Online-to-Offline: Is Local’s Holy Grail Within Reach?
Facebook just had another mic-drop moment. As I predicted in December, it will now track spatial patterns of mobile users. Meant to measure local foot traffic influenced by ads, it could be the most meaningful move to date in reaching local’s holy grail: offline attribution.
To put this in perspective, Facebook’s previous attribution methodology resembled what many in the industry do: associate lifts in local purchase behavior with ad-exposed control groups. This involves things like third-party purchase data, probabilistically tied to its own user data.
That’s accurate to a certain degree but pales to Facebook’s real potential in tracking a more direct source: users’ actual spatial and transactional behavior. Here, Facebook has the benefit of 1.3 billion signed-in users, bouncing around the physical world — an attribution gold mine.
So why didn’t Facebook do this sooner? One word: privacy. Facebook is walking a fine line between massive opportunities like this, and maintaining user trust. As a company whose value (user reach, engagement) is tied so closely to trust, it’s not something to throw around lightly.
As for the “why now?” Facebook is making the risky move to rip off the band aid to accelerate the market’s evolution, as it’s done with things like spinning off Messenger. And now seems to be a time when local offline commerce — longtime stepchild of the ad world — is getting due credit.
Though many of us in the analyst corps have echoed it for years, there’s now broader attention to the scale of offline commerce. You know the line: 93 percent of U.S. consumer spending, to the tune of $7 trillion, still happens offline. But it’s largely driven by online/mobile engagement.
Thinking about the broader marketplace’s arrival to this online-to-offline (O2O) party inspired a recent brainstorming session on clever attribution methodologies. What I came up with isn’t an exhaustive list, but includes some notable or unsung examples in the art of connecting the dots.
One under-recognized method I’ve always liked is what Square has done with email addresses. Because it’s collecting them through the natural and customer-centric process of sending a digital receipt (less paper), it teed up email as an identifying link between online and offline worlds.
From there, it launched email marketing for SMBs. Any campaign that drives an in-store purchase can be attributed, given that the credit card is tied back to an email address and click stream. This is somewhat narrow in its application but a nice example of clever O2O thinking.
Speaking of payments, an O2O “sleeper” is card linked offers. Empyr‘s Jon Carder reminds us there’s no friction to redeem physical offers — the achilles heel of traditional coupons. It all happens in the background when offers are tied to a credit card. And pay-per-sale is the latest evolution.
Another clever example is Marchex. Just as Square uses email address as an identity layer, Marchex uses phone numbers. From tracking a nine-figure sum of annual calls, it attributes things like ad impressions to eventual credit card purchases, using the phone number to tie it all together.
Then there’s Pinterest, another sleeper in the O2O game. Its opportunity is to link high-intent pinning activity to offline retail conversions. To connect the dots, it can track users’ post-pinning spatial behavior (like Facebook), when they show up at or near relevant stores.
But beyond attribution, the real play will be sort of real-world retargeting. Working with retailers to obtain live inventory data, the possibilities start to stack up for beacon-delivered content whenever someone is nearby an item (or competing item) they previously pinned.
And of course there’s Google, whose O2O work is well known and could fill an entire column. The same can be said for xAd, Placed, PlaceIQ and others I don’t mean to omit. These are all major forces, advanced by recent moves like Google Map ads, and xAd’s new ComScore partnership.
Back to Facebook, its latest move could be the most impactful. And it will go beyond spatial tracking to the store threshold. It could really start to close the attribution loop with conversion tracking through related efforts like payments, conversational commerce, and in-store beacons.
The outcome could be the biggest step towards local ad attribution we’ve seen yet. And Facebook’s sheer scale will force more advertisers’ hands — especially those still not doing more to measure activity where $7 trillion in U.S. consumer spending happens.
Michael Boland is chief analyst and vice president of content at BIA/Kelsey. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.