Alice in the Land of Missed PPC Advertising Opportunity

Paid search has been around and fairly popular for 12 years, and the Internet has been fairly popular for an additional three or four years. Yet, it never ceases to amaze me that many senior-level marketers at major retail organizations still consider Web marketing and search engine marketing the stuff of “Alice’s Adventures in Wonderland.”

Documented evidence has been mounting for years regarding the high influence of search results on offline purchases and the ability of Web site engagements driven off of search behavior to build lasting brand impressions. Yet, the vast majority of online marketing divisions and online marketing departments are completely siloed from the rest of the organization – operating based on an isolated marketing profit and loss, which judges success purely based on observable cookies. Even if we were to discard any branding impact of search-driven site visits, the opportunities that are lost based purely on failure to attribute sales to search or online media is staggering.

How many traditional catalog or multichannel marketers do you think have a good idea of the conversion rate from search visit to phone? Well, based on my non-scientific discussions with many dozens of marketers, the number of marketers with data to support phone conversion attribution even at the macro-level is under 25 percent. Ironically, in at least a handful of cases I’m personally aware of, the individuals running the search campaign were more than willing to conduct a structured test to get a handle on telephone conversions – but the “online business unit” didn’t get sales credit when the tele-reps “make the sale.”

The politics of these types of organizations needs to be smashed apart at the highest levels, and few C-level executives have the time or inclination to move their businesses into a holistic frame of mind because that would require that they also break down the silos between branding and direct response ad spending as well. Even when I was working in traditional advertising on Madison Avenue in the early 1990s, holistic and integrated marketing and cross-budget attribution models were all the rage in the press – but I guess we still haven’t moved far beyond the hype.

Even if we look at the last stage of the buying cycle, imagine if only 15 percent of orders come in via the phone but are not attributed to the search or online media that actually drives customers to dial. By bridging the information gap, marketers can learn how that 15 percent of caller traffic is originating, and can easily make the case for a 15 percent increase in online budgets accordingly – all while sticking to strict ROI (define) accountability. It seems obvious to me that every CMO would want to empower the marketing department in that way; but by refusing to measure success across all channels, marketers are leaving that opportunity on the table. I doubt that’s what they really want to do.

So, what does better multichannel tracking look like? For those retailers with large store footprints and an online e-commerce presence, tracking in-store purchases accurately is a big challenge (with several vendors working on it). But a highly accurate number isn’t needed to take your online marketing to a new level. Even anecdotal evidence coupled with some simple experiments would allow multichannel retailers to get a really good estimate of the online-to-offline consumer behavior pattern. For example, split off a major category and only advertise it online in half of the geographies where you have stores; and measure changes in in-store sales for the category or categories over the test period. Or do the full campaign geotargeted for two weeks, full-on and full-off in a single geography, and then rotate the test to the next location.

Some customers like to shop in stores, particularly for high-involvement goods or goods that have a tactile or “fit” component like apparel, shoes, or even appliances/cameras. As the Internet-connected public gets better at searching for information, the multichannel retailer is in a position to leverage that footprint – offering in-store tactile experiences, coupled with more information (or more offers, or even more brand engagement) online. Yet, few do offer that holistic experience. Welcome to the land of lost opportunity.

Not surprisingly, the same types of organizations that silo their online stores and don’t give them credit for offline sales also do promotions that leave out the online channel altogether. I received a $30 coupon from JoS. A. Bank in the traditional mail last week. Wow, a $30 coupon for any purchase over $30. Yet, it was only valid in a store. How ironic. I already know the exact shirt(s) I would buy. I can go get one from my closet and find the tag with the model number. Will I make it to a store? Doubtful. Will they get a sale as I replenish my dress-shirt supply? Probably not.

Merchants with big footprints, good products, the ability to “buy online – return in store,” and reasonable prices should be able to kick the butts of Internet pure-plays, simply because they have a greater pool of customers to choose from (the Internet only-shopper, plus the “shop online, transact offline” customer). But, by giving up on the opportunity to connect all their channels, the multichannel merchants are losing to the Amazon.com’s of the world.

The Internet is not a fantasy world where the rules of marketing don’t apply. It’s an extension of how your customers want to interact with you as they go through the process of deciding whether to buy. It’s time for the majority of multichannel retailers to understand this point, and take stock of their true missed opportunities. They will find that online marketing and, in particular, paid search play a far greater role in sales than they currently think.