Physical Store vs. Virtual World: Google's Innovations

According to the Local Search Association, 90% of US revenue is still generated in physical stores, a percentage that tends to be even higher in Europe.

Data from the Politecnico tells us that in Italy the impact of online transactions on total sell-out (that is, how much is bought in e-shops compared to total sales) is just over 6%, which means that more than 9 euros out of 10 are still spent at the till of a physical store.

So what's left of e-commerce?

Sure, it has taken off in recent years, but we're still far from its supremacy, at least when it comes to revenue collected. For fashion retailers, e-commerce revenue represents between 1% and 7-8% of total turnover, on par with a physical store.

The distinctive value of e-commerce should be sought elsewhere, in brand communication: the online store is a window on the world and a litmus test for the brand's overall health, especially when we consider that purchases in the physical world are influenced by online.

According to Google Think, more than 40% of people who view a product on a website will go on to make the purchase offline.

This percentage rises further when we consider that the website is not the only online touchpoint consulted before a purchase (1.6 is the average number of online touchpoints consulted by consumers before visiting a physical store).

This shows just how fluid the two worlds are, where one is the natural continuation of the other within a Customer Journey involving two different types of behavior: ROPO (research online - purchase offline) and TOPO (try offline - purchase online).

So the physical and digital worlds feed off and reinforce each other, giving rise to what has now become a buzzword: omnichannel.

The challenge for modern e-commerce becomes finding more points of contact with the physical store (reserve in store, click&collect, loyalty programs, CRM…). Meanwhile, the challenge for traditional retailers is to be found online, to cover every touchpoint to bring consumers into the store with a targeted, precise Local Digital Marketing strategy.

By applying that mix of technology, strategy and vision that leads a brand to win. Even the big digital players have noticed the change.

Google itself is developing a series of solutions dedicated to drive to store, with the introduction of ad formats such as Showcase Shopping, Gallery Ads and Local Campaigns.

Let's briefly go over the new features of the Google Ads platform:

Gallery Ads

Users, especially mobile users, expect to find immediate information when they run a search.

These mobile ads combine search intent with visually impactful ads.

The ad appears at the top of the page and creates an image slider with a link to the site above. Clicking opens the slider vertically with a caption for each image; subsequent clicks lead to the site (showcase style).

The format, currently in beta, will be available worldwide within a few months.

Showcase Shopping Ads

These ads let you group a selection of related products and display them together to promote your brand or business. They also help users decide where to buy when they use more generic search terms, such as watches.

Local Campaigns

The main purpose of local campaigns is to achieve offline objectives. You need to enter some input regarding budget and store listings; using machine learning technology, Google automatically optimizes bids, ad placements and asset combinations. The goal is to maximize store visits and promote your locations across Google's properties and networks.

Finally, Google has at last introduced a tool that lets you measure the return in store of people who saw an ad on Google.

Store Visit Insight (in-store visits)

Already active in Italy too; a few requirements are needed to access it:

• having a Google My Business account connected to AdWords
• activating the location extension in PPC and/or local campaigns
• having multiple physical locations in the area
• having a high number of clicks on ads online and of visits to physical stores

At RetailTune, we have the technology, the strategy and the vision to help retailers tackle this new challenge.