Connecting the Dots (Again)

I’ve have tried to argue for several years that “local” is the most important thing happening online — because it’s all about driving buyers to the point of sale offline. But one of the big, historical challenges in validating that argument and proposition has been tracking the influence of online to the point of sale. Lots of surveys and studies have been done (mostly by comScore) to try and document the connection. And they have documented it.

So if people have seen that the Internet is primarily a marketing platform that increasingly influences local sales, why isn’t the money flowing quickly online in recognition of that fact? Enter the panel I moderated at the ShopLocal Summit in Chicago yesterday. Among the panelists were my former colleague from The Kelsey Group, Peter Krasilovsky, as well as Centro’s Shawn Riegsecker, Starcom’s Sam Wehrs, speakers from Toys R Us, Target and NSA Media. (It’s a very interesting event overall that addresses the “product side” of local vs. the services side, which always get the attention.)

The reasons given by panelists for the failure to shift more budget from traditional media online were many and varied: inertia, budget silos, organizational culture and politics, the fact that online is still novel for many traditional marketers and the inability to show direct ROI in many cases. Most of us have heard some or all of these explanations before. But it’s kind of amazing that things are still moving relatively slowly, despite some high profile exceptions such as GM.

But in an earlier keynote comScore’s Chairman Gian Fulgoni spoke about some things that I was unaware the company is doing with its panel: looking at credit card receipts and tying names and addresses to in-store databases (e.g., national retailers and grocery store chains). Fulgoni stressed that these records are made anonymous and that the matching is being done with privacy safeguards. But this gives comScore high levels of visibility on offline purchase behavior.

With this empirical view, Fulgoni in fact confirmed that the behavior is just as expected: people do online research and buy overwhelmingly offline. That’s not to say that traditional media have lost their influence, but it does validate the central project and proposition of this blog.

This methodology cannot be extended to every campaign so it might not answer the direct ROI question in each case but it’s pretty compelling stuff.

Another theme in Fulgoni’s talk was the bargain that brand advertisers and retailers are getting with online display advertising, which is providing brand lift and having an impact on in-store sales, but is dropping in price:

Fulgoni argued against clicks as the relevant metric and measure of value and suggested a return to CPM across the board. I later argued to him that the “culture” of online advertising was such that this would be extremely difficult. In fact, it’s moving in the opposite direction.

We thus have the following situation:

  • Online is where the consumer audience is doing critical research on products and services – a critical time for brands to intercept them
  • The lion’s share of ad budgets remain offline
  • Other than search, online advertising offers a huge bargain but that’s not fully understood; most marketers and brands simply don’t see clearly the lift and value they’re getting or could get from online
  • Brands and marketers, by not utilizing online marketing and all the available tools fully, are not able to capitalize on the capacity to take people online “from search to store.”

On one level all this should be remedied in time and with more data like that Fulgoni showed to the audience. But for many there remains a conceptual understanding that still needs to penetrate: the Internet is not about e-commerce; it’s about driving in-store sales.

4 Responses to “Connecting the Dots (Again)”

  1. Industry News - July 17, 2008 | LocalPoint - Perspectives on the Local Internet Says:

    […] Connecting the Dots (Again) […]

  2. MikeM Says:

    I explain to my clients that branding is the greatest benefit to initiating a PPC campaign. I attach a phone number within the ad but the equalizing nature of PPC puts my clients in play against the national chains.

    Sadly local PPC requires a hard sell. Amazing as that seems.

  3. Greg Sterling Says:

    People don’t “get it.”

  4. G5 Search Marketing » Blog Archive » What Matters Most Online: Local Says:

    […] Sterling uses almost the exact same language as we do to describe this phenomenon. Here’s a sample: “I’ve have tried to argue for several years that “local” is the most important thing […]

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