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The Ripple Effects of High Gasoline Prices

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Shopping at home is rising along with gasoline prices.We’ve all heard the news reports about the effects that high gasoline prices are having on families who rely on automotive transportation for their livelihoods. It’s all well and good to promote the use of public transportation, but when your job is 25 miles away along suburban or rural roads, it’s often impractical to adjust commuting behaviors.

We’re also reading how high gas prices are affecting other aspects of the economy, such as the rising price of food items in the grocery stores due to higher transportation costs.

To this, we can now add another consequence of the high cost of petrol. Paralleling the gas price spike has been an increase in Internet activity.

Marin Software, a leading paid search manager platform for advertisers and agencies, has performed an analysis across more than $2 billion worth of paid search marketing activity. The firm established a benchmark based on the share of activity across the Google and Bing search engines, and then studied cost-per-click activity, clickthrough rates and conversion rates.

Marin evaluated the rise and fall in the volume of clicks along with the rise of gas prices over the time period January – March 2011. Voila! It found a positive correlation between rising gas prices and increased click activity.

In a similar vein, digital market intelligence firm comScore is reporting that U.S. e-commerce sales were ~$38 billion during the first quarter of the year. That’s up ~12% compared to the first quarter of 2010. And while e-commerce volume has been up over the past six quarters, this is only the second time the growth as been in double digits.

So the premise that the higher gas prices climb, the more the propensity is to shop from home and avoid the cost of driving appears to be on target. And it’s probably being helped along by the plethora of “free shipping” offers that are also out there — along with avoiding paying sales taxes.

Looking forward to the day when gasoline prices may plateau or fall back, it’ll be interesting to see if Internet activity drops back as well. Or will more people have become used to the comfort of shopping from home in their boxer shorts – so that online activity remains at an elevated level?

I have a suspicion it’ll be the latter.

More Insights on Online Display Ad Effectiveness

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Ad clickthrough rates
Clickthrough rates are only part of the story in online display advertising.
Last week, I blogged about the low level of clickthroughs on online display ads – basically a cipher at 0.09%.

In a conversation with a business colleague of mine who is with one of our healthcare client accounts, she mentioned that it’s also important to consider the branding aspects of online display advertising. The idea that people may not click through at that precise moment in time, but are favorably disposed to pay a visit later on.

This got me to looking for additional research into the matter. What I found from several advertising digital media marketing and data reporting companies – MediaMind (Eyeblaster) and comScore – confirms this impression.

An analysis by comScore of consumer clickthrough behavior covering ~140 online display ad campaigns found that only about 20% of the conversions came after clicking on a banner ad. The remaining 80% of conversions happened among those who had seen the ad but not clicked through at the time. Instead, they converted at a later date.

Other interesting points from comScore’s analysis include:

 Online display ad campaigns yielded nearly 50% improvement in advertiser website visits as measured over a 30-day period.

 Users who were exposed to the online advertising were ~38% more likely to conduct an advertiser-related “branded” keyword search in the subsequent 30-day period.

 Users who were exposed to the online advertising were ~17% more likely to make a purchase at the advertiser’s retail store.

Similarly, MediaMind’s analysis of ~100 million conversions from thousands of online ad campaigns has found concurring results – namely, that only ~20% of conversions are the result of a clickthrough, while the vast majority of the conversions happen at some point after viewing the banner ad without clicking on it at that moment.

The takeaway from all this: It’s a mistake to consider online advertising clickthrough rates in a vacuum. Because at best, it’s only a partial measure of the effectiveness of an online ad program.