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  • Writer's pictureRick Kenney

Welcome to the Digital Reset.

With traffic - digital’s bellwether metric - in retreat over the past three quarters, most brands and retailers are living through their first digital declines in more than a decade (or ever).

For a medium that grew accustomed to double-digit quarterly gains, traffic DECLINES are unheard of. Imagine looking back at the 2% gain of Q3 2021 as a fond memory. Against the backdrop of the past 3 quarters, any growth would help:

It wasn’t until the past few months, though, that the industry started to accept that the double-digit days are in the rearview mirror. While the stage has been set for declines since last year, a combination of self-rationalizing and an inflationary environment concealed the issues.

During the 2H of 2021, declines were excused over the seemingly impossibility of comp’ing last year’s massive covid bump. And, despite growth demands, most boards and leadership relented and accepted the very plausible reason.

And, the inflationary economic climate has provided an additional talking point on earrings calls and board meetings over the past 4 quarters. Inflation rates in the US first breached 4% in April of 2021, have only gone higher since. 17 straight months of 4% plus inflation. The impact on commerce was felt most keenly on AOV, which propped up shopper spend. And, with spend gains outpacing traffic declines, there was =some= growth.

The other reason, though was deceiving – higher spend concealed poor performances from other metrics. The bloated AOV hid the fact that conversion sank, and traffic slumped.

So here we are. The ‘just add water’ days of digital growth have dried up. The short-term reality is one where low growth is a high bar. And, with fall here, and the whispers of the upcoming peak shopping season beginning to crescendo, digital is in need of an urgent ==reset==.

Today, we’ll hit the first reset that is needed to get back in-step with digital’s current reality.

Reset: Planning and Channel Expectations

Out: top-down planning expectations. For those that have developed growth targets that are hoped to be motivating and thus met, well, you know the adage about hope as a strategy.

Reset: Bottoms-up planning needs a re-brand, and I’m here for it. SoS planning. Sum of the Sources. There is comfort in micro-planning for the existing channels, and projecting returns from new investments. Summarizing the sources produces a value that can be defended, challenged, stretched, and typically accounts for the certain variances.

But this post isn’t purely about planning. We’re talking reset, so something needs to reset and that something is our approach to shopper attraction. Across the entire funnel, every channel has changed. As attraction costs break budgets, encouraging shoppers to meet and return to you is an uphill battle. We need to ask ourselves, which channels can we count on to deliver traffic? And, there is a channel that has crossed the chasm over the last 18 months to earn a new expectation: SMS.

Just to be clear, this is not the cliche ‘email is dead’ type commentary. Rather it is a documentary about its far more interrupting, though massively productive little sibling, SMS. While SMS marketing has been a viable medium for more than a decade, adoption has soared in the past few years. Comparing send volumes of the two channels - email and SMS – shows a clear uptick for SMS. What was once a rounding error on outbound messaging volume share has quickly risen to account for 1 in 6 messages:

The lightning-fast adoption is due in large part to two factors. First, access to SMS has been democratized (yes, cover that space in your buzzword bingo). Technical hurdles have been eliminated and any brand can start up an SMS program in moments. While best-of-breed players have innovated, most email providers have added the capability to their offering. And, together, the competition between SMS-only providers and Email-first providers that offer SMS has helped to slash rates. Per message costs have fallen from 2-4 cents per message to a fraction of a penny (.75). Text marketing is truly for the masses. Now, with reasonable rates, SMS, like its older sibling email, is a relative bargain compared with acquisition channels.

The real adoption accelerator, though, is the evidence of SMS success. The productivity is head-turning. Shopper engagement with SMS is strong, and earnings per message and far north of what we’ve come to expect in email.

Of course, not only will results vary, but scale matters. SMS list sizes - especially for established brands and retailers - are a fraction of email list sizes (though growing), And, that means those triggered SMS messages will have small audiences.

The open question of course is how long will the uber-productive returns last? As the interruption factor grows, how long until we bifurfcate the SMS inbox like our email boxes? Those are clearly questions that will be asked in 2023 as consumers start to feel the weight of their notifications.

Until then, roll those SMS messages and hit that reset button for your channel marketing mix.

Stay tuned for additional resets in the coming days and weeks.

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