Clicks to Bricks: You Probably Aren’t Measuring Digital Marketing Correctly, and it's Costing You

Despite the fact that the retail landscape continues to undergo massive waves of post-COVID evolution, there are many things that still haven’t changed — like the fact that consumers continue to go to physical stores to shop and that the physical portion of retailers' businesses still command the largest share of their revenues by a very large margin. Despite this, many retailers still only focus on the e-commerce sales impacts of their digital marketing, and ignore the in-store sales impacts because it's “difficult to measure.” This myopic focus is costing them — a lot.

Web analytics tools or the measurements provided by the large platforms like Google and Meta have always relied on clicks to tell the story of campaign value. However, with major privacy changes in the market made by Apple and coming soon from Google, any measurement approach that relies on tracking individual consumers has been dying a death of a thousand cuts. Even measuring digital ads’ impact on e-commerce is getting a lot harder.

With the in-store portion of sales missing and the e-commerce side getting fuzzier, a brand’s approach to digital campaign measurement is essential for its future success.

A retail marketing impact benchmark using measurement of revenue driven by marketing campaigns across a wide array of leading retail brands shows why getting digital measurement right is so important:

1. Roughly two-thirds of leading digital channels’ impacts are on in-store sales — i.e., for every dollar spent on a digital campaign, only about 30 percent of its return will be found in e-commerce sales.
2. For example, approximately 36 percent of paid search campaigns’ value is in e-commerce sales, with the remaining 64 percent of the campaigns’ impacts driven in brick-and-mortar sales. These ratios are also very similar for paid social and online video.
3. Even traditional media channels such as direct mail and linear TV drive most of their impact and value in physical store sales, with approximately a 20 percent e-commerce/80 percent in-store sales impact ratio.

Consider the risks of a budget decision being made for common channels such as Facebook, Instagram, YouTube, Google, Snap, Pinterest, and TikTok. If the brand is only measuring the e-commerce traffic and sales impacts of these channels and decides to cut all investments that fall below “breakeven,” it may actually be reducing highly profitable in-store revenue without even knowing it. And most retail brands may have hundreds of campaigns running in these common channels where tactical decisions about investments are being made weekly or daily without any knowledge of in-store impacts.

Consumers don’t consume media or behave in channels, and retail marketers shouldn’t be thinking and measuring within channel silos either. “Digital transformation” isn’t only about e-commerce; rather, it's focused on educating and engaging consumers wherever they are, and meeting and matching their preferences accordingly. With this, marketing measurement needs to break out of the “digital-only” silo and become truly cross-channel. The brands getting this right will survive and thrive.

Matt Voda is the CEO of OptiMine, an industry leader in cloud-based cross-channel marketing analytics and optimization.