IKEA is one of Australia’s largest home retailers attracting millions of visits per month, both in store and on site.
Having always assumed a strong correlation between people visiting the website to then coming in to store, IKEA spends a good % of marketing dollars through online paid channels driving people to research on the website.
Yet without e-commerce capabilities and lack of third party ad server tracking on the website, the ongoing challenge faced is lack of insight into the true impact of online marketing activities to offline in-store sales - the ultimate measure of business success.
With IKEA being so rich in data, albeit sitting in many different forms and silos, Match Media wanted to set about changing this.
Lacking these tracking and e-commerce links that many other advertisers have, it meant that they had to come up with new and innovative solutions to get these different data points connecting and ‘talking’ to each other.
Easier said than done!
The agency set itself a two-pronged challenge:
1. To create a research model via analytics that would connect online behaviour with sales performance and give it something tangible to optimise it digital activity against.
2. Once it had built this model, it then wanted understand more about customer purchase behaviours to help shape future buying and targeting strategies.
Both with a common goal of better understanding the bigger picture around what their marketing activities were driving – from media placement, to onsite engagement, to in-store sales…..and back to media placement.
The first part of the strategy was about understanding what actions on the IKEA website correlated with in-store visitation.
Pulling data through feeds from numerous sources, they reconciled;
• Revenue and footfall by store, by department, by date
• Website engagement metrics and all online interactions by department, by location and date from Adobe Site-Catalyst
• External conditions e.g. sale conditions, weather, economic climate, key news stories, holiday periods
To develop the model, they then established a core set of principles:
• User purchase journeys are neither linear nor consistent - they are made from a diverse range of combined actions
• The research process and purchase journey length are never immediate - varying significantly by product, department and individual searching
• External factors (e.g. school holidays) impact research habits and business sales
With these principles Match Media used advanced analysis to establish which combination of online interactions resulted in business revenue then calculated the value of each. Here it used Multi-Linear-Regression (MLR) modelling, taking 70% of the data to ‘train’ the model and 30% to test – enabling it to forecast sales within a 95% accuracy.
This produced the following core business metrics, (in order of business value):
Number of products added to a ‘Shopping List’
Stock Availability checks
Visits to local store pages
Internal IKEA website searches
Number of products viewed
Understanding that these actions work in combination with each other, the agency then developed a system to combine and weight ALL of these business values which would give them one performance indicator.
It now had, for the first time, created its own bespoke (and dynamic) online conversion model to optimise their activity to! With this metric for measurement in place, the next step was taking this back to paid media. How could it better buy, target and understand their audiences?
To understand and execute this, the brand partnered with Yahoo!7 and Acxiom.
Together they devised a way of reaching IKEA customers who were likely to purchase Kitchens, or relevant products.
Firstly, it set about building its own database of people in market for kitchens in the upcoming year. This was executed through an integrated online promotion with My Kitchen Rules. Winners had to submit their home improvement priorities for the year for a chance to win a new kitchen. This allowed it to identify ‘kitchen priority’ consumers.
It then matched these ‘kitchen priority’ consumers to Acxiom data and built Kitchen Priority segment profiles and used these data segments to build lookalike customer profiles within Y!7 database and target them through advertising.
Match Media knew it had a robust target for its media buying, but wanted to understand more – if a campaign offer impacted the foot traffic and in-store sales, of consumers who were exposed to the activity online.
A tough challenge, given this had never been done before.
But with the 3 way partnership they were able to build a media first ‘close the loop’ solution.
Taking the audience that had been exposed to the advertising, it matched all of these people against the 1.2 million IKEA FAMILY loyalty database, then captured the Kitchen transactions of all of those exposed to the advertising and those who hadn’t been and for the first time ever was able to attribute kitchen sales uplifts directly to its display activity.
From creating a bespoke ‘website conversion’, year-on-year post-click tracking performance increased by the following:
• Business performance increase YOY: 91%
• Cost Per Business Performance decreased YOY: 51%
• Every measurable metric is up by at least 90% YOY and continuing to grow delivering the best business performance on record in Australia.
From the specific kitchens data matching test, campaign ROI analysis allowed IKEA to look at average basket size for exposed and non-exposed, total spends and ROI for the first time – setting benchmarks for future.
• 11% of FAMILY members exposed went to IKEA and purchased
• 26% of those transacted were in the kitchens category
• Average basket size of size of those exposed to the online advertising was 45% higher than non-exposed
• In terms of media spend to incremental sales, the campaign drove a 4.64 to 1 ROI
This case study has been used by IKEA at its global conference showing international excellence delivering exceptional business results. As well as setting the bar internationally, Match Media is continuing to use this as a springboard for future developments, having just completed the next generation, which will entail a fuse of the full IKEA FAMILY database to our online targeting.