Online Advertising is worth an average of 41% increased in store sales according to a Press Release  - Yahoo! and comScore Study Finds Online Consumers Who Pre-Shop on the Web Spend More In-Store which is pretty interesting because you could do a lot with that type of information.

"…The study, which examined the impact of search and display advertising on in-store sales for five major retailers, showed that consumers exposed to online advertising tend to research or ‘pre-shop’ online prior to purchase, and this behavior ultimately leads to increased in-store sales. These highly-engaged ‘pre-shoppers’ spend an average of 41 percent more in-store when compared to consumers not exposed to online advertising. "

"…-Almost 90 percent of the incremental sales generated by online advertising take place in-store: Consumers exposed to online advertising spent an incremental six dollars in-store for every one dollar spent online. "

"…“Although recent research cites 89 percent* of consumers shop for information about products online,  less than 7 percent** of retail sales actually take place online,” said Amy Vener, Senior Director of Retail Category at Yahoo! "

So…let me get this straight….if I spend 1000 on online advertising (PPC, Banner Ads, etc) those customers it will generate mostly offline - in store sales (91%) and those customers will spend 6 times more than if they were not exposed to the advertising.

• Let's say the average Computer Hardware purchase is 547.47 (2005 numbers)
• Let's say we spent 1000 dollars in online advertising and 91% (910 dollars) produced in store sales of 5460.00 and online sales of 9% (90 dollars) of 560.00 (assuming the same ration of 1 dollar spent produces 6 bucks of revenue).
• Total Generated Income 6020 - 1000 = $5020.00
• The In store Store revenue showed a big gain but the Online Channel showed a LOSS of 1000-560 = 440.00

So, if we did not know, for a fact, given the Comscore study that we generated 6000 (which we did not track against the Online Channel because it did not happen online) we'd be forced to conclude we're losing money on Paid Advertising.

And that would be the case if your store was ENTIRELY ONLINE!!!!!!!!!!!    That's right …. if you had an online business and no brick and  mortar store - you'd be better off if you could make SEO work (if what your selling online can easily be purchased In Store / Offline instead).

But if you are a retailer with offline stores - chances are, your Online Advertising is increasing your Offline Sales by 600%.

Wow!  

I admit, my thinking here is a little rough - but think of the implications of what I put out here.  Your spending online is far more beneficial if you can go into the store and buy that thing.   That means that businesses that are purely online like the Architectural House Plans (people the The House Designers, EPlans, for example) who have no offline ….. are losing money on PPC because there's no where someone can go and shop for their house plans in a store (unless they were smarter and affiliated themselves with Sears or Home Depot and Let people search for Home Plans in the actual House Wares Stores… then the PPC would make sense!!!!!!).

Ok, the larger sites like Eplans.com are into so many businesses via Hanley Wood, they'd still make money - but a pure internet business that was smaller would be at a big disadvantage spending heavily on PPC.

I was not able to find statistics on how much of the online spend is broken down by company size, but I wish I could.

At any rate, while I don't have the whole story -  it's interesting to think about what strategies work based on your company size, audience and if you have brick and mortar outlets to sell your products/services.