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Connecting online to offline: Why we'll find the missing link in 2014

Connecting online to offline: Why we'll find the missing link in 2014 Peter Vogel
This link between online and offline has been a holy grail for years, and 2014 is the year when we'll finally begin to crack the code.

Billions of consumers worldwide spend hours a day online, but 80+ percent of purchases are still made offline. That’s right – offline – in the real world, where you walk into a store, plunk down your credit card or some cash for a taco, a tank of gas, your dry-cleaning, an oil-change, a cup of coffee or your weekly groceries. E-commerce is big and growing (along with M-commerce), but it’s still dwarfed by the 80 percent of old-fashioned, offline purchases.

So, if you’re a brand who still depends on these offline purchases like restaurants, most retail chains, gas stations, supermarkets among others, how do you reach these consumers online and motivate them to make a purchase offline?

Emergence of the Mobile Wallet

The mobile wallet represents that single elusive point-of-contact between online and offline.  Consumers load a variety of credit cards, loyalty club cards and gift cards all into a single unified mobile application, a ‘mobile wallet’ and that one destination will track consumer purchase behavior across all credit cards, both online and offline, across all brands. The mobile wallet application will also have unfettered access to communicate with consumers both online and directly on the mobile device, at will.

As it becomes easier for brands to track this purchase activity, brands will have increased opportunities to motivate, track and reward consumers for their purchases – which is the ultimate goal of connecting online-to-offline. Consumers, also win from this approach – it only seems fair that as they make the effort to link all their credit cards and loyalty to one wallet application, that they will expect and should be compensated with a higher level of rewards.

It’s true that the mobile wallet did not gain much traction with consumers in 2013 – in fact a recent survey by YouGov showed that only nine percent of consumers were even aware if their smart-phone was NFC-enabled, one of the primary (but not only) technologies driving mobile wallets.  The reality is, consumers right now, don’t see a need for mobile wallets – ‘credit cards still work just fine, thank you.’

That message from consumers, though, is coming across loud and clear. Mobile wallet providers are starting to realize that if they don’t provide any additional value, rewards or some benefit, the mobile wallet is just a ‘solution looking for a problem.’

The big brands have all heard this for the last few years and they ‘get it’ – expect to see the big wallet providers offering lucrative reward programs which will provide the value needed to change consumer behavior. I would wager that the mobile wallets who emerge as winners in 2014 and beyond will also, not coincidentally, be the ones featuring the richest, most cohesive rewards program for its members.

Watch out for PayPal (owned by eBay), Google, Visa’s V.me, MasterCard’s MasterPass, Square, Isis, LevelUp and MCX (a consortium of more than 30 of the largest companies in the U.S.).

Explosive Growth in Card-Linked Offers

Over the last year, it’s estimated that about $3 billion in purchases were generated by card-linked offers, and these are primarily offline purchases. These are the offers and special deals you may see advertised on your online bank account, for example offering $10 cash-back if you spend $50 at a grocery store. These deals are tied to your bank account or credit card account and are becoming more and more popular with consumers and advertisers alike.

Banks ranging from Bank of America, to Chase, to Capital One are offering consumers these cash-back offers and consumers are automatically presented with these deals either in emails or on the banks’ web sites. There are also a variety of new independent stand-alone reward programs that offer consumers the ability to link the credit card of their choice and be eligible to receive even more special rewards, discounts or cash-back.

These card-linked offer programs are significant because they also act as a bridge between online-and-offline - they allow brands to connect with consumers online, present them with offers to make offline purchases, then track the purchases offline and even give the consumer a reward after for their purchases. It’s one of the few mechanisms that has the ability to track the entire cycle from beginning to end… and it’s growing.

Advertisers also then have the ability to target and present special offers to lapsed customers who haven’t made a purchase, in the last three months, or even to target consumers who only shop/dine at their competitors.

Industry insiders predict that card-linked offers will grow from generating $3 billion in purchases in 2013 to more than $5 billion in 2014.  As consumer adoption continues to grow, more and more advertisers will continue to take notice of this emerging marketing channel, continuing to feed its growth.

Facebook is Actively Looking to Bridge the Gap Between Online-To-Offline

Facebook recently announced it is offering brick-and-mortar stores a new way to see how effective online ads are at driving offline purchases.

In a nutshell, offline brands can upload data about who made purchases recently at their stores, using Facebook’s Custom Audiences tool (which is a very cool and relatively unknown targeting mechanism on Facebook) and Facebook can then tell the brand which of those consumers clicked on one of their ads prior to making a purchase. The caveat here is that brand has to be willing to send Facebook enough information (for example, name, email address, city, etc.) about their customers, so Facebook can identify them and label them as Brand X customers, but from that point forward Brand X can know exactly how every single specific ad or promotion affected consumers before a purchase was made in their store.

Imagine then, if you could tie this tracking mechanism to card-linked offers described above. If you can track what ads people are looking at online to what they’re spending on their credit card, you could create a very a universal 360 degree view of a consumer’s behavior online and offline. And there is reason to believe Facebook is closely watching the card-linked offer vertical as well.

Facebook was one of the founding members of The CardLinx Association, the first trade group ever devoted to card linked offers. The group’s goal is cited as “reduce consumer and merchant friction for payment-enabled offers and ads’ and to promote the growth of card-linked offers.”

It’s not hard to imagine Facebook combining card-linked offers with their ability to tie online ads to offline sales.

It’s Not a Holy Grail

There likely is no single secret to connecting online to offline.

The answer is the combined evolution of several different markets and products all converging to create a solution that makes marketers smarter and more efficient and best of all… consumers win. In 2014 consumers will learn just how valuable their loyalty truly is.

Peter Vogel is co-founder and CEO of Plink, an online-to-offline rewards program that motivates members to make offline purchases. He has more than a decade of executive-level, online sales and marketing experience specializing in performance-based...

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