Offline Conversion Tracking and SEM

 

On- and offline marketers often make decisions in a silo. But more and more CMOs and marketing VPs see the folly of separating business units that are perceived or advertised under the same brand. Clearly, consumers see the brand as one entity even, if P and L statements and marketing budgets are separate in the organization.

Study after study shows consumers use the Internet for research when making buying decisions. ComScore has conducted studies for Yahoo, Google, and Performics/DoubleClick, tracking the relationship between search and buying behavior. ComScore’s March 2006 study, conducted for Google, shows 63 percent of those who purchased an item directly related to their search query completed the purchase offline, with just 37 percent making that purchase online.

It becomes even more fascinating when studies look at offline sales and estimate the importance of online site resources and information. A Shop.org study conducted by Forrester finds 22 percent of offline sales are influenced by the Web. This is nearly a quarter of total offline sales, and this number will undoubtedly go up due to generational effects and improved availability of online information.

Clearly, the percentage of your customers who rely on online information before making offline purchase decisions will vary. Each multichannel merchant must make its own decisions on how to treat interaction effects between on- and offline shopping and pre-shopping behavior. The most important question for most marketers is whether the information consumers find online influences them to select one product over another, choose one brand over another, or select the retail store to purchase from.

If the level of influence on these kinds of decisions is high, the Web, and search in particular, become critical for not only the retailer but also the manufacturer. The manufacturer may not be able to rely on the retailers to do their selling for them and may need to dramatically increase its online presence while dealing with channel conflict issues.

Of course, if data show even though consumers spend time online researching products and purchases, they don’t change their behavior based on these interactions. The Web just removes friction from the product-researching process. I’m willing to bet, however, brand, product, and store decisions are influenced by online behavior.

There are even more critical, immediate reasons why you should care if your business unit measures success purely based on measurable online conversions. You may have a problem regardless of whether your online-only focus is because the business has siloed you into a separate unit or because you’re currently an Internet pure play. If your competition isn’t siloed and has determined how to measure or estimate the true impact of search on offline conversions, you’ll get your you-know-what kicked, because your competition’s overall conversion rate may be dramatically higher than yours, enabling them to outbid you. If this is the case, your only recourse is to either bid irrationally, which may get you fired (or at least in trouble), or become such a brilliant merchandiser that your landing pages convert better online than your competitors’ do, both on- and offline.

If you don’t have serious conversion, operational cost savings, and margin advantages over your competitors and they use a holistic view of on- and offline conversion, as opposed to your myopic view of online-only conversions, you may be completely priced out of the positions that generate real scale for your business.

If you’re a multichannel marketer and either you are corporate or C-level executives have empowered you to manage search based on its true value to the business (net search profit), several options are available. One was announced this week by comScore. Its new product, qSearch Retail, extends conversion tracking among comScore panelists to offline purchase behavior. With comScore data, you can gain a powerful understanding of how search and online behavior translate into offline purchases. ComScore won’t use its full online panel size for offline purchase tracking; instead, it’s building smaller panels, based on specific panel member behavior, particularly for the qSearch Retail product. Panelists will then be categorized by industry vertical (i.e., they searched for keywords that relate to a category) and grouped ready to be surveyed should a marketer want clarity on offline purchase behavior.

You don’t necessarily need comScore, however, to answer some key questions about the link between online search behavior and offline purchases. Multichannel merchants with catalogs have faced similar issue for years. Some of the catalog industry’s best practices can be adapted for use in the online world, including:

• Customer tagging. Look at purchases, then marry the online cookie with the offline customer number or credit card data.
• Offer codes. Unique offer codes can be provided for searchers to redeem via phone or in stores.
• Unique pricing. Unique online pricing can also become a tracking code of its own, so when a person requests that price, she must have seen the search landing page.
• Trackable phone numbers. Phone sales can be routed through a tracking system similar to the VoiceXML (define) systems used for pay-per-call systems. This is great for expensive or complex purchases.
• In-store surveys. Survey your customers.
• Anecdotal data. Ask your sales associates if people show up with printouts from the Web site.

In the future, lines between on- and offline purchasing behavior will blur even more. Make sure your search campaign strategy accurately reflects your net search profit, or you may find yourself out of a job.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.