July 31, 2015
Digital ads drive store visits and purchases
Digital ads work, particularly for dollar stores and warehouse clubs, according to research by Placed, a firm that specializes in location analytics.
Analyzing to two million first-party survey responses during the second quarter, combined with information from third parties, Placed discovered that dollar stores (99 Cents Only, Dollar Tree, Dollar General and Family Dollar) and warehouse clubs (BJ’s Wholesale Club, Costco and Sam’s Club) made up seven of the top 10 chains where consumers visited and made a purchase from advertising.
"It comes down to consideration process, especially with the top 10 on purchase rate," David Shim, CEO of Placed, told RetailWire. In the case of dollar stores, the low $1 price point represented "a low barrier to purchase." Based on the findings, 99 Cents Only indexes at 36 percent above average for all chains studied while Dollar Tree is at 132 percent and Dollar General was 131 percent above. Family Dollar indexed 25 percent higher.
Mr. Shim said warehouse club visits result in purchases because they represent "a high consideration visit" that includes the shopper’s "membership, commitment of time and energy." BJ’s indexed the highest among the three clubs at 28 percent compared to 27 percent for Costco and 24 percent of Sam’s.
Source: Placed
Warehouse clubs led Placed’s list for average spend with Costco (149 percent), BJ’s (137 percent) and Sam’s (136 percent) indexing well above the average for all the chain’s tracked. The warehouse clubs made up three of the top four for average spend with Best Buy ranked second.
- Placed Attribution Expands Ad to Store Visit Measurement with Offline Purchase Rate and In-Store Revenue Metrics – Placed
- They Came, They Saw but Did They Shop? At Costco and Dollar Stores, They Did – Advertising Age (tiered sub.)
- Location Tracking Is The New Attribution Engine – MediaPost Mobile Marketing Daily
BrainTrust
Recent Discussions
Discussion Questions
Will having the ability to track consumer behavior connected to digital ads result in a significant increase in retailer budgets going to this delivery method? Do you see retailers shifting greater portions of their ad budgets from traditional ad mediums over the next five years to digital?
Poll
There is NO question that both retailers and CPG brands are moving to digital in big ways. TSW (This Stuff Works). The promotions analytics tools available today in the marketplace as we speak are worlds better than what was available even three years ago. The guesswork has been virtually eliminated.
Retail marketers are always looking to understand how they can generate the greatest bang for their marketing buck so if digital ads are providing a higher ROI coupled with attractive increases in sales then it would be logical for them to shift more of the spend to this medium. Most retailers have been taking a measured approach to shifting their spend to digital but as they are gaining more insights into the effectiveness of the channel it is likely to accelerate going forward. Further momentum will be provided by the fact that more and more consumers now own smartphones and the combination of personalized digital ads delivered using time and location information will most likely provide greater impetus to retailers to increase the rate at which they move marketing spend to digital and mobile channels.
Yes, there is going to be a big shift. When you can prove something works it has to attract more promotional advertising money. Digital’s advantage is not just that it works but that it is so highly measurable.
To the question posed — Yes, retailers will follow major marketers like P&G and Mondelez into the world of digital advertising quickly.
But I see a different takeaway from the Placed research. What strikes me is that the stated drivers of increased response rates and purchase to digital advertising, price and convenience for dollar stores and high commitment to warehouse club trips, is no different than the drivers for any other type of stimulus used to remind consumers to shop somewhere. It is still the core reason for using the outlet that matters, not whether the ad is digital or print/radio/TV/outdoor/etc.
The advantage digital has is that digital devices are where the eyeballs have migrated. Particularly mobile. And that is why it works.
There’s less and less proof that traditional advertising really drives traffic and works, it’s just hard to stop something that is such a part of the retailer routine and is as embedded in routines, like a Sunday flyer (distributed in a newspaper with falling circulation as well). I hear from retailers that they find these vehicles less and less useful, but just don’t know how to stop the “addiction” so the money has to go to other vehicles over time. However it’s not just a question of shifting the spend, there’s an upfront investment in sophisticated personalization capability and superior targeting that is just now emerging within the realm of the possible. As these capabilities become more achievable the dollars will follow because (for a time anyways) well-targeted digital ads work.
I sense there are two factors impacting budget shifts to digital. In the case of grocery, the pace of change is commensurate with category managers becoming comfortable with the ability to monetize digital over print. That requires new tools for merchandisers to easily exploit the opportunity. Those tools are now available for progressive retailers to experiment with and quantify.
The second factor relates to the objective reality of the terms “reach” and “engagement.” Print has the luxury of being about raw impressions; how many were printed and distributed serves as proxy for engagement with little accountability. Digital is cursed with transparency. One knows exactly how many times shopper engagement occurs. Not everyone wants to know the actual cost per engaged shopper …
A retailer recently tracked shopper engagement with a digital offer to checkout. The average shopping basket of the engaged shopper was $83.31 compared to the average shopping basket of $38.44. If digital ads/offers continue to generate higher levels of engagement and sales, budgets will follow.
