Actionable Insights From APT's Retail Practice

How can manufacturers maximize the ROI of online ads?

November 24th, 2014 | Posted by Haley Jackson in Manufacturing

Over the years, manufacturers have refined their strategies for investing in POS displays, in-store signage, endcaps, and free-standing inserts to attract customers to their products in stores. More recently, manufacturers have increasingly allocated spend to paid search and online advertisements to assert a digital presence for their products. While it is relatively straightforward to measure the online sales impact of these digital advertising investments, it is much more difficult to confidently determine the effect that online investments have on in-store sales. Without an understanding of the complete sales impact across channels, manufacturers cannot be sure of the true ROI of online advertising.

Manufacturers can leverage in-market testing to measure the offline sales impact attributable to online advertising and glean insights to improve the effectiveness of future investments. Results from such tests can answer key questions to help maximize manufacturers’ return on digital marketing investments, such as:

  • – Which products or categories should we feature in our online advertisements to drive the greatest sales impact, net of potential cannibalization effects?
  • – How does this sales lift vary based on attributes of each campaign (e.g., SOV percentage, percentage of ads allocated to high performing products, etc.)?
  • – How does the sales impact vary by demographic factors of the market (e.g., household size, average age, etc.)?

As Google highlighted in their Retail Advertising Blog, Hewlett-Packard employed this Test & Learn approach to launch an online search ad in a subset of markets. By comparing store performance in markets where the ads ran to a set of similar “control stores,” HP learned that the online ad campaign had a significant offline sales impact, generating a 530% return on advertising spend (ROAS) for its computers. Further, the test revealed that more prominently positioned ads and ads for higher-end models generated a greater in-store impact. Testing campaigns before a broad rollout equips manufacturers with the ability to measure both the online and offline impact of digital advertising spend and identify the specific performance drivers of each initiative to maximize return on future investments.

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