Researching online before buying offline


Very intersting article read in the Sydney Morning Herald

 
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Consumers increasingly are researching online before buying offline, a trend known as ROBO, which has prompted retailers to change their advertising strategies. “This is not about e-commerce,” said John Murray, director of digital at Mitchell Communication Group. “This is all about the changes that are taking place in the consideration process. These days the visit to the store might be the last piece of the puzzle 

By Julian Lee, September 3, 2009, The Sydney Morning Herald

 

Consumers increasingly are researching online before buying offline, a trend known as ROBO, which has prompted retailers to change their advertising strategies. “This is not about e-commerce,” said John Murray, director of digital at Mitchell Communication Group. “This is all about the changes that are taking place in the consideration process. These days the visit to the store might be the last piece of the puzzle

 

ROBOs changing retail rules of engagement

JULIAN LEE

September 3, 2009

THE increasing number of people who are researching online before buying offline – known as ROBOs – is fuelling a mini-boom in retailers advertising online, with search marketing rather than e-commerce leading the charge.

Media buyers report increased activity among retail clients who are realising that the traditional rules of engagement with shoppers have changed.

Half of Australia’s shoppers are going online before they go into a shop, says a study by Google and the Australian Centre for Retail Studies, which also found that the number of queries for key categories was rising.

Google’s marketing manager for retail and consumer goods, Ross McDonald, said that in the year to July the number of queries made through Google across the retail category had grown by up to 30 per cent on the previous period.

But the deviations in the path to buying are driving online sceptics such as Harvey Norman and David Jones to revisit the internet.

A recent study by the consultants McKinsey found that unlike the old model where shoppers began their shopping journey being aware of a big number of brands, which reduced as they proceeded (the funnel method), it found the number of brands grew as soon as people went online and gathered information.

”Not all is lost for brands excluded from this first stage,” the authors write. ”Contrary to the funnel metaphor, the number of brands under consideration during the active evaluation phase may now actually expand rather than narrow as consumers seek information and shop a category.”

McKinsey found that in cars for example, another 2.2 brands were added to a potential buyer’s consideration list of 3.8. ”Brands already under consideration can no longer take that status for granted,” they say.

Findings such as these explain why the search category is expected to grow significantly in the next 12 months.

John Murray, the director of digital at Mitchell Communication Group, said: ”This is not about e-commerce. This is all about the changes that are taking place in the consideration process. These days the visit to the store might be the last piece of the puzzle.”

Mr Murray said he expected retail to be a ”major driver” of growth in search advertising in the next year, perhaps even reaching the same levels as mainstream advertising.

Retailers have been among the slowest to adopt online advertising, despite the sector’s accounting for a fifth of the $13 billion spent in the main media advertising market.

In the past financial year, the retail sector spent $15 million on general display ads on websites, representing only 3.16 per cent of that market, according to figures from PricewaterhouseCoopers.

Frost & Sullivan reports that last year retailers made up 8.3 per cent of search advertising, compared with 26 per cent by travel and accommodation, 17 per cent by media and entertainment, and 13 per cent by the banking sector.

Paul Fisher, chief executive of the Interactive Advertising Bureau, said the experience of some retailers in failed e-commerce ventures had made them reticent about online advertising. David Jones closed its online shopping store in 2003, having written off debts of up to $15 million on the venture. Yet its recent appointment of a head of digital marketing and e-tail signalled it was re-evaluating the medium.

Marcelo Silva, general manager of Group M Search, also reported an increase in activity. ”It’s good to see the likes of Harvey Norman and Rebel Sport among others dipping their toe in the water,” he said. ”There’s a nice growth [rate] and with the level of education we will see search taking a greater share of the pie [this year].”

Rob Marston, director of search at media agency Starcom, expects mobile phones to fuel the growth. He said location-based technology that allowed retailers to promote the handsets of consumers who had already registered an interest in that store or category would be key. Google is already reporting significant growth in searches made on mobile phones, particularly since the introduction of iPhones. ”It’s the missing link, especially for the growing number of ROBOs,” Mr Marston said.

Mr McDonald of Google said retailers should take advantage of the fact that when people were looking for information online they were open to messages from advertisers. ”Our own research accords with the McKinsey findings. If you take the volume increases in search queries plus the fact that our own research shows that half of Australians are researching online before purchasing, we believe that that second phase in the path to purchase – the active evaluation phase – is crucial.”

Google was putting on more sales staff to accommodate the growth, he said.

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19 thoughts on “Researching online before buying offline

  1. A good article David. let me add some questions to it.

    The whole concept of my small community http://www.x-power.be is to review games and accessories. That way consumers know which games are worth buying. But that only works if all the game publishers are willing to give us free samples. This is no problem for us, but I can image that new blogs experience difficulties with trying to abtain new research material.

    Another problem I experience in my country (Belgium) is that there are a few well known websites (like 9lives.be and Gunk) who absorpt all the advertising money. Belgium is already a small country so most sales persons don’t have a big budget to promote new products. Therefore the smaller sites don’t get the chance to grow.

    So I’m not surprised that a couple of weeks ago an internal email of those big communities leaked out. In that mail the manager was angry at a journalist who only gave a new game a 7/10 score. Which made their client angry as they just hired 10.000 euro’s of advertising space on their site.

    So maybe this brings in another discussion about that research. If the information online has been altered by the advertisers or sponsors can they really be used as a resource for consumers? And when do you know when the info is correct?

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