The ability to measure consumer paths from online all the way into the store will definitely push dollars to digital (dollars which are flowing that way already, of course). The problem is that it is also paving the way for a lot of bad analysis generating a lot of faulty conclusions. The problem is answering the question “what sales are incremental due to the ad?” Retail and CPG marketers have long confused easy-to-measure stats regarding action (promo redemption, click-through, coupon redemption, etc. and now online-exposed customer store visits) with incrementality. Even a lot of measures that are called “incremental” aren’t really because the measurement is deeply flawed (e.g., many media mix models).
At APT, we call this the “Cone of Uncertainty”—high measures of “this consumer bought” tell you that something is going on, but not whether the something is economically good (sales you wouldn’t have had without the ad) or economically bad (sales that would you would have had anyway even without paying for an ad).
The time for measurement and optimization based on true incremental ROI in marketing is slowly coming but sadly it isn’t here yet in many retail marketing organizations.
Recent retail market reports are showing a continuing decline in market demand and consumer shopping both in store and on line. These global results have made it possible for all of us to identify consumer trends and practices that are expanding as a percentage of the total sales. We need to be careful not to see this as a means to repair the slowing market, but as a means to keep more of our market share(s). With this expectation in front of our efforts, we will be inclined to invest our dwindling resources more effectively.
Making current enterprise platform applications easier to use and open to more devices would be a good first consideration versus more and bigger system expansions simply to keep what we now own, as in market share.
Yes, most definitely on the shift continuing. This can be particularly impactful for the warehouse clubs, especially high-volume sales driver Costco. With average basket spend well north of $100, leveraging digital ads to help drive incremental store/club visits across a 73-million strong member base can be a significant factor in driving sales growth, etc. And this — the store traffic driving success of digital ads — also bodes well for retail coupon provider website business models like RetailMeNot.
Tracking consumer behavior connected to digital ads will not result in more ad dollars being spent on this type of advertising. Because this single survey indicates that it works doesn’t mean that everyone agrees with their findings and what their next steps will be. Traditional ad mediums like print, radio and TV all have their place.
Digital technologies open the door for applying advanced analytics on collected data to create a more precise view of the situation at hand, or to forecast times to come. Analytics used with individual consumer data from advertising campaigns can provide a direct correlation to why a person bought something when and where they did — a veritable crystal ball for retailers wanting to deploy online/in-store strategy.
Smart retailers have already begun to shift their ad budgets to be more digitally-oriented in an effort to better connect with consumers’ wants and buying patterns, to the point of being able to predict trends, drive-up revenue with targeted offers, and perhaps even create new opportunities for growth. I expect to see this trend continue. As the character, Oscar Goldman said in the movie The Six Million Dollar Man, “we have the technology, we can rebuild him better than he was. Better, stronger, faster.” The age has come for retailers to build a better, faster, stronger 360 vision of their customer — one who is engaged by advertising that speaks to him or her based on personal insight, where they are physically, and what specific services or goods they may be wanting.
More Discussions
Should Grocers Pay Online Influencers?
What should the relationship between grocers and influencers look like?Will Google’s Pomelli Photoshoot Live up to the Hype for Retail SMBs?
Will Pomelli’s Photoshoot tool be a game-changer for retail SMBs?Mass Retailers, Including Walmart, Tie Grocers on Penetration For the First Time: What’s Next?
Walmart and other mass-channel retailers are reaching dominant penetration levels. What’s next?
There is NO question that both retailers and CPG brands are moving to digital in big ways. TSW (This Stuff Works). The promotions analytics tools available today in the marketplace as we speak are worlds better than what was available even three years ago. The guesswork has been virtually eliminated.
Retail marketers are always looking to understand how they can generate the greatest bang for their marketing buck so if digital ads are providing a higher ROI coupled with attractive increases in sales then it would be logical for them to shift more of the spend to this medium. Most retailers have been taking a measured approach to shifting their spend to digital but as they are gaining more insights into the effectiveness of the channel it is likely to accelerate going forward. Further momentum will be provided by the fact that more and more consumers now own smartphones and the combination of personalized digital ads delivered using time and location information will most likely provide greater impetus to retailers to increase the rate at which they move marketing spend to digital and mobile channels.
Yes, there is going to be a big shift. When you can prove something works it has to attract more promotional advertising money. Digital’s advantage is not just that it works but that it is so highly measurable.
To the question posed — Yes, retailers will follow major marketers like P&G and Mondelez into the world of digital advertising quickly.
