In a recent article by ComScore’s Magid Abraham, published in the April Harvard Business Review, Abraham discusses the off-line impact of on-line ads. I have written several pieces about channel conflicts (on-line and off-line) previously in this blog and the difficulties of measuring return on investment (ROI).
Clearly, one of the key questions in e-business management is how market communication investment generates ROI when termination needs to be understood in both channels from multiple vehicles.
In the aforementioned article, Abraham presents evidence gathered from a vast number of software tracked users. His study reveals that for a 15 billion USD retailer, sales on-line increased by 40% and offline by 50% following a pure on-line search and display ad holiday campaign. Because the retailer’s absolute offline $ sales were much bigger than the on-line sales, the 50% increase during the measurement period was much greater than the on-line increase in $.
Below the ComScore histogram outlining the impacts on control groups (Comsource’s note: “Results from 18 studies in the finance, travel, telecommunications, and retail sectors collectively show that on-line ads have a powerful effect on off-line sales. Running search ads tends to be more effective than using display ads, and combining both types is more effective still”).
My personal experience would also support this conclusion. When I look at offline contacts originating from the web vs. overall offline contacts, I find extremely strong relationships (coefficient of correlations > 0,9) in the historical movements. Even if web originating contacts will be included in the total contacts (and hence explain some of the correlation) they are still low enough to draw positive conclusion about how online traffic is driving offline traffic.
Bottom line is that separating ROI numbers on a stand alone channel level will give poor decision making material. To understand the dynamics of a dual channel set up you need to broaden the spectra of ROI measurement with what ComSource calls “aggregated, anonymous and syndicated market research reports” i.e. more than click through rates and site convergence.
