Closing the Loop in a Research-Fatigued World

Let’s face it. We’re suffering from chronic research fatigue.

Since interactive marketing broke onto the scene, we’ve been conducting and publishing scores of studies to prove it works. In the beginning, these industry-defining studies were greeted with enthusiasm and interest from the marketing community.

For the direct response crowd, research studies are largely irrelevant: either interactive marketing works or it doesn’t. For brand marketers, especially the consumer packaged goods (CPG) folks who won’t be closing their sales online, research is critically important. Now, over 1,500 studies later, we find ourselves awash in a sea of data. Yet we’re largely numb to the findings.

It’s not time for complacency yet.

Arguably, the hardest nut to crack from a research perspective is the ability to demonstrate a causal relationship between online ad exposure and offline sales. This is particularly complicated because consumers are exposed to thousands of marketing messages across all channels each day. The best research in this area not only shows whether online advertising works but also compares its efficiency with other channels.

Before discussing some of MSN’s research findings released last week, let’s look at how some marketers try to close the loop.

“The Cautiously Closed Loop,” published by Jupiter Research (a Jupitermedia Corp. division) last week, reports of 156 U.S. marketers, only 36 percent cite “influencing offline sales” as a reason for advertising online. More prevalent are items such as “building consumer databases” (47 percent); “increasing brand awareness” (47 percent); and “increasing brand favorability” (44 percent).

Equally revealing are some methods these marketers cite to measure return on investment (ROI). Sickeningly, the standout leader is “measuring click-through” rates, at 66 percent. This is followed by Web metrics (time on site, frequency of visits, etc.) at 56 percent; and conversion to online sales at 55 percent. Surprisingly, impact on offline sales is near the bottom of the list, cited by only 18 percent of marketers as a method to determine campaign ROI over the last 12 months.

Outside traditional research, low-consideration-goods marketers, such as CPG companies, have several effective means to close the loop between online exposure and offline purchase. The Jupiter Research report recommends developing a “token strategy,” or an experience path that relies on the consumer downloading an element from the Web or bringing an element from the offline purchase to engage in a Web experience.

One type of token is coupons, which are particularly effective against low-consideration products, such as beverages, detergents, and household cleaners. Other tokens include on-pack items (codes or passwords), which are taken home after the purchase and entered online, and recipe cards consumers can print and bring with them to retail. Naturally, this tactic is best suited for food products, but it could also be used in situations where consumers configure a situation (which music/candles/cologne would best complement the romantic dinner) to complete the purchase in store.

With all these options at our disposal, why do we still rely on CTRs as a primary success metric?

I’m baffled.

MSN assembled a CPG “dream team” last summer that included Procter & Gamble, Kraft, Johnson & Johnson, and Nestlé. This consortium participated in a research study to link online advertising to offline sales. Without getting into the methodology, the research was able to dissect various online and offline marketing elements and determine which were most effective at driving offline sales.

The full results aren’t in yet as a few brands still have campaigns in market. Yet initial indications are very positive. In the two instances reported, online advertising contributed 7 to 10 percent to offline sales. This was presented alongside other media (and their costs). In each instance, online advertising did an admirable job of contributing to sales against other, more dominant media, such as television.

Imagine if we were to factor in creative and production costs for the Web versus other channels (print, TV, radio, etc.). Online’s story gets stronger still. Though it may cost $300,000 to produce multiple creative executions for a Web campaign, TV production easily creeps into seven figures for just one 30-second spot.

As someone who has participated in a similar study with Information Resources Inc. (IRI) nearly two years ago, I commend MSN and the participating marketers. It’s not an easy undertaking and requires a significant commitment in terms of time, energy, and money.

To the rest of the digital marketing community: Snap out of your funk, shake off that research fatigue, and get in the game. Some 1,500 brand studies and nearly a dozen online-offline sales studies can’t be (that) wrong.

We must be onto something. What do you think?

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