Brick-and-mortar retailers often promote products with end-caps and special placements within a store aisle, and the retailer is typically paid for those promotions by wholesale suppliers. Ecommerce merchants can now merchandise products in a similar fashion, and receive similar payments, from a new ad platform. The innovative platform is from Dijipop, and we discussed it with its founder and CEO, Ji Kim.
Practical eCommerce: What is Dijipop?
Ji Kim “Dijipop helps online retailers build an advertising monetization strategy for their business. Retailers can add high margin advertising revenue into their business model, which a lot of your major retailers like Amazon, Walmart, CVS, and lots of other big-bucks retailers have implemented over the past several years. Being a midsize retailer doesn’t prevent you from doing similar monetization strategies. There are solution providers and service providers like us that can help get a monetization strategy off the ground for those retailers.”
PEC: How does the monetization work, exactly?
Kim: “There are two pieces of monetization that we offer. The plain and simple is just running banner ads around your site, whether it’s on the top or the bottom, and being able to run non-endemic, non-competing advertisers. It taps into some of the telecommunications brands like AT&T Wireless, T-Mobile, and Verizon, which your typical publishers online get access to. And so it’s a real easy way to tap into those brand dollars and become a standard publisher.
“The second piece, which is a little more complicated, is our platform solution. Essentially, it allows online retailers to take their online stores and convert a product placement into a paid product placement. The core of what we focus on with the Dijipop platform is that it can allow any online retailer to do what’s being done in a physical store setting.
“If you go into a store and you see end-caps, that is a paid placement between a vendor and a retailer. What we want to do is provide any online retailer with the tools and abilities to take a placement and turn it into a paid spot, and then ultimately allow the system to manipulate a product placement based on a vendor and a brand who’s willing to pay for that spot.”
PEC: Is that placement from search results, faceted navigation, or all of the above?
Kim: “It is essentially all of the above. The platform allows any of these online retailers to customize that program. So, if they want to run it on a home page, they can create a spot and we can template and create a placement for them using our system, and then they can put all the rules in place.
“Let’s take diapers as an example. If somebody’s searching for diapers on a retail site or they’re going into the navigation page of diapers, the retailer typically wants to have some relevancy of what’s actually showing. Our system can customize that spot so that, if we’re turning a spot on any of those more targeted placements, we can control who has access to push a product into that slot. So, in the scenario with the diapers pages, we can control it so that only diaper manufacturers have the opportunity to push those relevant diaper products into that section.”
PEC: If a merchant has a site-search function already, would the merchant continue using his or her own site search or would the function be your site search product?
Kim: “We are not in the game of being a search provider. Essentially, you can think of us as a decision engine that’s built for advertising and/or an ad-serving solution. And, it depends on how a retailer actually implements our solution. The simple implementation would be to create a simple ad place and drop our ad tags into their site.
“The other way of doing it is more seamless, and we have another way of doing it that’s tagless. It can actually create web services directly into those existing ecommerce system or search systems. We manipulate what is a result on that search results page or on that homepage by passing the appropriate product information to the existing ecommerce system or search system based on who’s paying for it.”
PEC: Are the advertisements all banner ads?
Kim: “The advertising options are banner, non-endemic — getting the Verizons to run on my clothing site, which is not competitive to us, but in the core Dijipop platform. As far as who’s running in that spot, that is more of a product placement.
“If it’s tag integration, we create a dynamic ad tag that will replicate how the site showcases a product, and a product ad would look very much similar to a standard product listing.
“And then, if they go tagless with the integration, it looks exactly like the site is today with just the product listings.”
PEC: In the tagless example that you just cited, does the merchant produce the banners and the advertisers or does Dijipop do that?
Kim: “It’s really a collaborative effort at that point. It’s all custom. I mean we have the ability to customize any look and feel of a particular spot. While we’re setting up and building and strategizing on the types of ad placements that are available to the merchant’s vendor community, we’ll define the spots. From there, we’ll customize the look and feel of that product ad or promotional spot. So, it typically will be a deep collaboration with those merchants, and they probably have a good guideline of how that ad will look.”
PEC: Does the URL for a banner ad stay within the merchant’s site, or will it send the visitor to another site?
Kim: “Again, there’s the two pieces of monetization. There’s the monetization of just using banner ads to get the Verizons to spend some brand dollars on the site. Those are clicking out to those advertisers in those sites. But then the platform play — what I call ‘inside the frame’ — that’s within the shelves; that is, within a walled garden approach.
