Proof that Paid Search Equals More Sales

Online-to-store study shows that search advertising like Google AdWords does drive customers to buy more

Written by Marketing Staff

Google Canada is touting the results of a study conducted with Hudson’s Bay Company as proof that paid search really works for retailers. According to its findings, for every $1 spent in online advertising, HBC saw $14.40 in in-store sales.

Last fall, HBC and Google conducted the first-ever online-to-store study in Canada. Google has conducted 50 such studies in the U.S., analyzing what it calls the ROPO effect: consumers who research online and purchase offline.

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To measure the impact of HBC’s search marketing campaigns on in-store sales, the company identified 19 regional markets and selected nine as control groups and 10 as test groups. HBC established a baseline of sales activity in each market for the previous two years. Then, during a three-week period, the test markets were saturated with Google AdWords ads across two product categories: women’s apparel and beauty. Same-store sales were then compared across all markets.

The result was a 2.6% lift in same-store sales across all categories, not just women’s apparel and beauty.

“What we’re observing here is a bit of a halo effect,” said Rafe Petkovic, Google’s head of industry, retail. “Consumers are coming into the store and they’re not just buying in categories [that were advertised]. That supports the notion that search advertising is a really powerful medium to drive customers who are prepared to spend money on lots of different things, not just the [items] they were searching for.”

In the U.S. Online-to-Store studies, retailers typically see increases of between 1.6% and 2% in overall sales. “The result from Hudson’s Bay was quite impressive in comparison to what we’ve seen in the U.S.,” said Petkovic. “Per capita, we find that Canadians search [online] more than their U.S. counterparts. They’re actually going into stores more often and completing those purchases there.”

Christina Callas, HBC’s senior vice-president of e-commerce and digital marketing, said the study proves that Google paid search is not only an effective online acquisition vehicle, but also an important in-store driver.

“We need to be there where our customers are looking and research the products we sell,” she said in a statement. “As a marketing, paid search is one of the most qualified digital marketing buys you can make.”

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