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A recent study (A comScore study sponsored by Overture, a division of Yahoo!,) showed that for one product market, the consumer electronics market, over 90% of people searched for product information online, but then bought offline: They either picked up the phone or visited a local ”bricks & mortar” store.

In fact, for most products and even many services, most people, 60% to 90%, search online, but buy offline.

So what does that mean?

Many people search online then pick up the phone and call. That’s good, because conversion rates are much higher, five to ten times higher, when people call as they are usually very far along in the buying cycle (See Pay Per Call below for information on the related Pay-per-call advertising model that should help take advantage of these higher conversion rates).

Regardless of whether they pick up the phone or go to a physical location it’s important that you begin to implement steps to measure offline sales that originated from online sources (such as from search engines, partner sites, etc) to a reasonable degree.

If you don’t learn how to measure offline sales and your competition does, then you may be at a severe disadvantage. If your competition knows its true conversion rate, including both online and offline sales, they’ll be willing to spend greater dollars than you in their marketing campaigns. For example they’ll likely spend more on their search engines ads (such as Google Adwords or Overture/Yahoo Search Marketing Pay-per click listings) to keep their ads in top positions. In a competitive market, this can have the effect of pushing your ads into lower positions in the search results greatly reducing the amount of clicks throughs to your web site. You competitors could even knock your ads off the radar altogether!

For example, let’s says you do a decent job of measuring the leads and sales that come directly from your web site (through inquiry forms, email, signups, or online sales) and you’ve determined that your total sales conversion rate is 1% from your Search Engine ads (that is 1% of the total visitors to your web site from your search engine ads eventually turns into a sale).

In this example, if you get an average of 1,000 visitors to the site each month from search engine ads that means you make an average of 10 sales per month from those ads (1,000 visitors at a 1% conversion rate equals 10 sales). If each new customer is worth say $500 in gross profit (either in one sale or on average over a year for example), you make about $5,000 a month on average from your search engine ads. So you might be willing to spend as much as $2,500 a month or more on your search engine ads if needed in order to make $5,000 in gross profit.

Now let’s your top five competitors do a reasonable job of measuring both their online and their offline sales resulting from their search engine ads. That means they know the “real” conversion rate resulting from both their online and offline sales.

As we mentioned, the offline conversion rate is five to ten times greater than the online conversion rate. In other words, it’s much more likely that people will buy if they pick up the phone and call you or stop into your location. So it’s reasonable to assume that “real” conversion rate is 5% to 10%. Let’s be conservative and assume the real conversion rate is 5%.

We’ll assume for simplicity that your competitors have determined that a new customer is worth about the same to them as a new customer is worth to you, about $500 in gross profit. Then, on average, for every 1,000 visitors that come to their web site from search engine ads they know they make 50 sales (1,000 visitors at a 5% conversion rate = 50 sales).  The number of sales will likely be even higher because as we mentioned above 60% to 90% of people actually buy offline, but for simplicity we’ll use 50 sales. Again, because you haven’t been measuring offline sales you only know that you make 10 sales for every 1,000 visitors from your search engine ads.

This means, in our example, that your competitors know they make $25,000 in gross profit compared to the $5,000 that you’re aware of. That’s huge! They might be willing to spend $10,000 to $15,000 a month on search engine ads compared to the $2,500 a month you’re willing to spend.

In a competitive marketplace, your competitors who know their “real” conversion rates will be willing to spend dramatically more on their search engine advertising than you. That could push your ads far enough down in position that your sales will be reduced dramatically.

Being unaware of your “real” conversion rate while your competitors know their real conversion rates can have a similar affect on all your marketing efforts, such as promotion and online advertising, email campaigns, search engine optimization, even traditional advertising intended to drive people to your web site.

I think you can see how important it is to learn how to measure the offline sales resulting from your online marketing. It can be difficult to do but there are some effective methods we can employ to help.

In the previous article, “Most people search online, but buy offline”, we mentioned that most people search for information online, but then by offline. Either they pick up the phone or visit a local ”bricks & mortar” facility.

When they do pick up the phone studies show the conversion rates are much higher, five to ten times higher.

There’s a new type of search engine advertising model that you’ll be hearing about over the coming months developed to take advantage of the higher conversion rates, Pay-Per-Call ads. It promises very high returns for some business. And you don’t even have to have a web site.

Essentially Pay-Per-Call ads are very much like the Pay-per-click ads you’ve probably become used to seeing in search engine results, however instead of clicking through to a web site the searcher picks up the phone. Just like Pay-per-click ads, you don’t pay until the searcher calls.

Another advantage to Pay-per-call advertising is the inherent lead tracking built into the systems. All the phone calls from Pay-per-call ads are tracked by keyword and the specific ad, so we should have a much easier time determining what ads and keywords are paying off (see the pervious article “Most people search online, but buy offline” for more on the importance of measuring offline sales).

Pay-per-call advertising had its beginnings last September. Until now Pay-per–call ads have only been available through the relatively small FindWhat search engine advertising network. In addition, some of the online yellow pages and Amazon’s A9 search engine (see below for more about A9 and Local Search) have offered a similar service called “Click to Call” where the searcher clicks a link in the ad which triggers a call to the advertiser (during business hours) who then either speaks to the searcher via a normal pone call or via a PC microphone.

