POS to O2S for ROI... The Evolution of Measurable Media Investments

8/24/2009 12:17:00 PM

Labels:

Could POS (Point of Sale) and O2S (Online to Store) be related? Absolutely!

Remember ‘back in the day’ prior to 1978 when there was no Point Of Sale data. Retailers would spend millions of dollars on advertising with no link to what was selling at the cash register. There were no bar codes, scanners or the like to help understand inventory levels, what sold, what day, how many, and from what medium. Well, when bar codes and scanners debuted, it changed business as we knew it - creating accountability as it relates to what products were selling, when they were selling, and if advertising had an effect on how many were sold. This led to increased investments in research from the POS data and shifting media spend to higher performing channels once the advertising results could be measured at the store level.

Sound familiar? It should, some day you may be talking to someone in marketing and saying- remember back in the day when we didn’t have O2S data? When advertisers weren’t aware of what effect their online marketing programs were having on their in-store sales, but instead were only optimizing and taking credit for sales on their website. Online To Store research is transforming retail today based on the ability to test digital marketing during a specified period of time and measure exactly what happens to sales not only online through eCommerce, but possibly more importantly- in-store in the test markets. Test and control has never led to greater clarity of online efficacy.

This is the Holy Grail of advertising and marketing funding if you think about it. You have read on this blog before about Google partnering with Retailers to learn exactly what a dollar spent online can do for in-store sales, well now a number of the tests have been completed and the results are in! Online advertising drives in-store sales!

Just take the publicly distributed Pier 1 O2S Case Study as an example from October of last year, when Google and Applied Predictive Technologies (APT), a data analysis and software firm, teamed up with Pier 1 Imports and their search marketing agency, Resolution Media. During one of the most turbulent periods in retailing history, Pier 1 saw a 3:1 return on investment in-store from their online expenditures in Search and Content. Not only 3:1 ROI, but an overall 2% sales lift, even more impressive when you factor in the times and economic conditions. Like bar codes & scanners in the past, these tests helped Pier 1 Imports understand their online-influenced in-store sales today: what sold, what day, how many.

So now what? Can you imagine hearing someone say that today’s POS data is good and all but they’re still just going to apply traditional media mix modeling without regard to the data the POS scanners are providing? NO WAY! We’re talking about data driven marketing decisions dating back to 1978 when newspapers were providing huge spikes in sales for retailers- measurable through POS.

So today, my challenge for you, Mr. or Mrs. Retailer is to take the data that O2S case studies or in-house tests are providing and put them to work and put your marketing money where the results are - using the wisdom of the testing crowds! Just like back in 1978…

10 comments:

Richard Altman said...

http://aggravationconnoisseur.blogspot.com/

look, i have the solution, but i'll need your help, or at least an ear, cause i don't know man, everyone is going about this backwards, if you wanna know what i mean, you know what to do. no one has yet, i don't expect you will either. thanks for the riveting insight

dejardins said...

Nice article about this challenge. For more details about Pier 1 Imports study, go here guys: http://www.brandweek.com/bw/content_display/news-and-features/retail-restaurants/e3i048f01beefa084a3837cbe15e128f4a5

johnnybaby45 said...

How could Pier 1, a site that doesn't offer ecommerce, be the one chosen for this study? It's useful, but for the rest of us that manage business for companies with brick-and-mortar store locations AND ecommerce, the data doesn't aid our case.

Buzz said...

"O2S" i.e. measuring the effect of online marketing on in-store purchase (for those who prefer to stick to 'standard' marketing laymans' terms) is definitely the next frontier in terms of valuable marketing metrics. However, this area is far more complex than this article may suggest. Methodologies will go beyond web analytics. Feel slightly uncomfortable with the suggestion that this is something that Google may lay claim to!

Richard Altman said...

anyone that wants to acknowledsge google's fallibility simply look to that site called youtube, they may claim something but have no clue how to mine it effectively, let's not forget why google is popular. keyword algorithms, it all stems from there, don't forget that, that is not a slight to google either, the other reason why they are popular is cause all in all they're quite improvisational and take risks almost without thinking, which i personally respect, cause it just means they well get around to becoming cognizant of their actions...when i finally help them monetize youtube, properly. heheheh

Julia Tang said...

Thanks for all your comments.

The goal of our Online to Store program is to assist our clients in understanding and quantifying specifically the in-store sales lift that can be measured and attributed to online search and display advertising efforts. Industry research and data continues to show that online marketing efforts can drive ecommerce, but results from this particular study show that online marketing efforts aren't only effective for the ecommerce channel, but rather can work for retailers with only physical store presence as well.

That said, there is still a lot of work to be done in this area. While the tests we have done to date have been promising, we by no means claim to have mastered this complex formula. We're continually testing and further testing, and partnering with different vendors and retailers to experiment with a variety of methodologies and we hope to gain a better understanding of the intricate relationship between online and in-store.

More case studies and research around this area to come...

Thanks,
the Google Retail Team

Dennisy said...

Attempts to combine offline and online data has been around as long as digital advertising. Unfortunately, the market has met many of these attempts with privacy-related concerns. I specifically recall DoubleClick's purchase of Abacus 6+ years ago, which housed data on millions of catalog purchase transactions with the goal that online ads would leverage this offline data for targeting. This practice is commonplace these days, but DCLK was early in the space and targeted by privacy advocates (DCLK later sold Abacus).

Clearly there is more work to do with regard to reversing this analysis (online activity driving offline action) but I am glad to see a concerted effort by retailers to use and leverage this data. Based on other comments, additional information regarding the Pier 1 case study and retailers with both online and offline channels would be helpful.

In order to measure the success of an online campaign offline, the process is somewhat broad as online campaigns are ramped and offline sales are monitored before, during and after the increased spend. Could a user's mobile device help to bridge this gap of more detailed information by tracking consumer location (i.e. proving a user visited a store). Could retailers provide digital coupons on-screen for use in-store that would be provided as users navigate online?

Any technology that would seamlessly track online to offline activity would go a long way with marketers provided any privacy concerns could be addressed. Longer term, as we move to mobile based payment systems (i.e. paying with your phone) this transition to building marketing tools into handsets takes on additional importance.

Will said...

O2S is no doubt wonderful idea ....but some segment people are against the change ..may be they would stick to traditional system .

thelosososhighschool said...

Attracting the right customers to your website will help you finish off 2009 strong and charge ahead in 2010. Few marketers realize that there is free data available, which is easy to access and can help you better target your advertising.

Please join us to discuss where to find this data and how to utilize it to make educated decisions and develop a sound targeting strategy.

Avinash Kaushik will lead a discussion to share ways for “Using Data to Better Connect with Your Customers.” You'll learn how to find and use data from Google Trends for Websites, Insights for Search, and Ad Planner. Avinash will offer tips for using this data to focus on your most relevant audiences and maximize your return-on-investment immediately. And you'll walk away knowing how to make the most relevant decisions to drive your business forward.

Planners said...

Very thoughtfull post on "POS to O2S for ROI... The Evolution of Measurable Media Investments". It should be very much helpfull.

I have used the AV Planners Inc for all "digital advertising" and their serivice is the best.
You can know more about them in "http://www.avplannersinc.com/index.php/digital-signage".

Thanks,
peter - digital advertising