Online Gets Real - online companies such as Prio help retailers garner customers

Brandweek, Nov 8, 1999 by Steven Vonder Haar

In the latest Web twist, a host of new tools helps bring online traffic to offline stores.

Mrs. Field's Cookies is whipping up a recipe for bringing hungry shoppers into its mall stores. Starting this month, the company is testing an online discount promotion program in partnership with startup Prio that aims to do more than draw shoppers to its Web site. The company also wants to see whether online advertising can be used to blast users away from their computers and into the company's 500 cookie shops nationwide.

"It has always been hard to measure just how Web advertising drives people into stores," says Jennifer Jobin, general manager of catalog sales for Mrs. Field's Cookies, Salt Lake City. "Now, we're starting to see tools that will help us find out."

In a Web world fixated with cross-media promotions that use traditional media channels to boost both the brand and consumer usage of online sites, some marketers like Jobin are dabbling to see whether the marketing flow can be reversed. In short, can online consumers be pushed into real-world stores?

The answer to the question holds enormous implications for the online advertising business. If the Web can carve itself a role in driving more feet into brick-and-mortar stores, the online industry puts itself in position to grab a piece of traditional-advertising budgets normally reserved for newspapers, magazines and Yellow Page directories.

A host of companies in addition to Prio is entering the online-to-real-world marketing arena. Palo Alto, Calif.-based Vicinity Corp., for instance, last month launched a wireless two-way information service that can retrieve lists of offline merchants by category, and show consumers how to get to those stores; and richer consumer-profiling and targeting services are emerging from the likes of San Francisco-based Personify and CMGI's Engage Technologies in Andover, Mass.

Ashok Narasimhan, chairman and CEO of Mountain View, Calif.-based Prio, notes that "the Internet can be your friend or foe. It just depends on how you deal with it. You can allow yourself to be cannibalized, or you can use it as a way to enhance your existing business."

Prio, located at prio.net, one of the first companies that aims to connect the dots between online promotions and real-world sales, makes it possible for retailers to offer discounts tailored to specific consumers online. Banner ads for in-store discounts can be shown by Prio to audiences based on the viewer's profile or geographic location. The company then collects credit-card information for later use from those who respond to the online promotion--which typically is a percentage discount on in-store merchandise. (For shoppers who already have responded to a prior Prio promotion, the service can pull accessible credit-card information from its database of registered users.) Shoppers who have responded to the Prio-enabled ad then go into the merchant's real-world storefront--buying products at their full, in-store prices. At the end of each sales day, Prio searches the store's sales log, looking for credit-card numbers of shoppers who have seen and responded to the retailer's ad online. When Prio finds a match, it applies the discount associated with the online promotion to the shopper's credit-card account. The discount appears as a rebate on the shopper's monthly credit-card billing statement.

Prio, which began marketing its service to partner retailers in earnest this fall, now has nearly 2,000 merchants nationwide; it is adding new stores at a rate of 150 weekly, Narasimhan says. So far, a dollar spent on a Prio-delivered program generates $20 to $30 worth of sales. That's about triple the performance of typical mainstream direct-marketing campaigns, according to Narasimhan, citing surveys conducted by the New York-based Direct Marketing Association.

While the early return-on-investment numbers may seem impressive, the more significant trend is that Prio is providing merchants a way to simply and effectively track the impact that online advertising has on brick-and-mortar sales. For much of the Web's history, consumers have been using the Internet to research purchase decisions. And while the online venue has helped drive new purchases of a range of items--from automobiles to consumer electronics--it has been difficult to quantify the Web's impact.

"If you separate the commerce that happens on the Web from the commerce that is enabled by the Web, the second would be much larger," asserts Charles Conn, CEO of local e-commerce and content service Ticketmaster Online-CitySearch. "Just because it's difficult to measure doesn't mean it's not happening."

Adds Seema Williams, an analyst with Forrester Research, Cambridge, Mass., of efforts to promote real-world sales: "The online industry is not in a nascent stage of using these types of applications. But it is in a nascent stage of understanding the impact of a multi-channel marketing strategy that includes the Internet."

Thus retailers and some of the world's biggest brands continue to experiment with new ways to move beyond the banner in using interactive promotional techniques to corral prospective buyers and deliver them to brick-and-mortar stores. Take the case of a wireless two-way information service launched last month by Vicinity Corp., a one-time maker of online maps that has expanded its charter to include a broad array of services that helps companies shuttle consumers from a Web site to the storefront. The company has rolled out a service designed for handheld Palm VII devices that allows users to retrieve lists of nearby merchants selling items in selected categories. Tap in "hamburgers," for instance, and see the address and driving directions to the nearest McDonald's. Enter a query on "coffee" and you're pointed in the direction of the nearest Starbucks. The system uses geographical location systems integrated in wireless communications networks to determine the user's position. Databases then are used to serve up relevant information based on the user's query and current location.