I’m stunned that research from comScore Networks and Overture Services came and went during the last few weeks without our entire industry screaming, “Stop the presses!” In my last column, I reviewed some results of the research. This week, there’s just one critical finding I’ll focus on.
ComScore’s study followed searchers 12 weeks from a “start query” for computer or consumer electronic products to their eventual purchase for. Of all conversions, 92 percent took place offline.
The Killer Finding
Would you structure an offline marketing campaign based on the buying behavior of only 8 percent of your audience? If your search ad campaign’s success in this vertical is measured only by conversions on your Web site, you’re missing 92 percent of search-generated buyers. You’re literally optimizing a search spend to maximize conversions on only the tiniest sliver of the potential buying audience. Chances are, these aren’t the only online vertical markets with offline conversion dramatically exceeding the online opportunity.
This means retailers who focus only on online return on investment (ROI) could choose to spend 10 times more on search marketing than they currently are and still net positive ROI. By underspending, they fail to reach the majority of their potential customers.
I recently spoke with Carrie Johnson, a principal analyst at Forrester Research who covers the online retail marketplace. She feels this research’s most important implication is the need for a budget shift from other marketing channels to search. Yet she points out budgeting is often highly charged.
“Budget shifting is more political,” said Johnson. “Everyone clamors to get more budget for their group, but no one’s clamoring to move more of their budget to the Web.”
I also spoke with James Lamberti, VP of comScore, who managed this study. He suggests the way to direct a larger piece of the traditional marketing budget to search is to educate offline marketers about the longer-than-expected timeframe search requires.
“Many marketers who are evaluating search marketing are demanding a short-term ROI when, in fact, they’re willing to accept short-term losses for their print, radio, and TV spending,” said Lamberti. “From my perspective, you have to consider search marketing in relation to everything else you’re doing.”
Another implication is the apparent benefit search marketers produce for offline marketers, who may incorrectly take credit for successes not earned through their efforts. Offline marketers may see a spike in in-store traffic and sales when search engine marketing (SEM) campaigns are launched. They may incorrectly attribute this success to TV spots, print ads, or direct mail and may very well receive additional budget dollars to reinvest in those channels instead of shifting funds to search.
How Should Best Practices Change?
If 80 to 90 percent of conversions generated by searches in your online vertical take place offline, you should change the way you execute and measure SEM tactics. The steps you take to increase your online conversion rate will be different if you’re trying to produce offline conversion.
Johnson thinks messaging may be the first thing to target. “Online marketers may have the messaging wrong, both in the [natural” search results and the creative for their PPC [pay-per-click” search campaigns and even on the Web site itself. Perhaps your online creative should say, ’In-store sale going on now!’”
In shifting budget to search marketing, properly attributing the offline sale to the online tactic is paramount. Better data and metrics are the only way to accomplish this. Point-of-sale surveys or post-sale follow-up interviews are needed. Many stores request a Zip Code at the cash register, but few ask if you visited their Web site. If search plays such an integral part in researching offline purchases, it makes sense for retailers to change their point-of-sale questions.
“Retailers tell us their store customers often visit their Web sites first, and they know search drives a good deal of their site traffic,” said Diane Rinaldo, director of strategic alliances at Overture. “But there seems to be a disconnect in tying together search marketing and offline behavior. This research helps retailers see what a vital role search plays in closing the loop in their interaction with their customers.”
Web Vs. Brick-and-Mortar Strategies
This obviously suggests different strategies for Web-only retailers, such as Amazon.com and Overstock.com, and retailers with on- and offline stores, such as Best Buy and Circuit City. Gary Stein, a Jupiter Research senior analyst, points out online-only e-commerce players face two hurdles.
“If you’re an e-commerce-only player, you have to work harder to make that purchase happen,” said Stein. “Nine out of 10 conversions will happen offline. If a competitor lures a prospect to the brick-and-mortar store, you’ve lost them. Worse, if someone walks into Circuit City with an Overstock.com Web page printed out, Circuit City may match their price.”
There are other challenges. What keywords should you target to lure the offline shopper? What should you use as a proxy conversion rate for search keyword targets who convert offline? How do you relate offline purchases back to specific online search keywords? These questions require solutions more complicated than most search marketers have yet encountered.
The challenges are made more daunting because there are few connections between offline marketers and the search marketers managing the SEM campaign. It will take the CMO to force these teams to play together under one measurement umbrella.
As more studies emerge showing a direct connection between a search term that doesn’t generate an online conversion and an offline conversion event, increasingly more marketers will increase attention, and budget, toward search.
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