10 Aug 10 The Disconnect

I have recently taken an interest in getting a pair of Tom’s Shoes. If you’re not familiar with Tom’s Shoes, you buy yourself a pair of comfy slip-on shoes and for every pair purchased, Tom’s gives a pair of new shoes to a child in need (usually somewhere in the developing world). They have a tag-line of One for One. Besides the social feel-good element, I’d heard they were just fun, comfortable and attractive shoes to wear, so I wanted to learn more.

At the same time, I happened to read read Sunday’s TechCrunch post about Online2Offline commerce, and I couldn’t agree more — especially about how the two converge:

The key to O2O is that it finds consumers online and brings them into real-world stores. It is a combination of payment model and foot traffic generator for merchants (as well as a “discovery” mechanism for consumers) that creates offline purchases. It is inherently measurable, since every transaction (or reservation, for things like OpenTable) happens online. This is distinctively different from the directory model (think: Yelp, CitySearch, etc) in that the addition of payment helps quantify performance and close the loop—more on that later.

[...]

FedEx can’t deliver social experiences like restaurants, bars, Yoga, sailing, tennis lessons, or pole dancing, but Groupon does. Moreover, for your locally owned and operated Yoga studio, there is little marginal cost to add customers to a partially filled class, meaning that the business model of reselling “local” is often more lucrative than the traditional ecommerce model of buying commodity inventory low, selling it higher, and keeping the difference while managing perishable or depreciating inventory.

The important thing about companies like O2O commerce companies is that performance is readily quantifiable, which is one of the tenets of O2O commerce. Traditional ecommerce tracks conversion using things like cookies and pixels. Zappos can determine their ROI for online marketing because every completed order has “tracking code” on the confirmation page. Offline commerce doesn’t have this luxury; the bouncer at the bar isn’t examining your iPhone’s browsing history. But O2O makes this easy; because the transaction happens online, the same tools are now available to the offline world, and the whole thing is brokered via intermediaries like OpenTable or SpaFinder. This has proven to be a far more profitable and scalable model than selling advertising to local establishments; it’s entirely due to the collection of payment by the online intermediary. [emphasis mine]

I followed every bit of the online purchasing funnel I’m sure you’ve heard as I learned more about these shoes: last week I used Web search to find the site and browsed the product pages to find the style I liked best. I went back later in the week and even located a store where I could try them on. Tom’s is running a good online marketing campaign, with both paid search (on Google, apparently, but not Bing) as well as Display Ads. I know they are a Google Display Network advertiser (yay!) since I am seeing their ads across Google properties like Blogger (see below) and YouTube.

I also can tell they’re savvy about it, since they’re certainly using Google’s Remarketing product, a powerful behavioral tool. As a result, I’ve gone from seeing zero of their messages to seeing plenty of them, all since I visited the Tom’s homepage. (Remarketing, or retargeting as much of the display ad industry calls it, refers to targeting users who have previous visited a site and serving them display ads based on a predetermined cookie length).

(Incidentally, I suggest you all add Darius’ blog, Various Provocations, to your feed reader).

The key detail to remember about my online-offline interaction was that while I did revisit the Tom’s website (and in that way, Remarketing “worked,”) I did not yet become a true conversion and go through the billing info and hit the confirmation page. In this case, it wasn’t for a lack of interest (or marketing) — I just wanted the chance to try the shoes on before I committed.

Ultimately, I did in fact “convert:” I bought a pair of shoes. Buying through the brick-and-mortar merchant was attractive to me since it negated my need for shipping and tax (shipping because it was free from Nordstrom and tax because it was under $110 and shipped to my home in NYC).

But the problem is, I’m still on Tom’s Remarketing list. For all they know, I still haven’t bought any shoes and I’m still thinking about whether to go back and pull the trigger. The importance of the “Online2Offline” is defined by its disconnect. So what can be done? What can a company (as a seller, as an advertiser) do to connect the dots?

I propose one of two ideas:

1. An aggregation service capable of tracking all conversions in one place. It’s a space that companies like Blippy play in and it’s not without its faults and dangers. But plugging in to such a service would allow for a centralized place for all conversions that happen (on debit/credit cards at least). Perhaps this is the value-prop that Blippy sees in the future.
2. An offline-to-online conversion tracking system. The idea is simple, but obviously the implementation is key. What incentive does the consumer have to acknowledge the offline conversion online to close the loop? Why should I in my case, in other words, bother to go back online to Toms.com and let them know that I’ve successfully purchased my shoes (thanks in large part to their online ad spend)? Could one build a new breed of rewards system which gives consumers a reason to “report” back purchases? Talk about optimizing ad spend and reducing waste: is it really all that far off, especially in this time of the increasingly personal Web?

Tags: blippy, conversion, cookie, Google, google remarketing, nordstrom, one for one, online2offline, remarketing, techcrunch, tom's, tom's shoes