Quantifying Online Search’s Impact on Offline Demand

Marketers increasingly look at search as a valued customer acquisition channel delivering much more than immediate transactions or conversions. One of our multichannel retail clients, for instance, strongly suspected that a significant number of customers who had initially been exposed to the brand via search marketing were converting in-store rather than online. They trusted their intuition, and we developed a method, an “offline multiplier,” to help them quantify this additional impact of search.

An offline multiplier mathematically attributes online and offline value to search engine marketing investments by quantifying the return on search from store purchases. The offline multiplier quantifies the amount of offline sales influenced by search for each $1 tracked to search online. While chief marketers responsible for multichannel brands should take the time to develop an offline multiplier, you can in the meanwhile take more-immediate actions to capitalize on a search-to-store effort this holiday season. With Black Friday and four Cyber Mondays approaching, a mountain of marketing opportunity awaits.

For best results with the search-to-store shopper, keep three considerations in mind:

1. the nature of the search-to-store shopper

2. how to quantify search-influenced demand

3. simple ways to cater to the search-to-store shopper

Search-to-store shoppers are calculated, educated, and well read. Most determine what they want first, relying on search before and after store visits. Then they find a local retailer stocking the product.

March 2005 research from the Dieringer Research Group highlights this type of shopping behavior: More than 80 million U.S. consumers a year make offline purchases after researching online; the vast majority bought more than what they researched once they got into the store. Additionally, a comScore study of Q4 2005 gift-buying behavior found that the majority of marketers’ search conversion, 63%, occurred offline.

Despite the evidence, most marketers still need a hard number to work with in order to factor offline demand into campaign metrics. But quantifying the exact scope of what we call “search-influenced demand” is not simple.

To create an offline multiplier and calculate total search-influenced demand, you must understand specific attributes of your vertical market sector, your customers’ behavior, and the differences across product categories. The size of your offline footprint–the number and location of brick-and-mortar stores–helps quantify geographic locations where a search-to-store strategy can be leveraged. A higher average purchase price, meanwhile, equates to higher consideration and an increased likelihood of the transaction happening in a store.

Recently we conducted an in-depth survey for a major housewares merchant, polling the client’s online customers as well as an anonymous panel regarding their shopping and purchase behavior online and offline. We determined that the client’s customer base exhibited an offline multiplier of $2.50: For every dollar in online sales generated, an additional $2.50 is generated offline, bringing the total revenue impact of search marketing to 3.5 times the basic search-to-click online revenue.

Offline multipliers can go much higher. In some retail verticals, marketers can expect to find offline multipliers as high as $5-$7. Once marketers understand this dynamic, search program data take on new light, accounting for more actual sales, and become more accurate and actionable.

Because shoppers exhibit such strong search-to-store behavior, you should consider ways to cater to search-to-store shoppers in the coming holiday season:

1. Ask your search team how they quantify the offline impact of search. If you like search’s directly tracked performance, just wait until you better understand its offline impact.

2. Consciously seek out these high-value cross-channel customers. Simply thinking of the search-to-store customer as a target can make a major impact on your keyword selection and search campaign strategies.

3. Buy affinity or behaviorally targeted keywords. Invest more on terms that reach consumers interested in lucrative product categories or categories presenting great cross-sell potential. Place emphasis on the keywords most likely to create significant in-store activity. You can be more flexible with their online ROI metrics.

4. Localize national campaigns. Implement geotargeting to greet customers with landing pages touting local stores, especially with products highly likely to transact offline, such as furniture or major appliances. And be sure that these landing pages make the offline channel readily available and appealing.

5. Implement complementary merchandising tactics. For instance, whenever possible, encourage “buy online, pick up in-store” customers to purchase additional items in the store before they leave.

As you complete your 2007 budgeting, be sure to consider the offline impact of search. Build a conservative assumption into your metrics that accounts for the full scope of “search-influenced demand.” Plan to validate your assumptions in 2007 and reap the benefits of an expanded view of search.

Cam Balzer is director of search strategy for Performics, the Chicago-based performance marketing division of DoubleClick, and a monthly contributor to CHIEF MARKETER. Contact him at [email protected].