The majority of our clients have online goals in mind when they initially speak with us about the their search marketing campaign.  But our experience with clients that have physical locations has shown that offline conversions also increase as a result of an effective online marketing campaign.  This experience is now being supported by a number of recent studies on the subject.

Recently, Yahoo commissioned a study that looked at the behaviour of 175,000 shoppers over a nine month period in 2006.  It split these people into two groups and compared the purchasing behaviour of one group who was exposed to online advertising with the other group that was not.  Its specific focus was on in-store purchases at five major retailers.

The study found that consumers exposed to the online advertising "pre-shopped" for products and then went to the physical store to purchase.  This group of "pre-shoppers" spent 41% more in offline sales (in the store) than the group not exposed to online marketing.  An interesting comment from the Yahoo exec leading this study was that "although recent research cites 89 percent of consumers shop for information about products online,  less than 7 percent of retail sales actually take place online"

Other key findings (from the report): 

 - Consumers exposed to online advertising are more engaged: Consumers exposed to display and/or search advertising viewed an average of six more pages during the period in which they were researching compared to those not exposed to advertising.

- Almost 90 percent of the incremental sales generated by online advertising take place in-store:
Consumers exposed to online advertising spent an incremental six dollars in-store for every one dollar spent online.

- Integrated search and display campaigns have maximum impact:Combined search and display ad campaigns resulted in deeper engagement for consumers exposed to those ads, leading to increased sales.

Other studies released over the past 12 months have drawn similar conclusions.  A recent Accenture report found that 67% people surveyed preferred to make purchases in physical stores.  The report also found that the majority (58%-69%) would research product features online, compare prices online before shopping in a physical store, or use the Internet to locate items online before going to a store to purchase.

A lot of people refer to offline conversions as the "last mile" for internet marketing.  It is notoriously difficult to track.  If you have a physical shop/location and a website and are trying to understand if your search marketing campaign is working, you need to look at your overall business levels and not just isolate the online conversions as there is a good chance that many of your in-store purchases were initiated online.