Overstock.com sees traffic climb with a major offline advertising campaign

The dot-com TV ad blitz of a few years ago that cost big but delivered little soured Internet retailers on broadcast advertising, but times are changing. Among the pure-play Internet retailers to test the waters with a national TV and radio campaign in the past few months is Overstock.com.

Since Overstock’s “Have you discovered the Big O?” broadcast campaign launched in August, traffic is up. On Aug. 8, prior to the campaign, Overstock ranked 14th in its category with 1.18% of the day`s total online visits to department stores, according to data from Internet traffic measurement firm Hitwise. On Nov. 17, after the campaign had been running about nine weeks, Overstock had climbed to a sixth-place ranking just behind Sears.com, with a traffic share of 3.67% for its category.

The broadcast campaign is estimated to be costing Overstock in the range of high single-digit millions. It’s a departure from last year`s ad spending, when all but about $50,000 of Overstock’s $8 million to $9 million marketing budget went to online, performance-based advertising.

With the broadcast campaign, “We’ve made 40 million Americans aware of who we are in the past few months,” says CEO Patrick Byrne. “It’s hard to do that just online.”

That realization helped reshape Overstock’s view on pricey offline brand advertising, something Byrne had previously opposed. Also weighing in the decision was the fact that in comparison to three years ago, few online retailers are doing TV advertising, meaning that consumers more easily remember those who do. But more than anything, according to Byrne the move to broadcast advertising and the bigger play for broader public awareness represents a preemptive strike against competitors.

“The Nordstrom space is taken in the online public’s consciousness by Amazon. You`ve got Bluefly in apparel, Hotels and Expedia in the travel space, and eBay doing its own thing. There is a big open space for online discount shopping,” he says. “We thought there was the opportunity to brand ourselves in that space quickly before anyone else does, which would give anyone else an uphill battle.”

Overstock lowered campaign costs by forgoing the services of an advertising agency and doing both the creative and the media buy in-house. Using ad industry indexes, the media buy was designed to focus primarily on outlets whose audiences include a disproportionately large share of Internet shoppers.

Byrne hasn’t disclosed the campaign’s impact on sales so far, other than to say the increase in traffic has been followed “to some extent” by a gain in sales. “I won’t really be able to say if this was worth it until Dec. 26,” he says. “What we’re hoping is that, starting this Friday, a lot of the traffic that has visited the site will come back and start buying,”