YOU'VE GOT MAIL
OTTO'S JOURNEY FROM POST TO PRESENT
In Nora Ephron’s classic 90s romance “You’ve Got Mail,” Tom Hanks plays the heir to a modern bookstore chain, while Meg Ryan plays the owner of a small corner bookstore battling to stay relevant in a changing world. For many businesses that grew up in the 20th century, the transition to online has been a rocky relationship, but for German e-commerce giant OTTO it’s been a proper love story.
Founded in 1949, OTTO’s first hand-printed catalog contained 28 styles of shoes. By the 1950s, the company had expanded its product range and become one of the leading German retailers in the mail-order sector. However, following a successful digital transformation strategy, beginning with the launch of the OTTO website in 1995, Otto.de is now Germany’s premier online retailer — with a turnover of €3.5 billion last year — and one of the top 10 mobile apps in the EU’s largest consumer market.
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OTTO kicked its digital transformation into overdrive with the launch of its mobile-first strategy four years ago. OTTO is the only one of Germany’s mail-order giants able to make the jump to online and thrive, something Marian Bucher, OTTO’s Senior App Growth Manager, credits to a combination of stability and forward planning.
“There used to be other big mail-order companies in Germany, but they have all gone out of business,” Marian says. “They couldn’t make the jump to online. But now there’s the next big shift, from desktop to mobile. And we’ve managed that as well.”
As part of this shift to mobile, Marian is proud of the amount of growth that the app is now driving for OTTO. With some banner performance metrics, such as growth in monthly active users by two thirds and a significant double-digit growth in in-app revenue over the past 12 months, the OTTO app is integral to the company’s future.
“If you have a look at our statistics,” Marian says, “you can clearly see that we are growing — and growing mainly through our app. The app is where the heavy spending is, and the more frequent users are located.”
It’s this focus on mobile that is guiding the OTTO team, especially during the COVID period. Marian explains that they work closely with their product development team to ensure that app features are playing to their strength, ensuring user acquisition is smooth. Marian cites OTTO’s use of deep linking as integral to their conversion funnel. OTTO was a best practice example for deep linking in Google’s keynote at the 2019 Marketing Live conference in San Francisco, an accolade that Marian speaks of with some pride.
STUCK IN THE MOMENT
The key to OTTO’s funnel is the use of “micro-moments,” catching consumers at key events within their customer journey. Marian believes that introducing such a methodology is less about data wizardry and more about making sure your organization is aligned.
These are the moments when we turn to a device — often a smartphone — to take action on whatever we need or want. These moments; "I want to know," "I want to go," "I want to buy" and "I want to do" are full of intent and immediacy.
Some 82% of smartphone users say that they consult their phones about purchases they want to make in a store. These micro-moments are important touchpoints in today's consumer journey and together they ultimately determine how that journey ends.
“We use micro-moments to guide product features,” Marian explains. “We have defined our own OTTO micro-moments, which the product team uses to roadmap feature development. But the most important thing is to advocate within your organization.”
Yet knowing the moments is only half that battle. Companies also need to organize to execute. “You have to identify the key stakeholders in your organization and bring them together to create an app strategy that makes sense for you going forward, not just driven by what the market needs at that time. For us, it definitely took some time, but I would say now that we’re sharing all the data we have across all the teams, we’re working on projects together and it’s always our main focus to push our app development forward.”
OTTO’s ability to create a robust plan and stick to it stands out as the characteristic that has marked them for success. The company’s clarity about its brand and mission, combined with a sharp focus on its business objectives lays a solid foundation for its mobile-first strategy. This mobile-first approach is more than a linchpin; it’s the guiding star that allows the company to navigate a market rocked by uncertainty and global events.
The direction is positive and some of the company’s ideas are incredibly ambitious. A prime example is the decision to build a display network in-house to cut costs and boost performance.
Cutting out intermediaries increases the efficiency of programmatic campaigns, Bucher says. It also boosts consumer satisfaction since shoppers aren't bombarded with ads that feel spammy. "The goal is to show customers the content that is most relevant to them."
