In the modern digital world, the primary concept of advertising, primarily for smaller companies, is done online. With billions spent on online marketing and online shopping becoming more popular, a significant portion of purchases is done offline, and it is important for retailers to capitalize on the ability to translate online ads to offline sales. At the beginning of the decade, when the trend of online marketing began to grow exponentially, Lewis and Reiley (2014) at Yahoo created an experiment to determine how online ads impact offline sales.
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In a controlled environment, using consumer online and offline sales data, the researchers sought to determine how a company can measure advertising effectiveness. Using control ads, allowed to isolate proper statistics which determined that 84 percent of offline sales increase came from online ads. The researchers note the importance of using precision control ads in making advertising decisions and targeting consumers based on behavior and demographics using appropriate statistics for the best positive impact.
Even to this day, there is little guidance on online advertising decisions for firms that operate predominantly in offline sales. A study by Lobschat, Osinga, & Reinartz (2017) found that a cross-campaign online banner advertisement combined with minimal television advertising increases a firm’s website traffic by consumers who have not previously visited the website in the previous four weeks. In turn, both non-recent and loyal consumers who visit the website by viewing or clicking the online banner, indirectly experience offline sales due to this action, suggesting online banners may be an effective manner of advertising or building a brand online.
Furthermore, Kireyev, Pauwels, & Gupta (2016) explore several models regarding the synergy between online ads and offline sales. Online advertising effectiveness is often based on the consumer’s stage in the process of deciding to purchase a product.
Display advertising such as banners often does not produce immediate results, but effectively contributes to later exposure such as during sponsored search results. Display ads increase the number of relevant search queries by as much as 45% (Kireyev et al., 2016). However, most models agree that the most effective synergy comes from investing in simultaneous online and offline advertising in a campaign rather than individual channels separately.
With the growing cost of advertising and the most effective use of marketing, budgets are to ensure that campaigns are aligned to brand strategy and focused on consumer perspectives, using the data available through major online advertising channels. Both Google and Facebook have tools to measure conversions to offline sales, the in-store conversions are tracked via user visits through smartphone data and aggregated credit card transactions (Pitylak, 2017). Tracking data and successful campaigns which translate into the customer’s physical purchases is the most appropriate use of the tools to drive the sales results needed.
A successful online campaign on average has 3 seconds to grab a consumer’s attention, compared to just 1 second offline. A combined synergy of the offline and online marketing mix is the most effective at gaining a positive return-on-investment (ROI) for each advertising dollar spent. As the majority of the population uses smartphones continuously on a daily basis, transferring more and more of their lives to the digital realm, capitalizing on this aspect is critical, even for offline retailers. For the majority of big purchases, customers prefer to do research online and then purchase the product in-store for all major retail sectors.
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For large or personal purchases, customers still value the in-person assessment of the product and guidance from a knowledgeable sales associate in addition to researching the product and its reviews online. A successful retailer is able to bridge the gap between online and offline engagement for a “frictionless experience” (Forbes Staff, 2016).
Forbes Staff. (2016). Customers like to research online but make big purchases in stores, says a new retailer study. Forbes. Web.
Kireyev, P., Pauwels, K., & Gupta, S. (2016). Do display ads influence search? Attribution and dynamics in online advertising. International Journal of Research in Marketing, 33(3), 475-490. Web.
Lewis, R. A., & Relley, D. H. (2014). Online ads and offline sales: Measuring the effects of retail advertising via a controlled experiment on Yahoo! Quantitative Marketing and Economics, 12(3), 235-266. Web.
Lobschat, L., Osinga, E. C., & Reinartz, W. J. (2017). What happens online stays online? Segment-specific online and offline effects of banner advertisements. Journal of Marketing Research, 54(6), 901-913. Web.
Pitylak, R. (2017). Are you measuring the offline sales coming from your digital ads? Forbes. Web.