The offline/online bridge

There has been one wide gaping hole in affiliate marketing since I can remember, I’ve been involved in the space for almost ten years. That hole is the offline/online bridge in respect to multi channel merchants. From an affiliate manager perspective, we know that sales are being influenced, at the very least, and and at the most being placed directly resulting from affiliate online relationships.

Online affiliates are promoting brands and products and as an industry we have only been able to effectively track the results that happen online.  But we all know that that isn’t the only result of our affiliate partnerships. Customers research on the web, stop by the store in the mall and use catalogs to shop. Where did they start their path to purchase, where did it end, and did only one of those channels influence the sale?  The networks have been unable to bridge the gap effectively.

In the past I have personally, and I have seen, launched and managed programs that have enabled phone tracking of commissions, but even there we have leakage.  It’s possible in all the networks to do this, I’m not sure why more don’t.

Here is an interesting, although a bit outdated (2007), article on Search Engine Land, reporting on the Yahoo ROBO Study.  It measured the influence of search and display advertising on offline behavior and I believe is still relevant today.  ROBO stands for Research Online Buy Offline.

“Search marketing has a greater impact on in-store sales lift, three times that of display advertising. When consumers in the study were exposed to search only, on average they spent $16 in the store for every $1 they spent online. However, the number of consumers reached via search is much smaller than display, creating a relatively small pool of pre-shoppers with a relatively high propensity to purchase in-store.

The study pointed out that customers “exposed to online retail marketing campaigns were more engaged and spent more dollars in physical stores than otherwise. There was an overall revenue lift of 43 percent from these engaged consumers; 88 percent of that revenue came in local store purchases.”

Wow, a 43% in revenue lift from users engaged in online advertising.  Merchants – are you incorporating any of these assumptions when evaluating your affiliate program?  At the very least we should be doing that.  I’ve seen many affiliate programs close because they can’t see if it is driving incremental sales and I am willing to bet this connection was not explored.

The online industry tends to segment out campaigns and their costs and performance too much.  We put everything in silos; affiliates, offline, retail, phone, catalog search.  Heck we even break out branded and non branded search with very little analysis on those two channels combined effect on purchasing behavior.  We forget about the “path to purchase” and how each exposure influences sales.  With engaged customers generating more revenue, we need to be looking at behavior across channels.  In a best case scenario, the affiliate channel would get some level of credit for those sales and the affiliates some sort of commission on those sales.  Maybe a smaller piece of the pie as the profit is now split between channels, but something.  At the very least, we need to be taking this into account when evaluating all these channels.  Maybe the catalog isn’t doing as well without a strong search and affiliate campaign?

Comscore also released a report in August of 08 that said users exposed to search and display ads online were 82% more likely to purchase offline.  That is extremely significant.  Looking to increase your offline sales, a strong search, affiliate and media campaign may be the way to do it.

BizReport.com reported here that “According to Katrina Doney, Director of Deloitte Growth Solutions, increasing numbers of consumers are using the Internet to research and compare products, prices and store offerings. “Results of the survey show that online research is important regardless of whether or not the consumer is buying the product on the Internet,” said Doney, adding that consumers continued to frequent bricks and mortar stores to receive “good old fashioned service”.” This was taken from Deloitte’s 2008 Survey on Consumer Behavior.

Ah, the offline/online bridge many times is “good old fashioned service”.  So which channel gets credit for that? The way it stands in most organizations it is the store, but they only facilitated the closing of the sale, search or an affiliate could have started them down that journey.

Here’s some more food for thought on the offline/online problem.  An Australian search marketing company, Outrider, commissioned a report (conducted by Research International) that showed 80% of Australian consumers researched products online prior to buying them.  Here are some very interesting tidbits from their research:

• 1/3 of consumers start their online research at a search engine
• the majority using a search engine first conducted a generic or non branded search

“”It is all about how consumers behave and marketers must embrace the new purchase decision cycle from the earliest stages of their media planning. What is fascinating is the lack of barriers between online and offline now – one does not exist in a vacuum from the other and consumers are more and more adept at operating in both worlds” said Research International Strategy Director Jonathan Sinton.”

I won’t get into the branded/non branded keyword issue, but I plan on having a guest author delve into that more later.  But Jonathan Sinton has it dead on.  We don’t exist in a vacuum, none of our campaigns do.  Why do we then evaluate them this way?  Why don’t the networks, who are probably in the best situation to solve this problem, figure it out?  It’s in the merchant’s best interest.

Having worked at a catalog company for several years, I quickly learned that analysis of performance was extremely vital to success of any company.  What campaigns are performing well and even what segments of customer perform well for a given message are things we went over time and time again, but no consideration was given to how customers reacted across channels.  At least not regarding affiliate marketing and search specifically.

This is an area we really need to look at, for everyone’s sake.  It may mean that some affiliates are deemed to be sending no incremental sales and others a very high number, but that sort of transparency is needed.  What say you?

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