Delivering appropriate advertising to the right audience is a key concern for all marketers. It helps that OTTO relies on first-party cookies and opt-in data to power advertising in a privacy-friendly way. "The shopping journey starts with the customer and what they want, for instance, triggered by their search term," he explains. "We use this information to show customers only products they're likely to be interested in, and we rely on automation to do this fast and keep it fresh."
It’s a tall order, but it has paid dividends. OTTO reckons that relying on its own display network saves the company "85 cents per advertising euro."
FOLLOW THE STRATEGY
It’s this clarity of purpose that also equipped OTTO to maintain advertising budgets during the early stages of the COVID-19 period. While everyone else was panicking, OTTO calmly stuck to the program.
“We definitely observed a decline in ad spend throughout March,” Marian said. “Various companies, some even bigger than OTTO, pulled their budgets out of the market. As a result, remaining companies were able to spend their budgets at a lower CPC or eCPM.”
The approach paid off when e-commerce across Europe surged due to shutdowns and a massive shift in consumer shopping behavior. "Being able to shift quickly and show ads for products that grew up to 6x in demand, such as sporting equipment, home office furnishings and consumer technology, allowed OTTO to record significant sales within these assortments," Marian says. "Overall, we counted over one million new customers in the first five months of the year alone."
As Bucher sees it, the ability to take decisive actions requires reliable data. This is where Adjust comes in with campaign-level data that powers the company’s sophisticated tech stack. “Definitely Adjust is a key component within our app marketing tech stack,” Marian says. “It's the single source of truth in terms of where our app users come from.” OTTO also has its own internal attribution model, which it relies on to track and analyze user actions across devices and touchpoints.
“When we’re evaluating campaign performances, we rely on our internal attribution model,” Marian explains. The approach allows OTTO to focus on sales attribution. “We use Adjust as a connector, to populate the app component of that,” he adds.
Overall, the model allows OTTO to attribute the return on ad spend across all its different marketing channels. As the app stores can be a “bit of a black box,” Marian says the company is keen to have the capabilities Adjust delivers to “connect a purchase to where the user came from originally.” This, he says, “then feeds into our internal models, so we can compare the ad spend performance of app user acquisition campaigns against other formats.”
The ability to tackle fraud enabled OTTO to focus on getting the most value out of its best-performing channels.
KEEPING DATA CLEAN
With data informing every aspect of OTTO’s online marketing calculus, ensuring the integrity of every data point is integral to the smooth operation of the entire system. With this in mind, OTTO is constantly vigilant to ensure that ad fraud is not polluting their analysis. The results speak volumes. “A few years ago, we were seeing a really high amount of fraudulent traffic,” he recalls. In fact, the figures were astronomical.
Over “250,000 rejected installs, mostly due to click injections,” have been stopped at source since OTTO activated the Fraud Prevention Suite, he says. And for an e-commerce company that focuses heavily on retargeting to ensure they’re getting the most ROI out of every user, almost 115,000 rejected re-attributions is another big win for OTTO’s data integrity.
The ability to get the upper hand when it comes to fraud has also boosted certainty around ad spend and enabled OTTO to focus on getting the most value out of its best-performing channels. It’s a conscious choice to focus the majority of spend on just a handful of networks. It’s a laser focus that fuels the significant ROI wins the company has been posting over the past two years. “What’s more”, Marian says, “it’s also the key to positioning the app as the growth engine going forward.”
But high performance requires more than a clear focus; it demands clean data. As Marian sees it, clean data is the key element in OTTO’s algorithm for success. “That's how you, as a marketer, are able to combine all the different data points that a user may have had prior to visiting your shop, and then adjust components of that journey to make sure you’re always driving traffic to your app", he explains.
What’s more, clean data enables a seamless and superior customer journey. “Clean data is how you’re, later on, able to match this data to this update or this app customer,” he says. “We’re able to connect all these different touchpoints, and that’s something we’re really focused on and always trying to improve.”
Evidence-based decisions, based on data, are an integral part of OTTO’s modern-day success story. Thanks to an effective app and exceptional KPIs, the former mail-order firm is using the benefits of mobile technology to write a new chapter in its growth odyssey.