Understanding how online influences offline
Everybody knows that eCommerce is big business - it's now estimated to be worth a staggering £5 trillion a year globally. But that's only part of the story. Sales through offline stores, branches and call centres still account for over 90% (Source: Forrester 2011) of all retail turnover in most European markets, making traditional channels the primary sales channel for many organisations. But online research has changed consumer behaviour beyond all recognition - the "prosumer" has arrived.
Today's consumer is a very different proposition to sell to than the consumer of 20 years ago. Thanks to the Internet, today's shopper has access to more information than ever before about suppliers, products and services. And, consequently, the modern consumer is often highly informed about which brand or product to buy before they make the journey to a store. Over 40% (Source: Consumer Commerce Barometer, 2012) of UK retail consumers perform online research before going to store, and in some categories this figure is even higher - particularly where the purchase is a highly considered one.
And these multi-channel consumers are potentially a highly attractive proposition to retailing organisations. Studies show that they are willing to spend more than their "mono-channel" peers, for example in the UK a recent study by Deloitte showed that multi-channel consumers accounted for 28% of non-food transactions by volume but 39% by value. Engaging with multi-channel customers on their online path to an offline purchase is a key driver of value for multi-channel organisations today.
Understanding how to harness the potential of multi-channel consumers leads to several key questions for marketers. These include:
● What role does my website play in driving offline sales?
● What proportion of my offline sales are already influenced by online?
● Could online advertising help to increase my offline sales?
● Would multi-channel consumers offer greater return than mono-channel consumers?
To answer these questions, Google has conducted around 75 studies in America and Europe to understand these issues better. The studies done in Europe show that:
● Over 10% of offline sales are influenced by visits to a retailer's website (Source: Google Online2Store studies with Auchan, Carrefour, PC City)
● Up to ¼ of media-influenced store sales are driven by Paid Search (Source: Google Online2Store study with IKEA)
● Consumers who perform ROPO (research online, purchase offline) spend up to twice as much per trip compared to their online peers (Source: Google Online2Store studies with FNAC, Goertz)
● Online advertising can drive incremental "lift" - up to 2% at a national store level (Source: Google Online2Store studies with Vodafone, SFR)
There are a number of ways in which the online-to-offline effect can be measured - namely through modeling, consumer panels, tracking studies or experiments. Some of these are more scalable than others in terms of being "replicable" whilst also being statistically robust. All of these approaches can, however, provide powerful insights into the behaviour of the multi-channel consumer and the role played by online media in driving offline sales.
In addition to delivering advertising products which link on- and offline - Call Metrics, Offer Ads, Nearby Shopping and eCirculars to name a few - Google is also actively working on a range of tools and platforms which will help clients and their media agencies to answer these questions. Our aim is to provide tools which augment what already exists in the market, and our focus is to isolate the role played by digital media in the path to offline purchase. The first of these tools will start to roll out this year - we welcome your input and feedback on how these should work for your businesses to add most value.