Online Paid Search Affecting In-Store Sales?
Planning your online marketing strategy for the coming year? You may want to demand some of marketing's budget.
According to a study by retail marketing firm RevTrax discussed in this Search Engine Land article, for every dollar in online sales earned via paid search, you can expect to earn $6 in local, in-store sales.
For years we have been calculating the ROI of paid search marketing based solely on the eCommerce sales and direct online conversions that it generates. At Shopatron, clients using our online marketing services typically see a 3x return for paid search ($3 in online sales for every $1 spent on paid search). But this return doesn’t factor in any in-store sales that may be influenced by these online ads. If you expand the calculation to take into account the research above, the $1 spent on paid search actually results in $21 in total sales ($3 online and $18 in-store), reducing the cost of sales from 33% of the sale to under 5% of the sale.
What should we make of this?
Clearly, if you're not investing in paid search and other online marketing for your brand and products, you probably should be. Customers use search to find you, to find products, to find stores that carry your products and to find companies like yours. That makes it both a branding opportunity (all those queries represent an opportunity to display your brand name in front of potential customers), and an opportunity to directly affect sales (by simply being the most on-target result or offering a compelling deal). This new research shows that you can now expect these online ads to have a greater affect on your in-store sales than your online direct sales.
When I asked our Online Marketing Manager, Greg Squires, about the findings he had this to say:
“Brands continue to look for ways to justify web marketing investments that bring offline benefits. Nearly everyone agrees the benefits are there; accurately quantifying the correlation has been the challenge. This study reveals a rare metric that ties online investments to brick and mortar retail purchases.
"As the industry evolves and the web continues to influence overall purchasing behaviors, brands will get smarter with their online marketing, website and eCommerce spend. The brands that have made a big splash online have figured out the correlation here, and are making smart and effective web marketing investments.”
To me, the meaning goes even deeper. It shows that in-store sales aren’t going anywhere, and the relationship between the online and brick-and-mortar channels is only getting stronger.
Want to hear more about this?
Join Shopatron’s Online Marketing Manager, Greg Squires, for his upcoming webinar, “Search Engine Marketing for eCommerce: Outlook for 2012” on January 17th. Register now to find out what online marketing trends and opportunities 2012 holds for merchants, based on data and insights from Shopatron’s hundreds of online marketing clients.
P.S. I’d love to have been a fly on the wall at Google when these findings were reported. I bet they started drooling…