ROI Tracking Holding Back Local

The question arises again and again: if consumers use the Internt to do research before they buy offline, why aren’t more marketers adapting their campaigns accordingly? Why aren’t brand advertisers trying to target consumers and lead them to offline stores or businesses where they can buy in their respective markets?

There are lots of reasons. But here’s an interesting one that reinforces one of the biggest challenges in local (tracking to the POS or its proxy). AdWeek reports on a recent study by Forrester:

Forrester’s annual report on interactive marketing channels, based on a survey of 333 marketers, found strong and growing interest in relatively all new channels such as social media, online video and user-generated content. Tactics involving social networks, podcasts and user-generated content all showed 100 percent increases in marketer use compared to a similar survey conducted by Forrester last year.

Yet, that enthusiasm was tempered by the pressure to measure the impact of such initiatives in new channels without established metrics. For example, 68 percent of respondents said they adopt new techniques “only after they’re proven.”

Also, take a look at this from a Sapient survey of 200 CMOs of brand marketers:

Source: Sapient/MarketingCharts (9/08)

The chart above suggests an impending increase in the ad budget allocated to online and, potentially, mobile. Yet the Forrester data show that marketers need to be convinced, empirically, that these “emerging media” work before investing in them.

When I was at the ShopLocal Summit this summer I heard retailers discuss the challenges of getting more of their ad budgets online. Some of it was internal politics and organizational culture. But there was also the theme of ROI and proving the value of individual campaigns in order to justify the online ad buys to their management.

With a couple of exceptions like coupons or “buy online pick up in store” — we’ll leave the discussion of mobile until later — it’s very hard to determine the Internet’s influence on offline transactions in any particular case. And in most cases online and offline are treated as separate channels by retailers. Partly this is the legacy of early e-commerce expectations.  But online and offline are much less distinct in consumers’ minds.

Online advertising is held to a different standard than traditional media — although that’s changing now somewhat as traditional media are under more pressure to prove value. Because they can be measured, online channels must meet a higher “ROI” standard than offline marketing.

Again, the problem for local is the crossover. While it’s easy to measure clicks, e-commerce purchases, video streams and page views, tracking offline purchases/sales is very difficult for marketers and requires an investment of time, energy and sometimes money that many aren’t willing to make — yet.