digital ad growth

Google knows that offline metrics will generate higher mobile ad spend.

 Lack of clear ROI has held many advertisers back from investing more in mobile. That’s all about to change as increasing amounts of data about store visits and offline sales become available.

As it does marketers come to recognize the greater value of mobile vs. PC users. Mobile users (especially mobile searchers) are closer to purchase decisions and often have immediate needs and desires.

In December Google introduced a “store visits” metric as part of its broader “estimated total conversions” program. According to an article in the Wall Street Journal, “Hundreds of retailers in the U.S., Canada and Australia now see regular reports on store visits that follow clicks on Google search ads. A smaller group that includes Target Corp. and Home Depot Inc., two of the largest U.S. retailers, get the purchase data.”

Mobile Ad Growth

Target’s Kristi Argyilan is quoted in the article saying that “people who have clicked on mobile-search ads spend more in its stores than those who click on desktop search ads. One-third of Target’s mobile-search ads led to a user visiting one of its stores during the 2014 holiday season.”

As audiences migrate to mobile — 60 percent of digital media time is now mobile — Google has been trying to show advertisers the value of mobile advertising, so that it can generate more ad revenue from mobile search and display ads.

Recently Google officially disclosed that there are now more smartphone searches than desktop search queries in the US, Japan and eight other countries. By contrast brands and retailers and other marketers have been painfully slow in their adoption of mobile.

Part of this is about the inability to prove to CMOs and other decision-makers than “mobile works.”

Smartphones and location data are now making it very possible to prove offline impact on a per-campaign basis. In some cases in-store sales data can be tied to ad exposures. This is what Facebook is doing for a segment of its brand advertisers with its Conversion Lift Measurement,introduced in January.

There are multiple ways to track the online to offline impact of ads. A range of ad platforms, including Google, use geofencing of store locations to watch aggregate smartphone user visits. Some also employ a control and exposed methodology to examine lift.

Location analytics company Placed has an opt-in smartphone panel and works with retailers and brands to measure the real-time offline impact of mobile advertising. Users agree to share location in exchange for rewards.

There are analytics firms and data vendors that are matching data sets in the background using email, phone numbers or IP addresses. This is the methodology described in the WSJ article:

To connect store purchases to its ads, Google works with data companies including Acxiom Corp. , the Epsilon unit of Alliance Data Systems Inc., and Oracle Corp. ’s Datalogix . . .

When a shopper clicks on a search ad, small bits of software called cookies are placed on the phone’s Web browser. Acxiom’s LiveRamp unit often can match the cookie to a user’s email account, which the user may have registered with other websites that work with LiveRamp. Once that connection is made, store purchases can be tied to these email addresses, and associated account information.

Why does all this matter? It should be self-evident.

Beyond getting much closer to metrics that actually matter, there are trillions of dollars in offline spending that are influenced by digital media. Consulting firm Deloitte has recently estimated thatmore than half of offline or in-store retail sales are influenced by digital (PC + mobile).

That online-to-offline pattern has existed for many years but largely been invisible to marketers, who’ve been optimizing against clicks and more recently calls. Clicks are a very poor metric other than for pure e-commerce mobile search advertisers.

Accordingly most online marketers haven’t truly had visibility on what’s driving the majority of their sales, which are offline. The US government reports that 93 percent of retail sales remain in stores.

Retailers are also the largest single block of digital advertisers and will deliver 22 percent of all digital ad revenue this year according to new estimates from eMarketer. The firm has also aggressively estimated that roughly three-quarters of all digital advertising will be mobile by 2019.

One of the major drivers of that mobile ad growth will be the kind of offline visits and sales data that are being developed by Google, Facebook, Twitter and others. Indeed, every major ad platform whether PC-based or mobile will be compelled to report offline metrics.

In the same way that video advertisers are no longer satisfied with impressions and are demanding “viewability,” retailers and others who primarily sell offline will soon demand offline impact metrics from their agencies and ad platform vendors.