We expect Pay-per-call advertising to start growing rapidly now as giant AOL released it’s version of Pay-Per-Call advertising on April 15th. Most of the other major search engines and directories will be bringing out their versions over the coming months.

In the last newsletter I mentioned that Local Search has been evolving for all the major search engines, as well as some new players. If you are concerned with local or regional markets, local search is quickly becoming important. This includes small local business such as auto body repair or restaurants for example, as well as larger regional or national companies that focus on local markets such as consumer electronics chains, movie rental chains, etc, 

It’s important because as we pointed out most people search online, but buy offline (see Most people search online, but buy offline above). When someone searches for a particular brand of TV, a pizza, a plumber, or to buy a car, for example, many of them will want to know “where can I find it locally?”

What is Local Search? Basically a search engine tries to offer up what it thinks are relevant results in your local area either at your request or for searches it believes are local in nature. Search on “pizza”, for example and Google may display a link near the top of the results asking if you’d like to see results for your search in your area.

Local search is evolving and becoming important for both the “natural” or conventional search results as well as the Sponsored Listings (Pay-per-Click ads)

Below are some of the features being offered with the various local search listings. I think you’ll see there are a lot of benefits to the searcher and this is why we think the use of Local Search will likely grow very fast:

• Some Local Search Features
• Ratings & reviews
• Integrated maps with contact info
• Business detail pages
• Click to Call and Pay-per-call (see article above)
• Links to web sites/pages that mention the business
• Add images of your business and products
• Satellite images

In this newsletter I’ll give you some examples that you can try on some of the major search engines so you get a flavor for how Local Search works.

AOL
If you’re a subscriber or a registered user, in some cases AOL will suggest local content automatically because they know where you are.

Go to AOL search, http://search.aol.com, and find and click on the link for Local. It should be just under the search box (AOL subscribers will get local results in a different manner).

You should see a new drop down box appear that may have a city, state listed in it or it may say something like “change location” If needed click on it to set your location.

Try a search such as “pizza”. You’ should see a listing of some pizzerias, etc in that city.

Pay-per-call ads should be seen here (as well as in the main web search results) as they grow.

Some features to check out -

• Click on one of the listings to see the available details for that business.
• Ratings and, if you’re a subscriber,  “add your rating”
• Map & directions
• Enhanced listings with your business information and web site link are available.

Amazon’s A9
Yes, Amazon is in the search engine business now. Go to its A9 search engine, http://a9.com, and try a search such as “pizza”.

You should multiple columns of results. Look for the Yellow Pages Results column. You may see a Mapquest map with locations numbered on the map in this column. Click on one to see more business details .

Some features to check out

• Click to call – People can click to initialize a phone call via a normal phone or over the internet.
• Map & Directions.
• Share images – You can add images to the business detail page such as products in action, with captions, people enjoying a pizza in your restaurant, etc.

Google
There a few ways to see local results on Google.

First, from the main Google home page, http://www.google.com, enter a search, such as “pizza” along with a either a city name and state or zip code. Relevant local business listings will appear at the top of the page next to a Google Local compass icon. Click on the link that says something similar to “Local results for pizza near CITY/ZIP” link.

You can also start on the Google home page click by clicking the Local link above the search box or go directly to the Google Local Search homepage at http://local.google.com

On the Local Search results page you may see some Sponsored Listings (Pay-per-click ads) near the top of the pages, some of which may themselves be local search ads being served by the Google Pay-per-click Adwords advertising network. When we set up an Adwords advertising campaign we can tell Google to only serve the ads to people from specific cites or regions or a specific distance from a location. Displaying local pay-per-click ads should be very accurate in the Local Search results as the searcher has input the location they are interested in. As we’ve mentioned before, if the searcher does not enter a location Google may try to determine where the searcher is from the address of the computer they are using (the IP address). Google is getting much better at determining where a searcher is located even if they don’t enter a location in the search, about 85% accurate, according to them.

Some features to check out

• Push-pin Map - Below the sponsored results, if there are any, you should see a listing of local results and a map with “Push-pins”. You can click on a push-pin to see contact information for the business and get directions. To “zoom in“ and narrow your search area, click a distance value in the top right corner of the page. The map will resize and the push-pins will spread out.
• Satellite Images – Just below the map you should “Map – Satellite” links. Click on the Satellite link and if it’s available and you’ll see a satellite image of the area. You can drag the image around, zoom in or out and also overlay driving directions on the image. I don’t see much value in these satellite images, but I expect the feature will evolve and possibly become more useful some day.
• Business Detail Page - In the listing of local results click on one of the businesses names (They should be a hyperlinks). You’ll be brought to a detail page for the business.  At the top of the page you’ll see the contact information again with another link to the directions. You should also see a much more detailed map of the location (with another link to see a satellite image if available).
• References – Below the contact information and map, Google will display results of a search on the business. The results could include pages from your web site as well as other pages that mention the business, both good and bad!!