Retailers use brand ads to help pay for free delivery

Jul 23, 2018

Home delivery is not cheap for retailers. Not only do consumers want the best price on the products they buy, they expect free delivery, as well. Merchants looking for ways to protect profit margins have tried to steer customers to in-store pickup and lockers. Another opportunity that some see as a way to offset costs is the space on and inside delivery boxes where marketers looking to connect with consumers can place their advertising messages.

Barnes & Noble College, Saks Fifth Avenue and Zulily are among more than 25 retailers that are now allowing brands to pay them to place printed ads in boxes being delivered to customers, according to a Wall Street Journal report.

Advertisers decide on the number of boxes that will include ads. Retailers typically insert two to three printed pieces in each box and charge between 10 and 12 cents per ad.

Zulily has mainly placed ads from existing vendors in its boxes. Doing so provides its brand partners with the opportunity to reach an established audience while generating additional revenue for the e-tailer.

“A penny saved is a penny passed along to the customer,” Chris Johns, manager of integrated marketing and partnerships for Zulily, told the Journal.

Last year, Revlon put messaging on 10 million shipping boxes as part of its “Love Project” campaign. Each box included the Revlon logo along with an image of a heart and the social media hashtag, #LoveIn3Words.

The program was designed as an extension of a Revlon marketing campaign focused on connecting with socially-active Millennial consumers. The beauty brand ran a commercial starring Lady Gaga on last year’s Academy Awards telecast and committed to making charitable contributions of $1 million as part of the campaign.

On Revlon’s fourth quarter earnings call last year, former president and CEO, Fabian Garcia, said the goal of the program was “to enhance the brand equity, to learn a lot [about] how to partner with the best retailers online and, number three, to monetize the effort. So, we expect results, positive results, on the three fronts.”

DISCUSSION QUESTIONS: Do you see in-box and on-box advertising as viable means for retailers to offset the cost of home delivery? Will it produce the types of results that advertisers expect?

Please practice The RetailWire Golden Rule when submitting your comments.
"Secondary packaging is just another piece of real estate for the retailer to sell."
"Similar to box takeovers that I’ve seen during holiday time for Amazon, this is another way for retailers to squeeze more dollars out of brands."
"...this works best if the brand with the box real estate plays curator, instead of billboard salesman."

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30 Comments on "Retailers use brand ads to help pay for free delivery"

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Dick Seesel

This sounds like a creative way for retailers (not just Amazon) to share the high costs associated with shipping and home delivery, even though the brand shown on a package may have nothing to do with what’s inside. Think of it as another form of co-op advertising — not all that different from charging brands for exposure in store circulars even if they are not covering the total cost involved.

Mark Heckman

Similar to on-pack coupons and ads, the placement of brand ads in boxes will likely find its place in the mix of advertising options. Like most ads if the content and offer is smart, targeted towards the shopper’s interests and compelling in terms of discount, response rates will reflect that.

Ron Margulis

Secondary packaging is just another piece of real estate for the retailer to sell. It will work better if the messaging is coordinated between the retailer and the advertiser. The last thing either party needs is something contradictory, like a retailer that wants to be perceived as discounter featuring an advertisement of a high-end sports car.

Larry Negrich

In-box advertising gives the brand a way to connect directly with a consumer who has just purchased one of their products — so the value will be dependent on the brand’s execution. As the retailer will have an in-depth profile of the customer, the in-box ad/promotion could be a highly personalized promotion: “people who purchased [this] also purchased [this]” — sound familiar? On-box advertising also has potential for the retailer and brand.

Chris Petersen, PhD.

Using vendor money to offset costs is certainly nothing new. This is another iteration that will help retailers offset some costs of shipping. However, there is a law of diminishing returns — how many ads will customers look at? There could also be an interesting logistical challenge of making sure that ads get placed in boxes with compatible merchandise.

At the end of the day, it is far better to test these strategies now than wait for perfection and miss an opportunity. This is a kind of strategy that can be quickly morphed based upon conditions and what is learned.

Zel Bianco

Why not? Ads on buses, ads in the bins going through security at the airport, ads in stairs, ads on turnstiles — why shouldn’t retailers try to make some money to help offset the costs of free shipping? Retailers need some relief and balance. Consumers cannot expect low prices and free shipping without it having a negative effect on many retailers and the industry as a whole.

