POS to O2S for ROI... The Evolution of Measurable Media Investments

8/24/2009 12:17:00 PM

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Could POS (Point of Sale) and O2S (Online to Store) be related? Absolutely!

Remember ‘back in the day’ prior to 1978 when there was no Point Of Sale data. Retailers would spend millions of dollars on advertising with no link to what was selling at the cash register. There were no bar codes, scanners or the like to help understand inventory levels, what sold, what day, how many, and from what medium. Well, when bar codes and scanners debuted, it changed business as we knew it - creating accountability as it relates to what products were selling, when they were selling, and if advertising had an effect on how many were sold. This led to increased investments in research from the POS data and shifting media spend to higher performing channels once the advertising results could be measured at the store level.

Sound familiar? It should, some day you may be talking to someone in marketing and saying- remember back in the day when we didn’t have O2S data? When advertisers weren’t aware of what effect their online marketing programs were having on their in-store sales, but instead were only optimizing and taking credit for sales on their website. Online To Store research is transforming retail today based on the ability to test digital marketing during a specified period of time and measure exactly what happens to sales not only online through eCommerce, but possibly more importantly- in-store in the test markets. Test and control has never led to greater clarity of online efficacy.

This is the Holy Grail of advertising and marketing funding if you think about it. You have read on this blog before about Google partnering with Retailers to learn exactly what a dollar spent online can do for in-store sales, well now a number of the tests have been completed and the results are in! Online advertising drives in-store sales!

Just take the publicly distributed Pier 1 O2S Case Study as an example from October of last year, when Google and Applied Predictive Technologies (APT), a data analysis and software firm, teamed up with Pier 1 Imports and their search marketing agency, Resolution Media. During one of the most turbulent periods in retailing history, Pier 1 saw a 3:1 return on investment in-store from their online expenditures in Search and Content. Not only 3:1 ROI, but an overall 2% sales lift, even more impressive when you factor in the times and economic conditions. Like bar codes & scanners in the past, these tests helped Pier 1 Imports understand their online-influenced in-store sales today: what sold, what day, how many.

So now what? Can you imagine hearing someone say that today’s POS data is good and all but they’re still just going to apply traditional media mix modeling without regard to the data the POS scanners are providing? NO WAY! We’re talking about data driven marketing decisions dating back to 1978 when newspapers were providing huge spikes in sales for retailers- measurable through POS.

So today, my challenge for you, Mr. or Mrs. Retailer is to take the data that O2S case studies or in-house tests are providing and put them to work and put your marketing money where the results are - using the wisdom of the testing crowds! Just like back in 1978…

5 comments:

Richard Altman said...

http://aggravationconnoisseur.blogspot.com/

look, i have the solution, but i'll need your help, or at least an ear, cause i don't know man, everyone is going about this backwards, if you wanna know what i mean, you know what to do. no one has yet, i don't expect you will either. thanks for the riveting insight

dejardins said...

Nice article about this challenge. For more details about Pier 1 Imports study, go here guys: http://www.brandweek.com/bw/content_display/news-and-features/retail-restaurants/e3i048f01beefa084a3837cbe15e128f4a5

johnnybaby45 said...

How could Pier 1, a site that doesn't offer ecommerce, be the one chosen for this study? It's useful, but for the rest of us that manage business for companies with brick-and-mortar store locations AND ecommerce, the data doesn't aid our case.

Buzz said...

"O2S" i.e. measuring the effect of online marketing on in-store purchase (for those who prefer to stick to 'standard' marketing laymans' terms) is definitely the next frontier in terms of valuable marketing metrics. However, this area is far more complex than this article may suggest. Methodologies will go beyond web analytics. Feel slightly uncomfortable with the suggestion that this is something that Google may lay claim to!

Richard Altman said...

anyone that wants to acknowledsge google's fallibility simply look to that site called youtube, they may claim something but have no clue how to mine it effectively, let's not forget why google is popular. keyword algorithms, it all stems from there, don't forget that, that is not a slight to google either, the other reason why they are popular is cause all in all they're quite improvisational and take risks almost without thinking, which i personally respect, cause it just means they well get around to becoming cognizant of their actions...when i finally help them monetize youtube, properly. heheheh