Somewhere around the turn of the 20th century, marketing pioneer John Wanamaker, a Philadelphia-area merchant, observed, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
For today’s brick-and-mortar retailers, this problem hasn’t changed much; in fact, it’s only been amplified by the advent of the Internet and e-Commerce. To truly compete, today’s retailers and offline sellers need to know that their ad dollars are making an impact and leading to in-store purchases.
Despite what my contemporaries in digital would like to think, this is more important than ever considering that a whopping 92.9% of the nearly $5 billion in U.S. retail sales came from brick-and-mortar purchases last year — and that’s not just a domestic trend. The highest share of online sales in the world belongs to the Asia-Pacific market, at just 10.2%. The problem is, until now, brand awareness ads, like commercials, have been all that’s available to them, and although they’ve buoyed whole industries for a hundred years, it’s nearly impossible to attribute per-transaction performance to brand awareness ads, and even harder to optimize them quickly.
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To put it bluntly, classic brand awareness has been stuck in the dark ages for the brands that can’t sell online. Thanks to Facebook, Snapchat, Pinterest and others, this era may soon be coming to an end. The emergence of digital advertising has paved the way for performance marketing, an online approach characterized by metrics like view-through and click-based conversions, which allow social advertisers to apply more quantitative approaches to show their efforts are improving sales.
Performance Marketing For Brick-and-Mortar Retailers
Over the last few years, companies like Datalogix, recently acquired by Oracle, have begun to show the brick-and-mortar world how to fill this void. By using data collected offline to connect the dots between digital advertising and offline purchases, they’ve been helping brands dramatically improve audience targeting and better gauge the impact of their digital efforts.
In June, Facebook announced an Offline Conversions API, which lets brick-and-mortar retailers track store visits and attribute offline sales to digital campaigns through point-of-sale integrations. Another way Facebook is coloring in the lines is by allowing advertisers to include an interactive map as part of its Local Awareness ad type, which displays nearby store locations as well as relevant business information like up-to-date store hours. Facebook can even us a phone’s location-based services to estimate how many users actually visited the store after seeing an ad. For social advertisers, all of these things mean enhanced insight about customer purchase behavior, which can be used to optimize campaigns and better estimate return-on-ad-spend.
The net effect is this: In a world driven by technology, data proliferation has created a marketplace where every sale has become digital to some degree — even if a customer isn’t purchasing online.
A future where every sale can be attributed to views, impressions and clicks from a specific digital ad is closer than many realize. Not only will offline retailers be able prove the efficacy of their ads in terms of in-store traffic, but they’ll be able to serve their ads to much more relevant audiences. Now, instead of spending huge portions of their advertising budgets on brand awareness ads they cannot quantify nor fine-tune, brands will be able to hyper-target smaller groups of consumers whose past behaviors deem them more likely to purchase a particular product — even if they’re purchasing in store.
Unpacking The Larger Implications For Advertising
As the gap between in-store purchases and digital advertising continues to close, the spending gap that remains between traditional methods of advertising and digital will continue doing the same; in fact, eMarketer predicts that digital ad spending will overtake TV in the coming year, projecting $77.37B and $72.01B in total spending respectively.
With in-store tracking capabilities becoming more robust and widely available, retailers will continue allocating more and more resources to digital campaigns. That said, the questions surrounding digital advertising never concerned targeting — it’s been a foregone conclusion that the best way to hyper-target addressable audiences was through digital. The issue and apprehension arose because tracking and optimization were no better.
With Facebook, Snapchat, Pinterest and others bringing to light “last brick attribution,” and effectively quantifying the in-store value of digital ads, one question will only get louder in the minds of Wanamaker’s contemporaries: How much longer will it make sense not to spend most of my ad budget on digital?
Jamie Tedford is the CEO and founder of Brand Networks, a company that delivers award-winning social media advertising software and services to hundreds of enterprise customers, including half of the Fortune 100 and 17 of AdAge’s 25 Most Advertised Brands. Prior to founding Brand Networks in 2006, Tedford was SVP, Marketing and Media Innovation at Arnold Worldwide, a top-10 U.S. brand advertising agency. Recognized as an innovative entrepreneur and a pioneer in the growing “Word of Mouth” industry, Tedford launched the WOM division at Arnold and is a founding board member of the Word of Mouth Marketing Association.