But I see a different takeaway from the Placed research. What strikes me is that the stated drivers of increased response rates and purchase to digital advertising, price and convenience for dollar stores and high commitment to warehouse club trips, is no different than the drivers for any other type of stimulus used to remind consumers to shop somewhere. It is still the core reason for using the outlet that matters, not whether the ad is digital or print/radio/TV/outdoor/etc.
The advantage digital has is that digital devices are where the eyeballs have migrated. Particularly mobile. And that is why it works.
There’s less and less proof that traditional advertising really drives traffic and works, it’s just hard to stop something that is such a part of the retailer routine and is as embedded in routines, like a Sunday flyer (distributed in a newspaper with falling circulation as well). I hear from retailers that they find these vehicles less and less useful, but just don’t know how to stop the “addiction” so the money has to go to other vehicles over time. However it’s not just a question of shifting the spend, there’s an upfront investment in sophisticated personalization capability and superior targeting that is just now emerging within the realm of the possible. As these capabilities become more achievable the dollars will follow because (for a time anyways) well-targeted digital ads work.
I sense there are two factors impacting budget shifts to digital. In the case of grocery, the pace of change is commensurate with category managers becoming comfortable with the ability to monetize digital over print. That requires new tools for merchandisers to easily exploit the opportunity. Those tools are now available for progressive retailers to experiment with and quantify.
The second factor relates to the objective reality of the terms “reach” and “engagement.” Print has the luxury of being about raw impressions; how many were printed and distributed serves as proxy for engagement with little accountability. Digital is cursed with transparency. One knows exactly how many times shopper engagement occurs. Not everyone wants to know the actual cost per engaged shopper …
A retailer recently tracked shopper engagement with a digital offer to checkout. The average shopping basket of the engaged shopper was $83.31 compared to the average shopping basket of $38.44. If digital ads/offers continue to generate higher levels of engagement and sales, budgets will follow.
The ability to measure consumer paths from online all the way into the store will definitely push dollars to digital (dollars which are flowing that way already, of course). The problem is that it is also paving the way for a lot of bad analysis generating a lot of faulty conclusions. The problem is answering the question “what sales are incremental due to the ad?” Retail and CPG marketers have long confused easy-to-measure stats regarding action (promo redemption, click-through, coupon redemption, etc. and now online-exposed customer store visits) with incrementality. Even a lot of measures that are called “incremental” aren’t really because the measurement is deeply flawed (e.g., many media mix models).
At APT, we call this the “Cone of Uncertainty”—high measures of “this consumer bought” tell you that something is going on, but not whether the something is economically good (sales you wouldn’t have had without the ad) or economically bad (sales that would you would have had anyway even without paying for an ad).
The time for measurement and optimization based on true incremental ROI in marketing is slowly coming but sadly it isn’t here yet in many retail marketing organizations.
Recent retail market reports are showing a continuing decline in market demand and consumer shopping both in store and on line. These global results have made it possible for all of us to identify consumer trends and practices that are expanding as a percentage of the total sales. We need to be careful not to see this as a means to repair the slowing market, but as a means to keep more of our market share(s). With this expectation in front of our efforts, we will be inclined to invest our dwindling resources more effectively.
Making current enterprise platform applications easier to use and open to more devices would be a good first consideration versus more and bigger system expansions simply to keep what we now own, as in market share.
Yes, most definitely on the shift continuing. This can be particularly impactful for the warehouse clubs, especially high-volume sales driver Costco. With average basket spend well north of $100, leveraging digital ads to help drive incremental store/club visits across a 73-million strong member base can be a significant factor in driving sales growth, etc. And this — the store traffic driving success of digital ads — also bodes well for retail coupon provider website business models like RetailMeNot.
Tracking consumer behavior connected to digital ads will not result in more ad dollars being spent on this type of advertising. Because this single survey indicates that it works doesn’t mean that everyone agrees with their findings and what their next steps will be. Traditional ad mediums like print, radio and TV all have their place.
Digital technologies open the door for applying advanced analytics on collected data to create a more precise view of the situation at hand, or to forecast times to come. Analytics used with individual consumer data from advertising campaigns can provide a direct correlation to why a person bought something when and where they did — a veritable crystal ball for retailers wanting to deploy online/in-store strategy.
Smart retailers have already begun to shift their ad budgets to be more digitally-oriented in an effort to better connect with consumers’ wants and buying patterns, to the point of being able to predict trends, drive-up revenue with targeted offers, and perhaps even create new opportunities for growth. I expect to see this trend continue. As the character, Oscar Goldman said in the movie The Six Million Dollar Man, “we have the technology, we can rebuild him better than he was. Better, stronger, faster.” The age has come for retailers to build a better, faster, stronger 360 vision of their customer — one who is engaged by advertising that speaks to him or her based on personal insight, where they are physically, and what specific services or goods they may be wanting.