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Fresh water in need of some horses…
This is my first post, and I must say I’m excited to be a part of the Revenews team. I’ve been quietly immersed in online marketing for over 6 years and heavily involved with traditional marketing production and cost analysis for well over 16 years. I plan to write a series of posts on a topic very few people know much about: Offline Affiliate Marketing.
If you’ve never heard of the term before that’s okay, because I had to make it up. I don’t tend to make things up, but in this case, I needed to create a term that describes an important “new” variation of affiliate marketing - one that has the potential to dramatically improve the growth rate of our industry in general.
It’s funny, people do not have to define what channel they are promoting when they use newspapers to advertise a website - that’s just print advertising. You don’t have to clarify the fact that your “cross-channel” anything when you promote a catalogue by using a radio spots - that’s just radio advertising. Yet for some reason you can’t call promoting offline sales via the Internet “online marketing” without confusing everyone because “online marketing” means only one thing to most: using the Internet to sell online.
I’ll define Offline Affiliate Marketing as the business of generating offline sales on a commission only basis through online advertising. Why does Offline Affiliate Marketing matter? Because the revenue potential is enormous for affiliate publishers, networks, and marketers alike. Additionally, it promises to bring an entirely new set of marketers (ones with offline objectives and far larger budgets) to our industry - marketers who will for the first time be able to realize the vastly improved cost efficiencies, accountability, and sales performance modern affiliate marketing delivers over their staples: Print, Radio, and TV advertising.
Having worked with over a dozen large retail chains to deliver both online and offline sales through online marketing, I’ve learned something that most online marketers haven’t learned yet: the Internet is far better at selling things in-store than it is at selling things online. What a concept.
But if you think about it, it completely makes sense. The latest research is now showing that 87% of consumers research products online before buying in store. Almost 90% of the people surveyed said they used the Internet to make an offline buying decision. (If the link changes the article was entitled “87% of consumers research products online, buy offline” - published by InterentRetailer.com July 2006). I’ve been watching similar research findings from companies like Forrester, Nielsen, AMR and others closely over the years, and all I can say is that the percentage of shoppers using the Internet for offline pre-shopping research has been rising steadily. It is not impossible to imagine this number could approach 100% within the next 5 years.
It is also fairly well known from similar consumer studies that for every $1 spent online another $8-$12 (depending on the research firm) is spent offline as a direct result of Internet research. Think about that statistic for a minute. If you are an online publisher reaching an audience producing $500,000 per month in online sales, odds are you could be influencing an additional $4,000,000 - $6,000,000 per month in offline sales especially if you directed some portion of your energies to that effort. This is the potential I am talking about.
Now, I don’t want anyone to think that Offline Affiliate Marketing poses a threat to online retailing in any way because the evidence I’ve seen shows the opposite to be true: as more companies start using their offline marketing and ad budgets to promote offline objectives via the Internet, sales through both channels go up - there is absolutely no evidence of “cannibalization” as so many online marketers fear - only increased buying activity - but that is for Part 2 or 3 of this series.
There are, of course, many reasons why the retail industry limited its view and use of online marketing the way it has, but I am here to tell you none of these reasons hold up well, and it is my goal to point out each of them for all to see and debate. I am hoping that when we can see things more clearly in relation to how things are and how they should be, we will find that where we think there are conflicts, there are none. Where we fear there there could be cannibalism, there is only cooperative sales growth. New budgets, opportunity, and usefulness will emerge for all of us involved in online marketing if we simply take time to educate ourselves on this one very important subject.
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Welcome to ReveNews, and great first post.
You know, I researched turtles online before I went to the pet store to buy one for my mom’s pond. So, yes, you’re right.
Glad to see you at Revenews, Kurt!
Interesting post– it relates closely to something I’ve been researching and studying on my own. I’m interested in how offline media, like broadcast tv ads, effect online ad spending.
An example: I’ve got a friend who produces Ford’s MidWest region tv spots for JWT (http://www.jwt.com). I’m trying to collect data to show that whenever JWT runs a Ford broadcast ad, Ford’s online ad spending grows. Also, when this happens, Ford credits these online advertisers for actions that result from JWT’s broadcast ads.
Send me an email, Kurt? Thanks!
-Mike-
thethinktank at gmail
Jim - Thanks! The litmus test/BS sniffer for studies such as the one I cited is always, “have I personaly researched something before I bought it offline recently.”
And Mike - thank you for commenting. You are absolutely right to think that the reverse could be true: offline ads affect online revenue. We have had several campaigns where online activity/vists and online sales were directly impacted by TV and Radio ads. The affect is usually strong but very short lived representing a sharp spike in user activity with a corresponding lift in average daily online sales. The obvious challenge is to appropriately track and credit full or partial credit for the sales from the “awareness” ad vs. the “closing” ad. We do this through promotional keycoding, and this same theory could be applied to the broadcast mediums…expect an e-mail.