Yahoo! & OMD study reveals Online Research plays critical role in Consumers’ Offline Purchases.

The Internet’s greatest impact on shopping is assisting consumers in the decision-making process, regardless of whether purchases are made online or at retail stores, according to a study released by Yahoo! Inc. and worldwide media communications specialist OMD.

According to the study, a large majority of consumers look online for information as a core part of the purchase decision process for products of all kinds. In particular, the Internet offers a collaborative environment where consumers turn for advice and the experience of others in weighing brands, discovering alternatives and distilling prices, as they weigh their purchase decisions.

Released today, the “Long and Winding Road: The Route to the Cash Register” is the first research study to examine how cultural shifts brought about by the proliferation of technology have radically altered the way consumers make purchasing decisions. The study found that the Internet, along with related technologies like camera phones and text messaging, have given consumers a new kind of “social empowerment” as they gather information before they shop. More than two-thirds of shoppers across several product categories still make the bulk of their purchases at physical retail locations — yet nearly two-thirds (62%) use a combination of online and offline sources to gather information before they buy.

“The Internet is far more than just another point of purchase; its biggest impact lies within the awareness and consideration process,” said Wenda Harris Millard, Yahoo!’s chief sales officer. “The widespread adoption of social technologies gives marketers an even greater opportunity to continuously engage consumers and make connections across traditional and new media advertising, helping to build brand mindshare and increase offline sales.”

The Role of Online Research

The research shows that the Internet is crucial to consumers as they follow various paths on their way to making a purchase. The Internet serves as a price leveler, has helped create a communal shopping experience, and is where consumers turn for trusted sources of information and dependable customer reviews.

The Internet is now the most common method of gathering information, with consumers using the Internet to comparison shop more often than they use it to buy goods. While consumers are online looking for information, the study found that three things are important when making a purchasing decision:

— Trusted information. Consumers say the Internet is the most trusted shopping information source (54 percent), followed by magazines (34 percent) and TV (23 percent). Seventy-four percent of people use trusted, familiar Web sites when purchasing online, and 55 percent opt-in for e-mail marketing messages from companies they trust.

— Choices. On average, consumers consider three brands before making a purchasing decision. Many comparison shop using the Internet, but 38 percent of consumers still want to be able to see and touch products before they buy. The Internet helps narrow down options before they purchase either online or offline. In addition, 61 percent agree that Internet search engines are one of their favorite tools for finding product information.

— Price. The research shows that 61 percent of people consider themselves to be serious bargain shoppers. The Internet is changing the concept of fixed pricing by enabling consumers to search for the same product at myriad prices, as well as actively monitor a product for price discounts or find coupons and rebate offers.

Consumers Travel Four Distinct Paths

The findings from the Long and Winding Road research can help advertisers connect with consumers online at crucial stages of the decision-making process. The study uncovers four distinct paths that consumers take on their way towards making a purchase:

— QUICK: This path involves little consideration. Consumer packaged goods are often quick paths.

— WINDING: Comparison shopping between different channels, including online and offline retailers, typifies this path. Retail goods are often winding paths.

— LONG: This path involves researching various options over an extended period of time. Technology purchases are often long paths, particularly if the price tag is high.

— LONG AND WINDING: This path requires investing a considerable amount of time researching across several channels. Many big ticket items — including automobiles and financial services — follow a long and winding path. These paths offer marketers the most opportunity to impact and possibly sway a purchase decision in their favor, because consumers of these products are the hungriest for information.

From Purchase “Funnel” to “Tumbler”

Another research finding is that the shape of the traditional purchase “funnel” has changed. In the past, as consumers began researching their options, they steadily narrowed their choices all the way to purchase. The study found that there is opportunity for marketers to affect purchase decisions with brand messaging — be it traditional, online, in-store or word of mouth — even after consumers have decided where to buy. Sixty-three percent of consumers gather information when they first begin researching a purchase, 57 percent when they are narrowing down their options, 42 percent when they are deciding where to buy, and 51 percent when making their final decision. At each stage of the “purchase tumbler,” the Internet is the first place that consumers turn to when gathering information. It is used more than any other resource (including friends and family, offline reviews and traditional media sources).

Social Shopping and Sharing Information

As the most trusted source for information, the Internet also offers “communal shopping” — access to a vast community of fellow shoppers, who share knowledge, shopping tools, product reviews and even coupons to help others make purchase decisions. The study showed that 25 percent of people have posted reviews of products or services online, providing a service to other shoppers. Another new phenomenon, the “coupon train,” has emerged, in which consumers clip both standard and online coupons and share them with others.

Mobile and camera phones, email, text messaging and other digital tools have contributed to the strong influence of community in the path to making a purchase. Shoppers can now text message each other, send pictures of merchandise and use Internet enabled phones to compare prices, all from the point of sale. Consumers are seeking trusted advice, and know that no purchase decision needs to be made alone.

“Significantly, this sharing of information may have big implications for pricing, particularly in light of escalating energy costs,” noted Joe Uva, President and CEO, OMD Worldwide. “Consumers still prefer bricks and mortar for purchases. However, rising gas and other related prices could become a tipping point, cutting down on trips to stores or around town comparing prices. It may encourage more online buying and more sharing of information down the road.”

“One conclusion that might be drawn from the study is that consumers have access to so much information that it often broadens, rather than narrows, their choices by the time they get to the store to make a purchase,” added Mike Hess, Global Director of Communications Insights and Research, OMD. “This makes the role of advertising, especially ‘just in time’ advertising, and the buying cues in the in-store environment even more important. The use of a variety of traditional media, like television and magazines, can be potentially stronger than ever in influencing the 40% of shoppers in the store who are yet to make their final decision.”