Thursday, December 25, 2008

Google Focuses on Retail Basics - eMarketer

Google Focuses on Retail Basics - eMarketer
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Google Focuses on Retail Basics

DECEMBER 19, 2008

Online giant draws strength from brick-and-mortar sales.

Despite slowing, search advertising spending growth is predicted to stay in the double digits for the next five years. Clearly Google stands to gain from that trend, so one might expect the company to encourage retailers in their online sales along with their offline efforts. Yet John McAteer, industry director of retail at Google, told eMarketer the vast majority of its business will continue to involve supporting physical store sales.

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“If you look at any retailer, maybe 92% of the revenue is coming from the brick-and-mortar channel, so the most important platform to make successful is driving people to a store,” Mr. McAteer said. “A small percentage of retailers’ spending is online, and the majority of their advertising dollars are still being spent offline.”

US Search Advertising Spending Growth, 2007-2013 (% change)

Mr. McAteer said that marketers knew best what media worked best for them, and what their mix should be. He also said marketers would demand increasing transparency in their media and tactics.

“Within 12 months, you’re going see a lot of retailers talking about how they are measuring in-store success from their online marketing, and it will open up a whole other way of looking at ROI from your dot-com spend,” Mr. McAteer said. “As smart retailers start to figure it out, they will probably shift more of their marketing dollars online.”

It’s not surprising for Google to suggest that online ad and marketing spending will increase, but marketers themselves tend to value online tactics highly.

Search was second only to e-mail when it came to which tactic CMOs would cut last, according to a survey fielded in October 2008 by Epsilon.

Marketing Tactic that US CMOs Would Cut Last, October 2008 (% of respondents)

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