisers-1476439202
http://adage.com/article/media/amazon-adds-twitch-streaming-prime/306138/
https://techcrunch.com/2016/11/02/twitch-starts-selling-its-own-video-ads-says-they-cant-be-avoided-via-ad-blockers/
http://twitchadvertising.tv/audience/