Impact of online advertising

The Off-Line Impact of Online Ads

The internet is widely considered the most measurable of advertising media, but those easily tracked click-throughs and e-commerce sales don’t tell the whole story. Far from it. Internet advertising stimulates off-line sales, too—in most cases, our firm finds that online campaigns increase sales more at advertisers’ retail cash registers than on their websites. Data like that should embolden executives to shift ever more dollars to online advertising.

Some two million people worldwide have installed our firm’s tracking software on their PCs and given us explicit permission to observe their online activities. In return, these research panelists get various rewards, such as free network backup or file encryption, and a chance to have their opinions and behavior influence the future development of the internet. We use their information—including data about sites visited, searches conducted, transactions made, and content viewed—to produce aggregated, anonymous, syndicated market-research reports and, when clients commission them, issue-specific studies.

Our tracking helped reveal how online advertising influences consumers’ behavior. Measuring the online sales impact of an online ad or a paid-search campaign—in which a company pays to have its link appear at the top of a page of search results—is straightforward: We determine who has viewed the ad, then compare online purchases made by those who have and those who have not seen it. Analyzing the off-line sales impact requires a variety of other techniques, such as conducting surveys or drawing on the panelists’ profiles in clients’ frequent-buyer databases.

A recent study we conducted for a retailer with more than $15 billion in annual revenues—the vast majority of which come from its physical stores—had notable results. Over a three-month period, U.S. sales increased by 40% online and by 50% off-line among people exposed to an online search- and display-ad holiday campaign promoting the entire company. Because its baseline sales volumes are greater in physical stores than on the internet, this retailer derived a great deal more revenue benefit off-line than the percentages suggest. Even in terms of raw increases, though, online ads had a bigger impact on off-line than on online sales in a majority of our studies.

People tend to respond—with their wallets—more to search ads than to display ads (see the exhibit “Web Ads Boost In-Store Sales, Too”). However, search ads, which appear only after a viewer has expressed interest in a subject by initiating a search, are generally more costly per impression than are display ads. Consistent with other kinds of advertising, using both types of ads in one campaign increases sales more than the two, added together, do in separate campaigns.

A version of this article appeared in the issue of Harvard Business Review.

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