“Say I’m a diapers advertiser or brand. I’m buying my product listing into that spot and that will click back into my product page within that store and that click will stay within the store. It is really a shopper-marketing mentality, where we are asking the vendors to influence where they are placing their products so that they have a better chance of getting a higher conversion and getting those consumers to buy their branded products as opposed to others.”
PEC: In the example of a diaper advertiser, would the diaper manufacturer be expected to pay for that listing?
PEC: Does the advertiser pay on a per-click basis?
Kim: “Yes. Again, on our platform, we will customize the placement, and from there it really depends on what the retailer wants. Do they want to charge the vendor on a cost per click? Do they want to charge them on a cost per thousand [impressions]? Or do they want to charge them on a flat fee? Is it a weekly spot? Is it a monthly spot? Our system has the ability to customize based on the rate types as well, and that flexibility is available to each retailer.”
PEC: What can a merchant make for those ads?
Kim: “It really depends on the retailer and the merchants. We’re doing custom modeling for lots of the retailers that we talk to today. If you’re a leading retailer, it’s going to vary based on the number of pages, the number of visitors you get to your site, and the amount of dollars that you would charge to your vendor community. So, that range is definitely going to vary site by site depending on all of those data sets.
“It’s early, and we don’t have dozens of retailers using the system, but we’ve seen rates as high as double digit CPMs [cost per thousand] to click-through rates of 5 percent. Other advertisers or retailers are pricing it on a flat fee. So, depending on what spot and the duration of time that they’re going offer to their vendors, fees could be as low as a couple of hundred dollars per spot per week to as high as $2,500 to $10,000 per month for a product spot. It really depends on how much traffic you get to the site and how big of a retailer you are.”
PEC: How much of those advertising fees does Dijipop keep?
Kim: “Our typical revenue share is a small percentage. Depending on how big the retailer is and how much effort we have to put forward, that range is anywhere from the low double digits to less than 50/50. Typically, the retailers make the majority of those ad dollars as their share.”
PEC: There are merchants that buy products from many suppliers and are receiving co-op advertising dollars based on those purchases. Does your platform qualify for co-op dollars for those merchants?
Kim: “Absolutely. The reason we built the solution is for these merchants. We’ve talked to dozens of online teams at major retailer organizations. I’ve got an example of one major retailer who has merchants in certain categories that are doing extremely well. I asked them what are they selling, how are they structuring these programs, what space do they offer and what’s the rate card, and the answer that I typically get is he can do whatever he wants and he’s doing really well. He gives them this sometimes, and he gives them that sometimes. He gives an inclusion into a product listing sometimes on the home page or the category page.
“It’s the wild West for most merchants and most retailers. Dotcom is not structured. And if you compare that to a retailer who’s been selling the circular programs, that circular program is extremely organized and structured.
“So, we believe that with the shift in how consumers are actually shopping today, how consumers are influenced by dotcom, and particularly the online retailer’s website, we think that merchandizing on these major retail sites and even the mid-tier sites is not that good. What we’re trying to do is create that same merchandizing that happens in the store. You see lots of brands, you see lots of promotional opportunities in the store. You don’t see that happening as well online and on these online retail storefronts because there’s lack of organization.
“What we want to do with our platform is to give merchants the tool sets and the technology to be able to organize the space and, with these on-demand platforms like ours, be able to turn on and organize and sell this space to the vendor community. The result is better marketing and merchandizing, which results in better sales and also a nice revenue stream for these merchants as well.”
PEC: Tell us how you came to found Dijipop.
Kim: I’ve been in the digital media space for 16 years and most of my time was working for ad agencies and ad networks. The majority of my time in this market and this digital space is in the advertising side. I sold banner ads at the largest ad networks on the planet. And if you take the model of a banner ad that gets the worst click-through rate on the planet and then you try to shove it into a retail setting, I felt that that was the wrong execution. So I built Dijipop to be able to create an advertising program that is focused on products and product placement.
“I joined an incubator called Beta Spring in Providence, Rhode Island in 2009. At the end of that incubation project, we launched an alpha version of Dijipop and we’ve essentially overhauled this entire backend system over the last year-and-a-half to the enterprise grade. We re-launched last summer and now we’re continuing to build more user interface functionality and bells and whistles into the platform.”
PEC: Any other thoughts for our readers?
Kim: “I think that one of the key things that online retailers should look at is a monetization program. If you look at the modeling that we do for a lot of our retailer partners, you have the ability as a merchant to add a very high margin revenue stream for your company. You can increase your bottom line by as much as 15 percent in a given year. Compare that to other programs that exist today and typically most of them will only give you single digit increases [within a year]. So, I stress the importance of building a monetization program because it has huge impact on your financials in a given calendar year.”