Gib Bassett

Great idea. Unprofitable e-commerce shipping costs was an analytics use case discussed at Toys “R” Us near the end. The creative application of not just ads on boxes, but promos and calls to action that link to a mobile or online interaction, help make these efforts more measurable for the advertising brands. Think too about the potential to build this into a broader retailer ad marketplace across the website, mobile application, digital ads and in-store displays, and you can create an entire retail service to supplier partners. Great data monetization use case.

Lauren Goldberg

In-package and on-box advertising are just the newest ways for retailers to sell space to their brand partners in order to defray costs. For it to continue, the brands need to see a positive ROI. Retailers need to be smart about how they execute. If they simply stamp logos and put tons of collateral in shipments, shoppers will start to tune it out.

Joanna Rutter
3 years 11 months ago

This reminded me of magazines selling ad space that fits with the interests and aspirations of their key demographic. Echoing others below, this works best if the brand with the box real estate plays curator (Easy for Zulily, since that’s already their model) instead of billboard salesman.

Lyle Bunn (Ph.D. Hon)

In the never-ending barrage of inserts and attractions of consumer attention, perhaps it is time to better promote online engagement and give the paper recycle bin some relief. Must every message be a Trojan Horse for several others?

Charles Dimov

What’s not to love here? Ads on delivery boxes both make the packaging more interesting and help pay for the delivery. I don’t see a downside on this one. In fact, it is almost silly to think that all these years have gone by without using this space for ads. Lost opportunities.

For the moment — while this is new and fresh, there will be positive results to be had. However once everyone is doing it, then these ads will become part of the background and questionable investments at best. But for now, this is a good move on all sides.

Georganne Bender

Advertising on the outside of the box may be new, but promotional ads placed inside packing boxes have been around for a while. It’s the online shipping version of a brick-and-mortar bag-stuffer.

It’s becoming harder to get your message in front of customers, especially where you have a chance of your ad actually being seen before the channel is changed or another link is clicked. We’ve seen ads tattooed on people’s foreheads, on cows in pastures on the side of the road, ads on airline barf bags and window shades — how much time do you have? Because the list is endless. Advertisers today have to be sharp. And hyper-creative.

Seth Nagle

A key part of any marketing strategy is image perception. As a marketer I would worry about the quality of the advertisements. Boxes vary in sizes and the last thing I want is my graphics being contorted to fit a 4×16 package. Additionally, it’s not uncommon to see broken, dinged and dirty boxes being delivered as e-commerce continues to grow.

Lastly, what happens with competitors’ advertisements on the boxes being delivered? If a customer ordered an Oral B toothbrush and I’m Phillips, do I really want to help my competitor with their shipping costs?

Neil Saunders

If shipping is low-cost or free, then it’s entirely reasonable for retailers to use third-party advertising to help cover the costs. The only downside is waste, especially in the case of printed flyers in delivery boxes – if these aren’t relevant they are thrown out. Of course, that may annoy those customers who care about sustainability.

The real opportunity is customizing insertions and on-box adverts so that they are relevant to each customer.

Rich Kizer

Here we take a play out of the newspaper playbook. Desperate to sell space on the printed page, they have allowed stickers (ads) to be placed on the “front door” (front page) above the fold. They know that many will be ripped off almost immediately, but that instance of customer contact can be extremely valuable. This “in-box” or “on-box” advertising strategy is exactly the same thing, and it is smart. Now if the advertiser gets really creative with attention-generating graphics, or a message (like a crumpled up Post-It note with a hand written message — everyone will look at that!), this could be a real win for the retailers!

Sunny Kumar

This sounds like a great way to get a brand’s message in front of consumers. Though how effective this type of advertising will be may be dependent on how relevant the advertising is. If it is not relevant, it will simply become wallpaper and be ignored.

Personalizing/targeting sounds like the obvious answer. Connecting the advertisement to what the consumer has actually bought could help effectiveness.

Ken Lonyai
I’ll be the skeptic here. We receive packages with extra crap inside a.k.a. in-box advertising. It goes expeditiously into the recycling bin with any other recyclable packaging. In the few times we’ve glanced at it, there was no more relevancy than a billboard and no value add. It all sounds amazing in theory, but theories don’t drive consumers to purchase. To have any value, advertising flyers need to be highly targeted and of even higher value. I doubt any advertiser/digital merchant pairing is doing that and therein lies the real problem. To have any chance at effectiveness, the advertiser is completely reliant on the merchant selecting what flyer goes with what order, based on a lot of demographics/ethnographics/order history. Come on — that’s barely happening (and I believe not happening at all). Merchants may have a couple of targeting parameters, or not, and are slapping paper into boxes to get some minuscule shipping cost reimbursement. And they most certainly don’t provide audited metrics like media does, so advertisers are spending on a hope and a… Read more »
Christopher Jordan

Retailers seem to have their heads wrapped around secondary revenue streams online, but still have a lot of running room with offline components.

