Paid Search Drives Offline Sales, Compensation Model Flawed

Cash-registerPaid search and display ads more often drive online activity into brick-and-mortar stores, but those running ecommerce campaigns don't get the kudos for connecting online to offline sales. Marketers running digital media campaigns, for the most part, are compensated for purchases made by consumers online, but not in-store.

Companies have begun to figure out how to integrate offline data into online campaigns to better target ads, but internal incentives for sales in brick-and-mortar stores aren't quite there, per a source. The process continues to evolve, but it's been a huge internal hurdle for many retailers that are building out ecommerce businesses.

Companies continue to work through the challenges as they reorganize processes, said Seth Sarelson, chief operating officer at RevTrax.

Suzy Sandberg, PM Digital president, believes the industry sits on the cusp of much better attribution among channels -- either by way of coupons or traceable things that show the order originated online. For example, Google Offers, aimed at enticing people to go in the store to redeem the coupon, can provide a method to track offline sales. "There are also those retailers who can afford very expensive studies that tie the online buyers with point-of-sale purchases," she says -- and unfortunately those studies remain outside the reach of most."

PM Digital designed a workaround to support the connection between online advertising and in-store sales. The company works directly with retail teams -- which are different than the eCommerce teams -- that carve out a budget, and PM Digital drives search and mobile campaigns with the goal of driving in-store traffic. The campaign is targeted to a local area around the store.  

"Internally, the eCommerce people feel good about supporting the retail teams' efforts, and the retail teams feel they are in direct control of the drive-to-store campaign," Sandberg said. "The strategy, called a drive-to-store campaign, is totally different from the strategy for the eCommerce team, so there is no concern that one campaign cannibalizes the other."

In fact, a new study from RevTrax, which provides a direct-response cross-channel analytics tool, finds that offline sales benefit most from online paid-search ads. A two-year study ending in August found that for every $1 of ecommerce revenue generated from paid-search ads, marketers gained approximately another $6 of in-store revenue.
The data indicates that multichannel retailers must factor in-store sales into paid-search ROI calculations. If not, they will undervalue the paid-search channel's contribution to revenue by as much as 85%.

The study also found that by creating a keyword-level attribution model, marketers in the study better understand the ROI of each click on a paid-search ad. Retailers with an average transaction of less than $200 found the average click on a paid-search ad generated approximately $15 of in-store revenue, with some merchants seeing as much as $28 of in-store revenue.

Approximately 9% of clicks on a paid-search ad generated an in-store sale, with some merchants seeing up to 26% of clicks on a paid-search ad generating an in-store sale. Some merchants saw a cost of sale as low as 1%.

Clients measure the paid-search campaigns by keyword. They analyze brand keywords, competitive keywords and more. For the study, consumers saw a paid-search ad that led them to a printable coupon or mobile landing page displaying a unique barcode. The consumer redeemed the coupon inside a brick-and-mortar store. Using the unique barcode or promo code, each coupon was tracked back to the search activity that drove the initial engagement.

When asked if a specific market segment, such as automotive, does better than others, Sarelson said the success partly comes down to "training" consumers to look for the deals online before heading into the store. "There are marketers training frequent customers to look online first, but there are also marketers bidding on keywords in specific categories, converting customers away from competitors," he said.

Sarelson said as more brands drive consumers from online into stores to make purchases, companies must recognize the need to change internal business models that compensate ecommerce marketers for offline sales. 

4 comments about "Paid Search Drives Offline Sales, Compensation Model Flawed".
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  1. kevin lee from Didit / eMarketing Association / Giving Forward, December 13, 2011 at 9:28 a.m.

    Actually, when clients are of the mind to understand the true impact of paid search and display there are indeed lots of great ways to understand which elements of a campaign are driving offline sales as well as BRANDING, and INFLUENCE. It simply requires a competent agency and the desire of the marketer.

  2. kevin lee from Didit / eMarketing Association / Giving Forward, December 13, 2011 at 9:30 a.m.

    Oh, and with regard to compensation models, you'd be surprised how some agencies (I won't name names) are willing to assure that clients get everything they are paying for, and more. Properly structured and run agencies can even be cheaper than in house, particularly when the costs of campaign management technology are included in the analysis.

  3. Troy Johnson from, LLC, December 13, 2011 at 11:18 a.m.

    I can't tell you how many people have told me; "I saw a book on your website and went to the store to buy it". Too many advertisers underestimate the power of online advertising and, as this article mentions, use online sales as the only benchmark to measure the campaign's success.

  4. Adele Tiblier from FSC Interactive, January 3, 2012 at 6:42 p.m.

    I often offer the suggestion to the skeptical client "if you don't think that paid search or any of your online marketing is part of the boost you have seen to your in-store sales, then let's go ahead and put it on hold" - which is often followed by a lot of back peddling, a stutter and some excuse as to why they aren't willing to try that. While it's sometimes hard to get the exact impact of PPC, it's no worse than trying to determine the exact amount generated from TV, radio and print campaigns for countless years, exposing their products to not-so-likely potential clients versus those actually searching for what they are selling.

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