Michael Kors

Connecting advertising dollars to physical purchases is a notoriously murky endeavor, but Facebook thinks it might have cracked the code.

The social network worked with Michael Kors on a case study that ties physical transactions back to Facebook ads. It is the first research derived from Facebook’s offline conversions ad tools . During a four-day campaign in September, the fashion brand saw a 33 percent increase in return on ad spend, a 31 percent increase in transactions and a 25 percent rise in revenue attributed to the ads.

The Michael Kors brand used a combination of Facebook ad formats to drive traffic to its physical stores, and then used Facebook’s “offline conversions” to measure the impact of the ads in each store. Offline conversions lets businesses match transaction data to Facebook’s ads reporting software to see demographic insights on those who make a purchase.

It works by matching point-of-sale data to Facebook ad campaign data using information such as a phone number or email address. The tech giant is then able to estimate the number of in-store sales driven by the Facebook ad campaign allowing the retailer to tailor and target future ad campaigns accordingly.

Michael Kors used the information to build campaigns for different customer segments based on the value, timing and frequency of their purchases.

“We’re always looking to refine our attribution methods,” said Lisa Pomerantz, Michael Kors senior vice president of global communications and marketing. “Adopting offline conversions has enabled us to better connect our in-store sales to our Facebook campaigns. As a result, we’ve gained greater visibility into our customers’ overall path to purchase.”

She said this resulted in a 5.3-times increase in return on ad spend. The brand also used offline conversions during the holiday season, to which it attributed a three-times return on ad spend for ads that ran in November and December.

When Facebook revealed the store visits tracking option in June, the idea seemed both far-fetched and prescient.

But as the mobile revolution sets in, it makes sense the advertising juggernaut would be ahead of the curve by helping advertisers in both the digital realm and in brick and mortar.

According to Facebook research, mobile devices have a growing influence on purchase decisions, including in-store sales; 49 percent of in-store purchases are influenced by digital interactions, and more than half of those interactions are on mobile devices. And although shoppers are increasingly turning to their phones for research, going completely mobile might be a bit premature: 90 percent of transactions still take place in stores.

While it might seem antithetical for Facebook to invest in the offline realm, it ultimately means more advertising dollars.

“Our goal is to drive value for our clients,” said Facebook chief operating officer Sheryl Sandberg in a recent call with investors, who added that as the diversity of advertisers grows, so does its ad products — which include “moving products off shelves online and in-stores.”

She added that Facebook is taking advantage of the range of measurement tools that the digital world enables.

“When you see platform shifts, as you are in the ad market, from more traditional forms of media to display, to now mobile, we’re seeing those metrics change, and there’s obviously a lot of conversation and a lot of concern out there about what we’re measuring,” Sandberg said. “We think the answer to all of this is to remember that what really matters is going all the way through from the ad itself to the sale, whether that sale is online or offline.”

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