Is online advertising effective? Exactly how effective? It depends how you measure.
Facebook’s Sheryl Sandberg cites a recent case study by Canadian sporting goods chain Sport Chek attempting to prove that Facebook ads provide a greater lift than paper flyers. “During the two week experiment, sales rose across Sport Chek stores nationwide by 12 per cent.”
On the strength of these results, the company will shift 25% of its print ad budget to digital spending in the coming year.
Aha! Targeted digital ads work better than paper flyers very few people read.
But one suspects there are still serious problems in the measurement methodology. Was this 12% sales increase over the prior period, or year-over-year? Was it same-store sales or part of a national measurement that increased the overall square footage of the company? Did any other variables affect the result? Was anything done to attempt to directly attribute sales back to the Facebook campaign? How much did the campaign cost? What is the estimated ROI?
Certainly, the shift of those offline flyer dollars over to digital is long overdue.
So… what about online sales? Sport Chek has a website, too. And after visiting that website, I saw a remarketing ad, so they’re obviously doing what they can to drive traffic there. So why not talk about advertising spends that can be easily and directly attributed to the exact source of the spend? When is someone in retail going to come out and admit that all those retail stores, constantly changing layouts, staff, real estate, and taxes, are very costly overhead? Is it the CMO’s job to embrace low-margin sales in agnostic fashion when there is also a full web presence waiting to make the company higher profits? Is it the CEO’s job to look into shifting the proportion of online sales? In financial reporting after quarterly earnings results by Canadian retailers like Sport Chek and Lululemon, why is it so rare to hear anyone ask about the growth in that proportion of online sales? (Fortunately, it’s becoming more common. In this Bloomberg report from 2012, Lululemon’s CEO indicated that online sales drove 14.3% of the company’s revenue — not too shabby. That metric should be front and centre in far more conversations about digital ad campaigns.)
Some companies, while shifting their “dollars to digital,” are still measuring their results like they used to measure their results from TV ads — or flyers. The lower-hanging fruit awaits a fuller commitment to the power of digital, accountable ad spending.