With macro issues resolved, micro issues take center stage.
CHICAGO -- AD:TECH opened here Monday with "Online Marketing Drives Offline Sales," a panel asking whether online activities effectively drive retail sales.
Moderator Dave Smith, Mediasmith's CEO and an iMediaConnection contributor, told the crowd that with more than 1,500 studies proving the correlation, the macro issue of whether it works seems to be resolved. Advertisers are finally taking action to influence their own brands, and the surge in local search is certainly helping the cause.
Unresolved, however, are the micro issues, such as how to determine a site’s visitor consumption value and how to get traditional media spenders on board. He cited one startling piece of data that demonstrates there is still room for improvement. Consumer package goods and related companies make up almost 40 percent of the top 100 advertisers and spend more than $31 billion annually on advertising. Yet less than two percent of these dollars is earmarked for Internet advertising initiatives.
Panelist Steve Warshaw, VP business development at ACNielsen, said brands are wary of spending more online if their goal is to increase offline sales for two reasons: they either don’t know how to reach the brand’s target online or they don’t know how to track the investment.
There are tools to measure retail sales, however, including coupons, gathering personal information and virtual exchanges such as vendor follow-up -- as well as "on-pack" promotions, such as the iTunes and Pepsi partnership.
Sky-rocketing sales impact
Warshaw has been leading Consumer Direct Online, a collaboration between Yahoo! and ACNielsen that measures media by tracking surfing behaviors across Yahoo! Web sites in 23,000 households. ACNielsen then compares this particular group’s behavior to the surfing behavior of all other visitors to the Yahoo! Web sites.
The results show that there are ways to make online marketing dollars work harder: targeting based on all-channel purchase behavior, yielding measurable results (changes in awareness, sales, etc.) and bringing accountability to the medium.
He told the crowd that sales impact analysis has shown retail sales increases as high as 36 percent, and reach in excess of 10 million target households. Across its client base, Consumer Direct Online says return on investment (ROI) has ranged from 100 percent to 400 percent.
These findings have also proved that behavior-based targeting is highly effective in reaching a brand’s most valuable consumer base, especially when coupled with the use of new ad formats to draw attention and engage the online audience.
Though Consumer Direct Online has primarily worked with CPG brands, there are plans to dive deeper into other verticals as well. And although it is limited to tracking sales from the larger portals, next year the program could take on smaller content sites, if the demand is large enough.
The cost of conducting research with Consumer Direct Online depends on the goals but for CPG companies it has been estimated at less than a million dollars for a six week campaign. Alternatively, for those brands that don’t have hundreds of thousands of dollars to spend, the Advertising Research Federation (ARF) has embraced this methodology and will subsidize programs to make the costs lower in other verticals.
Microsoft on the micro issues
"There have been enormous advances in ways to measure offline sales since I began studying it in 1987. Even in the last year the program advances have been significant. Now the question is how to run it more effectively in the real world," Stephen Kim, Microsoft’s director of ad sales research, told the audience.
Kim is involved in the experimental design of campaigns with Microsoft’s partners, reviewing whether a test group buys more of a partner’s product offline than a control group does. Many will recall the company’s Ford F-150 truck campaign last September -- considered one of the most compelling integrated campaigns yet, which concretely tied sales impact to the roadblock. Recent studies of Kraft’s Jell-O and Nestle’s Coffee Mate campaigns showed retail sales increases of 7 percent and 10 percent, respectively.
"Comparing online’s cost efficiency to other marketing elements is crucial (i.e. online vs. print vs. TV). This is the goal of the program, not just simply to prove that it works. Having this comparative insight allows marketers to adjust media allocation," Kim said. He also recommended that the program’s ROI measurement include branding, not just sales.
He added that questions still remain about which components of these programs really drove the most significant results. What type of formats work best? What types of creative drives sales? What is the impact of different sizes in rich media? Those questions need to be answered to determine where the industry is headed.
The AD:TECH audience asked about which specific online ad formats performed best, considering the negative light surrounding pop-ups. Kim told them that rich media drove large offline sales increases for Microsoft’s campaigns, and that he believes it will probably grow in importance as broadband penetration increases.
One vertical down, many more to go
Kim told the audience that the gap between online consumption and online investment is still significant -- marketers have not invested up to the medium’s potential. The ARF and the Interactive Advertising Bureau (IAB) still have a great deal to do to educate people about the offline sales impact of online advertising.
Kim said, "There is no doubt that people are spending more online, and recently companies who see their direct competitors getting results from this type of program are looking to increase their interactive budgets. CPG has been penetrated, now it’s time to tackle retail."