During the worst months for retail in decades, Pier 1 ran a marketing test with Google that boosted sales by 2 percent. Online advertising has a strong effect on offline sales, the company found.
This story first appeared in the May 13, 2009 issue of WWD. Subscribe Today.
“We wanted to gauge what our paid search efforts were doing when we had no idea,” said Pier 1 direct marketing analyst Jeff Haddox. “We’re not an e-commerce site.”
The Fort Worth, Tex.-based purveyor of home decor, gifts and gourmet food tested furniture, a strong category for the company that has been hurt by the economy and the decline in the real estate market. Pier 1 bought generic keywords relevant to furniture such as “chair” or “couch.” When someone searched on the terms, an ad would come up along the lines of, “Find great deals on couches at Pier 1.”
The ads ran Sept. 21 to Oct. 11, and Pier 1 collected data from Aug 18 through Oct. 26. The ads ran in 59 test markets, but not in 93 control markets. (Google helped Pier 1 find test markets and control markets that were similar in sales, store size, and other attributes.) Then the company compared furniture sales in the test versus the control markets during the period, and found the areas with the paid search ads had sales 2 percent higher than the locations that did not.
The return on investment was 300 percent, meaning that for every dollar Pier 1 spent in marketing, it received $3 in sales.
Costs are lower online, and ads are more targeted, said John McAteer, Google’s director of retail.
Pier 1 plans to continue with more tests over the summer to get a clear idea of how different mediums affect brick-and-mortar stores, but it won’t stop print advertising.
“We feel it’s important to have a mix of all kinds of advertising,” said Kelly Keenum, Pier 1 public relations manager. “We feel it’s important to be present in as many places as possible also while being cognizant of the money we’re spending.”