Proving Local Attribution and ROI Remains a Top Challenge for Multi-Location Brands

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Outside of budget and time/resource constraints, local marketers at big brands and multi-location retailers continue to rate attribution and ROI as their most difficult digital marketing challenge, according to Street Fight’s latest survey. That’s similar to what they said in 2017. And it mirrors what suppliers of local marketing technology and services tell us is the toughest issue facing the industry.

In mid-June, Street Fight surveyed 250 local marketing managers and decision-makers at multi-location brands about their tactics, spending, technologies, and marketing effectiveness in support of their local branches and distributors. We asked them to choose up to three of the most difficult off a list of issues affecting local advertising and marketing. The results are shown in the figure below.

Unsurprisingly, budget and resource constraints top the list, but proving ROI and attribution was cited by over a third of the respondents. Last year, we asked a roughly similar ranking-style question without offering the budget or resource options, and 40% of 2017 respondents ranked ROI/attribution first or second.

Advertising ROI can mean buying efficiency (rather than effectiveness), and attribution can mean assigning the correct value to each point of a multi-touch campaign. But when you boil it down, proving marketing effectiveness probably means driving sales in local stores or online.

The survey respondents who tagged ROI/attribution as one of their most difficult challenges did not differ from the overall base. That is, over 60% of the companies had over 1,000 employees across all their locations, with a similar mix of industries, revenues, and number of locations. They also rated budget (37%) and time/resources (34%) as top challenges. And, like the rest of the group, they rate email, SEO, direct mail, and print advertising as more effective than paid social media, online display ads, or paid search, even though over half said they were increasing spending on social media marketing.

Earlier this year, in support of its annual State of Hyperlocal report, Street Fight polled its readers who work on the supply side of the hyperlocal marketing ecosystem: those at technology companies, publishers, agencies, and data/analytics companies. They ranked online-to-offline attribution as the single biggest challenge facing the industry, as shown in the figure below. That outranked, but was probably reinforced by, industry challenges that were structural or company-oriented.

In response to that challenge, the vendors said their top R&D priority was online-to-offline (O2O) attribution, slightly outpacing company- or product-specific initiatives. Brands should be encouraged that suppliers are spending on solutions to one of their top challenges.

But it’s worth noting that the next four challenges cited by the brands don’t make solving ROI and O2O attribution any easier. Concern over customer privacy—even more than data security—makes tracking online and offline behavior more difficult, and vendor responses to European privacy standards make integrating multiple data sources that much harder. Coordinating and synchronizing technologies and analytics tools will be critical for managing and evaluating multi-touch campaigns.

There’s no magic bullet. Over a third of our brand survey respondents said they regularly collect and analyze a wide variety of customer behavior information, with point-of-sale purchase data (44%) and behavior on their local sites (43%) the top two. Only 15% said they were regularly using third-party location data, but it was one of their top new technologies to explore.

We’ve just begun to analyze correlations between tactics and marketing effectiveness, but the companies who collect location data rate their digital marketing more effective. For example, 28% of the location data collectors said their local digital marketing efforts were “very effective” at increasing conversion and sales, compared with only 18% of the overall survey base. Similarly, more of the companies that were good at conversion collected location data.

Nearly half of the very effective converters listed location data as one of their top three new technologies to investigate, and another 40% cited mobile payments and wallets. The combination of those two offers promising potential in proving ROI and identifying store traffic drivers.

Google, Facebook, and location data providers all have attribution offerings. Even Amazon appears to be dabbling, although its early efforts have been met with some skepticism. Some of these solutions work only within the supplier’s ad network, and they’re all based on modeling, usually based on phone or app usage. That’s a perfectly reasonable approach, especially given strict privacy requirements, but accurate modeling requires scale, despite Google’s recent offering for small businesses. Read the fine print in Google’s FAQ.

Meanwhile, location tracking by beacons or in-store WiFi suffers from the lack of deployment of those technologies. The same is true for mobile wallets. When we asked last year, about one-third of multi-location brands said they used codes/coupons or call-tracking to determine the effectiveness of their local marketing programs. Only 14% said they were applying multi-touch attribution techniques. Using relatively mature tactics with email and local sites, and taking advantage of the increasingly rich call-to-action and conversion features from Google My Business and Maps listings, and even Facebook pages, remain the most reliable attribution techniques for now.

Brands should experiment judiciously where they can. As shown by the survey results, they’ll effectively be early adopters, and thus gain the first-mover advantages that provides. Check out Street Fight’s webinar, sponsored by GroundTruth, on using location data to drive store traffic.

David Card is Street Fight’s director of research.

Click here for a free copy of this year’s State of Hyperlocal report.