Building secondary streams like on-/in-box advertising can make all the difference in whether a retailer is able to (profitably) participate in things like free, overnight, etc. shipping that used to be a differentiator and is quickly becoming table stakes.

While ads and sponsored listings have been a staple of the online revenue model for some time, there’s analogous money to be made on the offline portion of the experience. It’s not just about ads, either — companies like ExactMedia provide the ability to create additional revenue from brand coupons, samples, etc.

Brandon Rael

This is the age of the shared economy and what better way to mitigate the cost of shipping then to sell advertising. Shipping is not a simple or cost efficient proposition. Yet in the age of Amazon Prime and two-day shipping, the consumer expectation is to not pay anything extra for shipping. The in-box and on-box advertising strategies are a creative way for retailers to offset these costs, and to keep up with the customer expectations around shipping.

As far as the advertisers are concerned, the visibility and publicity will come at a lower cost and risk compared to traditional advertising methods and direct mail campaigns. For this to truly work, there has to be some sort of messaging harmony between the retailer and advertiser.

David Naumann
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
3 years 11 months ago

With free and fast delivery now expected by consumers, whatever retailers can do to make it cost effective is worth trying. In-box and on-box advertising is a smart strategy that can be a win-win for retailers shipping product and complementary retailers looking to increase brand awareness.

The key will be not to over-expose customers with intrusive flyers in the box. You don’t want to annoy customers with too many unwanted or non-relevant ads.

Byron Kerr

I love the concept but I’m not sure how effective this will be in dramatically reducing shipping costs and being impactful for brands. Similar to box takeovers that I’ve seen during holiday time for Amazon, this is another way for retailers to squeeze more dollars out of brands.

If this is an integrated marketing campaign that can allow a brand to take a consumer from an unboxing experience to taking some action (social amplification or purchase), this will perform well.

Kenneth Leung

It is viable as long as there are buyers for the advertising space. Looks like they are allowing brands to place ads in the package of products they are selling … I wonder if they are going to allow competitive offers. That’s going to get interesting if they do.

Mel Kleiman
3 years 11 months ago

Some great in-the-box thinking, but not actually a new idea, just a new application. For years, pizza companies have been putting ads on boxes. Sells more pizza.

James Tenser

In-package ads, catalogs — even samples — are nothing new in the world of catalog and online sales, but in the digital era, the execution might be far more targeted. Considering the cost of free and expedited shipping, collecting even a few cents of ad revenue per package can be an important offset for retailers. Inserts might be “picked” as part of the order assembly, making the process seamless for the packer. It’s conceivable that package inserts might be matched to a customer’s present purchase or past profile.

Competitive ads and bounce-back coupons have some potential (works for Catalina). Ads on the exterior of shipping boxes probably need to be less targeted (as Revlon would understand), but there are plenty of heavy advertisers who may want broadcast brand exposure – insurance companies come to mind.

Ad inserts may only get a few moments of exposure, but at a happily suggestible moment when the shopper’s state of mind is focused on un-boxing.

Cate Trotter

This isn’t a particularly radical idea. In fact it’s a pretty obvious move when you think about it. Customers want fast, free delivery. Advertisers want to reach them. Using them to offset the delivery costs seems like a win-win. It’s a bit like going back to flyering except they come through the door in a box, rather than the letterbox. I’m not sure what kind of results it will have.

Based on my own experiences the paperwork in the box, including these ads, goes in the bin without so much as a second glance. I think advertisers will have to work hard to get buyers attention with these ads, but that’s nothing new in today’s world! I think on-box advertising could be the more interesting approach and offer a lot of room to be creative and capture people’s attention.

Tony Orlando

This has been going on for 50 years, and now to offset free shipping, having a few flyers is gong to solve the problem? Free delivery is now part of consumers’ expectations, and many retailers are scrambling to find ways to get a little revenue to help with the high cost of delivery. Amazon gets about $12-13 billion just in subscription fees, and they still don’t break even on shipping costs, so now a few flyers are gonna be a game changer? It must be built into the cost of the goods being shipped, or risk losing money big time trying to be like Amazon. Higher minimum purchases is another partial solution, so keep the new ideas coming, I’m looking forward to reading about them.