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Wayfair vs Plow & Hearth: Battle of the Brands

Daniel Yonts


Introduction

In 2010, Plow & Hearth celebrated its 30th anniversary within the home products market. Its online efforts were supported by a catalog, retail outlets and traditional media buys.  With sales exceeding $100 million annually, it was well positioned to expand its revenue and brand online. When purchased that same year by Evergreen Enterprises, the brand was given additional advantages in terms of inventory and infrastructure.  Leveraging an established brand and over $200 million in sales, Evergreen was ready to impact the home products market.

At the beginning of 2010, Waifair.com didn’t exist. Instead, CSN Stores had developed over 200 niche sites. They we’re the masters of intention-based marketing. Rather than focus on building a brand, they took advantage of long-tail intent within home product markets. This strategy enabled them to grow sales to over $380 million. It also provided them with an incredible laboratory from which to learn about markets and try new things. What they learned compelled them to completely change direction. Instead of just harvesting consumer intent, they would build intent around a brand. Thus, Wayfair was born.

Online Marketing Strategies

Click Focused

Plow & Hearth has employed an approach based on “best practices” within its digital markets. Emphasis is placed on getting clicks and social interactions rather than being seen. It is reluctant to engage consumers earlier in the buying process and relies upon generic intent to grow its market share. Thus, its ability to grow Brand Activity is mostly limited to offline exposures and messaging to its existing customer base. For this reason, its strategy is focused on incremental growth as the overall market expands. If overall retail sales grow by 10-15%, they should be able to grow within this range.

Brand Focused

Wayfair is focused on getting seen as often as possible by its most likely buyers. In an effort to grow their brand, Wayfair focuses on exposures and reaching consumers earlier in the buying process. According to AdBeat, Wayfair is one of the largest buyers of display advertising in the US -- spending millions each month. Through aggressive testing, Wayfair has learned to measure, optimize and grow results. It is not focused on clicks. Wayfair knows that online messaging influences consumers without needing a click.

Look at the Numbers

How did a brand which didn’t exist in 2010 attract over 30 million visitors to its site? Why did Wayfair grow so quickly in comparison to Plow & Hearth? At first glance, the traffic sources of the two retailers look similar. Plow & Hearth has a higher percentage of its traffic coming from social media (2.47% vs 1.93%), search (44.23 vs 43.41%), and direct entries (38.85% vs 37.03%). The big differences between the two is their use of display advertising. Wayfair receives 2% of its traffic from display versus 0.15% for Plow and Hearth.

What does display matter? It only accounts for 2% of Wayfair’s traffic.

Wayfair understands how consumers buy and advertising influences decisions. They don’t depend upon display ads for clicks. Instead, they want ads to expose consumers to their brand throughout the buying process. They realize display ads generate traffic through direct entries and brand searches, which I refer to as Brand Activity. This activity cannot occur unless there is a familiarity with a brand. Thus, Wayfair understands attribution and how to measure the true impact of display campaigns. Plow & Hearth does not.

Wayfair gets 1.5 Billion exposures every month, while Plow & Hearth is seen 1.3 Million times.

At 2% of traffic, Wayfair receives over 730,000 visitors from display ad clicks every month. Assuming a CTR of 0.05%, Wayfair also receives over 1.5 billion exposures. Conversely, Plow and Hearth attracts less than 1,000 visitors from display clicks and receives around 1.3 million exposures. While Wayfair is achieving frequency with scale (ads are being seen by millions of consumers multiple times), Plow & Hearth is unlikely to achieve any frequency that would make campaigns profitable – even in narrow niches.

Leveraging exposures, Wayfair receives over 13 million visitors who go directly to their site. For retailers, direct entries represent their best channel. Direct entries account for a large percentage of sales. Visitors know that Wayfair exists before they type in a URL. Being seen 1.5 billion times and having an accessible brand makes this easier. Plow & Hearth, however, only attracts 156,000 of its absolute best customers, who are most likely to convert and engage with their brand.

Exposures Impact Brand Searches

A large percentage of search traffic is brand specific. This traffic accounts for the vast majority of sales that are attributed to the search channel (both paid and organic). Without these sales, search professionals would have much greater difficulty demonstrating value. Yet, what does an SEO/SEM professional do to increase searches for a brand? How are their tactics and measurements affecting brand intent? My guess is that Wayfair answered these questions long ago – and that Plow and Hearth has yet to ask them.

Right now, Plow and Hearth receives around 90,000 visitors per month via brand searches. Wayfair receives nearly 8 million monthly visitors from branded search. These visitors represent a retailer’s best customers. They stay on the site longer, visit more pages, and convert at a higher rate than non-branded channels. Wayfair has figured out how to measure and grow their brand searches. Thus, they grow the largest part of the pie rather than incrementally engage generic intent. In fact, their brand is searched for more than the generic intent within their industry. They are replacing generic intent and growing the overall size of the market.

Wayfair wins BIG because Brand Intent is scalable -- generic intent is not

Wayfair understands that brand intent always beats generic intent – a lesson likely learned through its hundreds of micro-sites. You can grow and measure the number of times people search for “Wayfair”. No amount of SEO or PPC trickery will make consumers search for "fireplace screens" more than they already do. What’s more, as a brand associated with “fireplace screens” emerges – it will replace much of this generic intent as well. In other words, as a brand grows, generic intent within markets shrinks. Wayfair knows this because it has seen this happen.

For click-focused companies, it is difficult to understand online attribution and digital branding. The premise that clicks should be prioritized over exposures is codified within industry "Best Practices". This premise drives market selection, market targeting, ad messaging, landing pages, conversion optimization and data analysis. Thus, it drives staffing, marketing technology and strategic planning. The digital infrastructure and capabilities of click-focused companies are built upon a premise that is never challenged through testing or analysis.  They cannot build scalable brands because they don't believe that branding occurs online. There is no reason to test or inquire about something that you don't believe exists.

For Plow & Hearth, this means their brand must be built on more expensive channels. If online exposures don't have value beyond clicks, it would be assumed that offline exposures are the only driver of brand activity. Without brand activity, sales will decline and the company will shrink. Thus, the need to spend more on offline campaigns -- where ad messaging actually influences consumers. Unfortunately, the reach and frequency of this approach is limited -- and growing more so everyday. Without online exposures, PH will have difficulty maintianing their position. Even limited growth will be determined by the growth of generic intent.

Yet, the premise that exposures are less important than clicks is wrong. It's been disproven by research, testing and the data. Wayfair has proven this premise to be wrong -- along with a growing list of successful brands. Over the next few weeks, I'll be writing about these brands, using examples from different industries and markets.



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