Retail makes up the largest category of internet ad spending, representing about 21 percent of total revenues, or roughly $15 billion annually. Contrary to popular belief, people still prefer to shop in stores instead of online, over 90 percent of consumer retail happens in the store. That’s trillions of dollars spent in the real world versus $294 billion online. For franchises, determining the amount of online to in-store visitors can be especially difficult when there are close together locations like sub shops and fast food. then there is the problem with franchises that have very few locations and people interested in their products are forced to buy online when they might rather visit in store if they could. The development of cost-per-(store)-visit ad models (CPV) is possibly very significant because they could show where some franchises could expand and put in a real world shop.

There are some retailers whose ad spending is driven by pure-play e-tailers, meaning they are exclusively online. While this sort of model works for specialty small businesses that cannot afford a store front, for those large chain retailers that have chosen to close their doors for e-tailing only, like The Limited, will surely fail.

Who Is Buying Online Vs. IRL

Recent studies have shown that the millennial generation has the highest number of online shoppers, 40% of men and 33% of women aged 18-34 say they would ideally “buy everything online.” When broken down further it was found that Gen X spends $561 on average online, 15% more online than Gen Y who spends $489. It is difficult to lump together age groups because of the differing opinions on what age range each generation is and what they are called. Gen Z (those born after 1996) spent the highest amount of income online but it is important to note how young these individuals are, how low their income is, and that they are not necessarily spending that money on retail sites — gaming, apps, in-app, mp3, and movie purchases are top of the list.

There are a few theories about why a generation that has grown up with new technology and are more tech-savvy than previous generations would go offline for their shopping.

  • It could simply be the age they are at currently, these are adolescents who tend to hang out at malls in their spare time. A good test of this would be to reinterview in five to ten years and see if where consumer spending takes place is more reliant upon generational upbringing or age and where an individual is at in their lives.
  • Online shopping is still seen as exciting and convenient to those between 20 and 45 because during these individuals lifetimes there have been extreme, significant, and rapid tech advances.
  • Gen Z does not yet understand the value of the money they have earned, therefore they are more likely to spend time walking around a mall with stores and buying a full-price item. Whereas Gen Y is more likely to shop around online for the lowest price available, which is usually an e-tailer.

Why Is CPV So In-Demand Suddenly?

It is not a new idea that retailers want to know who is coming into their store because of an ad they saw on the internet. Offline merchants, retailers, and other service businesses have wanted data on whether their digital ads are actually bringing in real-world visits and sales, as opposed to clicks and engagement, for a long while. Now, it is becoming more easily possible and available to track these things. We talked about how Google AdWords is starting to use location tracking to determine store visits based on local internet ads.

Last time, we talked about how Google AdWords is starting to use location tracking to determine store visits based on local internet ads. This kind of progress in information and resources means that there are huge shifts coming in how advertisers can place, create, optimize, and evaluate retailers’ ads in the very near future. It’s a fair bet to say you need to keep your eyes peeled — we will.

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