October 30, 2007, 12:00 AM

Rooms To Go finds it is possible to drive offline sales with online ads

Furniture retailer Rooms To Go has had little luck with online advertising, most of it aimed at encouraging customers to visit its web site. But a test with Google showed how geographically targeted online ads can successfully drive traffic to stores.

Furniture retailer Rooms To Go had not had much success with the online advertising it had tried, most of it aimed at encouraging visitors to shop at its web site. “Banner advertising was a waste of time,” says Jeff Seaman, CEO, and placing text ads next to search results hadn’t worked much better.

Thus Seaman was “pleasantly shocked” when a two-week test with Google of geographically targeted advertising produced $7.50 in sales for every $1 in ad spend. “This was the first time we’ve really been able to use Internet advertising successfully,” he says.

The test, which took place in September, was aimed primarily at driving traffic to Rooms To Go stores in four cities: Austin, TX; Tampa, FL; Charlotte, NC; and Raleigh, NC. When someone searched for furniture whose IP address indicated they were from one of those four areas Google presented an ad featuring a coupon offering $100 off a purchase of $1,000 or more. Consumers could print out the coupon from the ad’s landing page and bring it to the store, or use it on the retailer’s web site.

Consumers who used the coupon spent 20% more than an average Rooms To Go customer, the retailer reports. And 86% of the sales were in stores, with the rest on the web site. “If you had asked me a month ago, I would have said you can’t drive offline sales with online media,” Seaman says, “but seeing these results I am pleasantly surprised-no, pleasantly shocked.”

Seaman was still skeptical enough that he insisted on redoing the test with some different locations a few weeks later. “The second time was as good as the first,” he says.

Seaman plans another test with Google in December. Because the $100 off coupon was quite an expensive offer, he wants to see if a lesser incentive will be more cost-effective.

Google can tell 85% of the time by the IP address where the customer is searching from, says Brett Goffin, vertical manager, retail, at Google. If the search engine is not certain of the searcher’s location it will not serve an ad that is targeted to a specific geographic area, he says. The Rooms To Go test was important, Goffin says, “because we proved online media can drive scalable offline sales.”

Rooms To Go is No. 196 in the Internet Retailer Top 500 Guide. Seaman says less than 5% of the company’s nearly $2 billion in annual sales comes from the web. While he believes most consumers prefer to buy furniture in a store, he says the web is a fast growing part of his business, with annual growth exceeding 20%.

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