Online Advertising: A Case Study
A leading manufacturer partnered with a major retailer to evaluate the effectiveness of online ads.
- The trading partners sought to quantify the impact of shifting trade promotion dollars from weekly circulars to online search and display ads.
- Using the Test & Learn™ approach, the companies were able to accurately quantify the impact of sponsoring ads that displayed alongside search engine results, both for online as well as in-store sales.
- The companies found that online ads drove a lift in brick and mortar sales of more than 1%, which more than paid back the marketing expense.
- Armed with a list of DMAs where search ads were significantly more effective than traditional media, the consumer goods company began shifting trade promotion dollars, driving an annual sales lift of over $10 million.
The Companies
A leading multinational manufacturer and a retail partner with an established online presence and over 800 brick and mortar locations in the United States
The Challenge
The companies sought clarity on the effectiveness of online advertising in driving in-store sales, as part of a larger evaluation of trade promotion spend across media channels. Some executives believed that the ROI of online ads was greater than that of traditional weekly circulars; however, accurately quantifying this hypothesis was challenging. Seasonal variations present significant challenges in accurately measuring changes of this magnitude, and high variability in day-to-day sales data posed challenges in precisely quantifying in-store sales lift.
The Solution
APT's Test & Learn™ software is designed to optimize accuracy and precision and effectively measure the impact of test programs, despite many measurement challenges. APT’s software identified the optimal number of DMAs to include in the test, balancing between keeping test cost low and ensuring a large enough sample size to measure the impact of the ads. Fifty test markets were chosen to receive search and content ads for specific test products and test category names. Fifty-two control markets received no search and content ads for the tested categories.
The retailer’s test stores included all stores in DMAs where the test ads ran, and performance for each test store was measured against a set of scientifically matched control stores. The manufacturer and retailer found that APT’s Test & Learn™ software was able to apply a rigorous testing methodology to accurately measure the impact of geographically targeted advertising and to uncover the actual in-store lift generated by these ads.
Online advertising generated an overall lift of 1.1% of in-store sales, with a 2.1% lift in promoted categories. Non-promoted categories also experienced significant measurable lift. Net ROI was determined to be over 150% for the manufacturer. Comparing this 150% ROI to returns on other media vehicles, the company identified a clear opportunity to optimize media mix by gradually and intelligently shifting more spend towards online advertising.
The Results
Management used these results to support increased spending on online advertising. Upon rollout, this approach generated $10.5MM in incremental sales.
