Google Wants to Prove Ad Clicks Make for In-Store Purchases
Google (NASDAQ:GOOG) (NASDAQ:GOOGL) is the undeniable king of online and mobile advertising, and the company wants to extend its ad domination by proving the effectiveness of advertising online to brick and mortar retailers. It’s enlisting data companies like Acxiom (NASDAQ:ACXM) in order to do so, according to a report from The Wall Street Journal.
The report cites anonymous sources saying that Google is working on a pilot program that matches data on physical purchases from a retailer’s computer system to cookies tracking whether or not a consumer has clicked on a banner ad online. If the data matches up, it can prove that someone who clicked on an ad was interested enough to go make a purchase in a physical store, which is highly valuable information for Google to show to potential advertisers.
While it can be easy to track when people click on ads, their behavior in a store is much more difficult to monitor. Advertisers are still spending more money to show commercials on television than they are to place ads online, because after a user clicks on an ad it’s difficult to tell if they ever journey to a physical store and make a purchase. This makes companies more cautious about pouring tons of money into online ad campaigns, particularly for brick and mortar retailers.
Companies like Acxiom are trying to change that by striving to reach what advertising executives refer to as ‘the Holy Grail’ of online advertising — matching the consumer who clicked on an ad to a consumer who went to the store and made a purchase. According to an article on the company from The Wall Street Journal, Acxiom created a strategy in which it takes a group of consumers an advertiser is looking to target, shows most of the group the online ads but leaves out a control group, then compares who goes to the store and makes a purchase — the people who saw the ads or the people that didn’t.
The results of Acxiom’s research were published in a paper in March. After studying 50 companies that use online banner ads over the course of two years, Acxiom found that online ads drove $9 out of every dollar spent, and most of that money was spent in physical stores.
“The way we got there was not through panels or cookies or proxies but with people making real purchases,” Acxiom vice president of consumer and product strategy Josh Herman said to The Wall Street Journal. “This is a cleaner way to defend the money spent on advertising. That’s the Holy Grail.”
Large Internet companies including Google and Facebook (NASDAQ:FB) are looking to firms like Acxiom to help them prove to advertisers that paying for online ad space is worthwhile, as those companies make the majority of their revenue from ads. Google in particular is worried about the future of online advertising, as its ad cost-per-click and aggregate click figures have been stagnate and even showing declines. The company reported earnings on Wednesday that showed cost-per-click fell 9 percent on the year and aggregate clicks fell 1 percent versus the previous quarter.
Part of the problem is the rise of mobile, where ads don’t command as high of fees because there’s less screen size to work with and people are less patient about being bombarded with ads while on-the-go. Google is also dominating the mobile ad world, so the company is on the right start. According to data from eMarketer, Google alone accounted for 49.3 percent of the $17.96 billion advertisers spent on mobile in 2013.
A recent study from ZenithOptimedia forecast that in 2014 online will account for a quarter of the $537 billion expected to be spent on ads during the year. Initiatives like Google’s project to show a link between online ads and in-store shopping will help drive that figure up even higher.
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