Marketing Effectiveness
Improving Digital Marketing

Bridging the Gap Between the Digital and Physical Worlds

Tom Dolan
April 29, 2016

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Analyzing and optimizing marketing results? We all thought we had that game won, didn’t we? That is, until digital marketing rose into the stratosphere while most retail sales remained tethered to the earth, and the game board went flying.

Marketing dollars have shifted toward the tightly-targeted digital space, yet 85–90% of CPG purchases are still made in mass-market physical stores. This has opened a rift in marketing measurement: How do we connect digital marketing dollars with their impact on physical store sales and optimize ROI?

A panel convened at the CMO Club Summit in April to discuss the latest developments. Here are the big ideas we took away:

Smartphones Create a Local Connection Between Digital Ads and Physical Store Visits.

Over three-fourths of Americans aged 13‒80 have smartphones now and – because a smartphone and its owner are rarely parted – their location is easily tracked. We can now measure whether a given set of digital marketing impressions led to an increase in shopper visits to a specific store and even to a specific category within the store. Most importantly, this can now be done without requiring consumers to join a panel or install an app, dramatically increasing sample sizes.

Real-Time POS Data Enables a Closed-Loop System of Digital Advertising Delivery and Measurement

When digital marketing effectively blankets the neighborhood around a store, its impact can be measured with store-level POS data. POS and inventory data can also be fed into the digital ad system to turn advertising on and off, where needed. For example, it could be used to kick off sales of a new item as soon as it hits store shelves or to drive inventory run-out at the end of a season.

With the integration of real-time POS and inventory data into the advertising delivery system, measurement no longer has to be something done only at the end of a campaign. In fact, an ad campaign need no longer have a fixed end date. Analytics and optimization can happen continuously during a campaign, and advertising can be allowed to run around each store (or toward each consumer target) until it stops generating lift in the desired metric, whether that be store visits or sales. 

Smartphones Take Loyalty Marketing to New Places

In the wake of the smartphone, the concept of a linear “path to purchase” has been supplanted by the concept of a non-linear “consumer journey.” This has, in turn, caused marketers to shift their focus from “How is this marketing activity going to push the consumer one step further down the purchase funnel?” to “How does this touchpoint build the brand–consumer relationship?”

This shift in thinking naturally leads to a discussion of loyalty marketing, especially as technology now makes it feasible to track each impression and purchase transaction at the individual consumer level over time. Sephora, for example, claims 80% of their sales transactions, both online and offline, can be tied to specific consumers via their rewards program.

Manufacturers’ loyalty marketing programs have also been changed by smartphones. With receipt-scanning apps, manufacturers get the dual benefits of targeted delivery of promotional offers and a new source of insights into how those offers impacted sales and shopping baskets.

Organizational Change is Needed to Complete the Bridge to Digital

While the latest technology developments summarized above are starting to close the gap between the digital and physical worlds, there is much work yet to be done. The ultimate blending of digital and physical will ultimately require organizational change to bring marketing and IT resources together, as well as to break down the silos between teams focused on brick-and-mortar sales and their e-commerce counterparts.

 

This article was written by Tom Dolan, SVP of MaxPoint Solutions Group, as a recap of a breakout session from The CMO Club Spring Summit in New York City. Special thanks to discussion moderator, Kevin Moffitt, VP of E-commerce at Office Depot, and our three panelists: Dee McLaughlin, Global VP of Marketing at Forever 21Oskar Kaszubski, General Manager NA of Ecommerce at Mondelēz International; and Tom Dolan, SVP of MaxPoint Solutions Group.

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