Interactive Advertising & The Next Wave Of E-Commerce

Although e-commerce has been growing at a rate of knots in recent years, almost half (48.2%) of consumers still report that they prefer to shop in-store rather than online. This is largely due to the lack of tangibility presented to consumers when shopping online.

This article addresses this problem from an advertising perspective by explaining how brands can introduce interactive ad formats as a way of creating better e-commerce experiences for their customers, bringing aspects of the physical shopping experience into the digital realm. 

As e-commerce evolves, so too should the customer experience

During the past two years, the rapid growth of e-commerce has been widely reported on. Everywhere you look, record growth is being achieved with more and more purchases moving from brick-and-mortar stores to digital alternatives. 

If, for example, we look at retail e-commerce sales in the U.S, revenue is predicted to cross the $1 trillion milestone in 2022. In 2023, this number is predicted to jump to $1.262 trillion, a figure which is more than double the $598 million that was recorded in 2019. 

When we combine this rapid e-commerce sales growth with the fact that by 2023, 58% of all U.S retail sales will be influenced in some way by digital, we can see that the future of shopping is very much an online one—even if the majority of sales still do take place in store for the time being. 

Of course, this idea that e-commerce is the future of shopping isn’t a novel one. I just want to set the scene for this article by noting that digital’s influence has been fast-tracked to a point where it’s impacting the majority of all retail transactions. For marketers, this should signal that more effort needs to be placed into creating the best possible experience for consumers when they encounter your products online. 

Responding to this need to foster better online customer experiences, a main suggestion made by McKinsey is for brands to “bring an in-store feel to the digital experience.” 

This article approaches this recommendation from an advertising standpoint and proposes how the use of interactive ad formats can enable brands to provide consumers with a richer, more engaging shopping experience.

Moving from a passive to an immersive ad experience

Unlike traditional ad formats where audiences take the position of a passive viewer, interactive ad formats are immersive and are defined by audience participation. This is achieved through interactive, hands-on elements that are built into the ad format. 

The development of these formats has ramped up in recent years, with most digital platforms now including interactive offerings in their ad solutions. This has made interactive advertising a lot more accessible and has moved it from what was a novel format used in one-off cases to a more regular practice.

A win-win for advertisers & customers alike

Although e-commerce has become increasingly commonplace, the major downside of the online shopping experience compared to that of in-store is the uncertainty that often arises from not being able to touch or try the product in-person. 

In a report published by Raydiant consumers were asked why they prefer to shop in physical stores rather than online. The most common reason (reported by 34.90% of respondents) was that they enjoy the shopping experience that they receive in-store/in-person. The second most common reason (24.10% of respondents) was that they like to see and touch products before buying them. 

Interactive ads are a way that brands can bridge the gap between in-store and online shopping by providing consumers with an experience that:

1. Is more fun and engaging
2. Helps to provide greater trust in what they are buying
3. Bridges the gap between the tangible and intangible

Let’s explore this further by discussing two of the most common use-cases for interactive ads as tools for improving e-commerce customer experience. 

#1 Try-before-you-buy

Currently, the most popular type of interactive ads that are being used to help e-commerce sellers are ads that enable consumers to “try-before-you-buy”.

This is mostly achieved through augmented reality (AR) solutions on social platforms such as Facebook, Instagram, TikTok and Snapchat. 

This format has become increasingly popular mostly amongst beauty and clothing brands in order to allow shoppers to see how their products would look on their body.

However, other product categories have been using AR to create 3D models of their products so that shoppers can see how they would look in a real-world environment. For example, furniture brands are able to utilize this tool to allow customers to see how an item would look or fit within their home. 

By providing shoppers with a greater level of trust, try-before-you-buy formats enable brands to improve conversion rates. 

#2 Product customization

Another interactive function that can be used to create richer e-commerce shopping experiences is by enabling customers to customize products within the ad format.

AR can be used to achieve this or alternative formats such as Facebook Instant Experience can be utilized in order to enable customization. 

To the right you can see an example of Ford utilizing the Instant Experience format to allow audiences to configure their preferred car model all within the ad, leading to a 15% lower cost-per-lead. You can learn more about how this was achieved by reading the full success story. 

As highlighted by Ford, ad formats where customization can take place are perfect when promoting higher-involvement purchases in areas such as luxury goods, automotive or travel. This is backed up by Accenture research that shows 47% of consumers would be willing to spend more if they could customize products or services using interactivity. 

Interactivity will be influential shaping the future of e-commerce advertising

Although the adoption of interactive ad formats has been significant in recent years due to an influx of easily accessible off-the-shelf formats, interactivity in digital advertising is still in its infancy. However, with huge amounts of investment being funnelled into developing technologies such as AR & VR, you can expect to see a spill over into the world of digital advertising with more sophisticated offerings making themselves available to e-commerce marketers. 

In fact, it is quite likely that in the not-so-distant future, the majority of digital ads will be interactive to some degree. Which is why we strongly recommend that advertisers jump on the interactivity train early, getting familiar with the formats that are already available and exploring how they can be used to improve online shopping experiences.