Many people buying digital media are looking to see an actual purchase consummated online as part of their online advertising campaign. In most cases, this is not, actually an achievable or relevant goal because relatively few goods are actually purchased online. No one buys cars, snacks, movie tickets, sodas, pet food, and many other categories of products online. In fact, even some products you may buy online: electronics, clothing, toys, etc. the vast majority of people purchase in the physical world.
According to Forrester, around 9% or 10% of retail occurs online, and that number will only grow to 11% by 2015. Since people really don’t buy any groceries online with some exceptions (myself being one with Freshdirect in NYC), the number goes up a bit to 15% in 2015 with consumer packaged goods removed. That gives you a sense of just how much commerce sits concentrated in snacks, soda, prepared meals, condiments, vegetables, etc.
A massive amount of product research and learning happens online, but the actual purchase typically happens in the physical world. In fact, as more and more of our media consumption moves to the Internet, the place we learn about products will increasingly be the web.
Mary Meeker (Kleiner Perkins) released this great chart of media consumption at the end of May:
Desktop internet currently consumes 26% of our media time and mobile currently takes 10%. (Notice the under-allocation of advertising to mobile.) Taken together Internet represents 36% of media consumption, just shy of TV at 43%. The Internet will increasing be where we are exposed to new products, but even by 2015 we’ll be buying most of our products in stores. I think on mobile this will be even more true, where you’ll learn about a nearby business offering something you want and just go to it. No wonder Square just raised $200 million at a $3.25 billion valuation- buying stuff in stores is not dead! You can even ask Apple.
Further, consumers typically need to be exposed to countless advertisements and educational messages before they buy. No one wakes up, Googles “Cellphone Model X” and buys it with a single click, with no prior research or messaging. That’s fiction.
So when a marketer is looking at key performance indicators for an online campaign, they need to ask about how much of their product is actually transacted for online. In most cases, at least 85% of the time they are driving towards offline conversion. At BuzzFeed for a product that converts offline we look for several key KPIs as part of a social advertising campaign:
- Consumption of the branded social content via paid media (typically our custom Story Units and their click through rates)
- Social Lift: How much is the content shared to generated views via social or “earned media”
- Social Brand Lift: When we survey people about their purchase intent in three groups: unexposed to the social ad, exposed via paid media, exposed via social; do we see large and lifts in intent between the unexposed and paid, and the paid and social.
For most marketers, and those who have purchased television, this is all old hat. However, for generalists and those working on an offline converting product for the first time, the first chart in this post may help to convey that the reports of the death of offline commerce are greatly exaggerated.*