One of the biggest challenges in a world where digital advertising swallows up a greater percentage of retail ad budgets each year is how in-store traffic, and subsequent purchases, can be reliably attributed to online activity and digital advertising.
After all, businesses both small and large value the promise of accountability that has been implicit in digital advertising (think: pay-per-click.) Pay for performance based digital ad products are only possible with some form of attribution further down funnel. With in-store purchases, the attribution problem has yet to be solved.
Enter beacons, the $5 piece of technology being talked about as the solution to this 21st century retail problem.
Here at CallRail we’re acutely familiar with the challenge of attributing offline customer behavior to online activity and digital advertising. Our call tracking software makes it possible for marketers to attribute phone calls to online advertising campaigns. Unfortunately for digital marketers, the attribution promise offered by these new in-store beacons is not as straightforward (or as realistic) as some evangelists might claim. Despite this beacon adoption is increasing, but for different reasons.
2015 Was a Banner Year for Beacons
As of May 2015, the shopping mall giant Simon Property Group had installed roughly 4,800 beacons across nearly 200 malls and shopping plazas nationwide. As beacon use grows and retailers receive more data about customer preferences and purchases, they can then send targeted coupons to generate higher customer satisfaction and more sales, as Business Insider notes.
BI estimates that 2015 beacon-influenced in-store sales will reach $4.1 billion for the top 100 U.S. retailers, and $44.1 billion in 2016 due to increased shopper activity. These numbers sound great. The question I’m curious about as a digital marketer, however, is how accurate beacons are at measuring the real driver of the purchase, including online activity, so retailers can invest in advertising campaigns more wisely.
If beacons are going to live up to the attribution claims by companies and fans, then they must help retailers allocate their ad budgets effectively. Sure, beacons deliver the retailer more data about consumer shopping behavior, but not enough data that they can draw strong conclusions regarding influence and sales attribution.
Attribution Promise Currently Falls Short
We know that beacons can easily integrate with app activity, but how many shoppers actively use store apps when they are not in the store to search for deals or find items? Beacons can’t connect the quick online search done on a desktop computer at work with the subsequent in-store purchase, for example.
Beacon service providers have not been able to address this. Steve Cheney of Estimote suggested here that beacons could help solve the attribution loop problem and allow businesses to credit the proper online sales drivers. It would be great if a beacon could automatically tell you that a shopper arrived after searching on Yelp or because you sent a special SMS coupon, but the technology for clear and causal attribution isn’t really there yet. Cheney notes that the two dominant mobile platforms, made by Apple and Google, haven’t built in support for beacons at the OS level.
If mobile OSes build in support for beacons, there’s hope for the attribution promise of beacons. But that’s a big IF. Even if that happens there’s the issue of connecting multi-device usage along the path to purchase.
Connecting the Dots
Online to offline attribution is not the puzzle it once was, but the successful attribution of online activity is complicated by the rise in multi-device browsing. Beacons can connect some of those dots in a limited device environment. Only if the shopper first researches items on their smartphone or tablet, then takes that device into the store, has the proper app installed that can communicate with an in-store beacon, and finally has bluetooth enabled on the device can a beacon reliably attribute a purchase to online activity. That’s a lot of ducks to get in a row.
Accurately linking offline purchases to online activity requires massive amounts of consumer data and the time, tools, and personnel to perform data analysis. Desktop, laptop, and mobile device behaviors can all be integrated to create a consumer profile that shows where shoppers engage most and how they engage. Paired with in-store sales data from beacons, these figures can give retailers a good idea of what channels the consumer is most active in and what channels tend to drive sales. That’s a lot more work than looking at beacon data, but it ensures the sort of accuracy needed to set budgets – even if it’s not what beacon advocates want to hear.
While beacons themselves are low cost and seemingly simple to set up, the hard work of analyzing their attribution is not a given. It’s not easy and it does not come cheap. Local businesses that got a few beacons on the promises of attribution and customer engagement might be displeased to learn that the technology really isn’t as out of the box as it seemed.
Then There’s the Privacy Concerns
Aside from the attribution shortcoming, some consumers have privacy concerns about the technology associated with beacons and the general concept of retail tracking.
OpinionLab asked 1,000 consumers about in-store tracking and found that 43 percent of shoppers claimed they would be less likely to shop at a favorite store if the retailer implemented a tracking program. 8 of 10 individuals did not want retailers to track their in-store movements with a smartphone. Recently the FTC has begun to take privacy concerns about retail tracking more seriously.
While beacons do not track shoppers’ movement around stores, lack of clarity about their benefit can lead to confusion and distrust among busy consumers. The average shopper isn’t going to parse the specifics of this technology while trying to get through their grocery list or buy holiday gifts.
Beacons hold quite a bit of promise for digital marketers but that promise is a long way away from being fulfilled.