As newspaper circulation continues to decline, so does the reach of printed ad circulars/free standing inserts, which are important drivers of both brick and mortar and ecommerce sales. Along with challenges of decreased reach, retailers are also finding that the promotional lift of circulars is declining. According to research conducted by Nielsen, printed circulars are less effective than they were 6 years ago. In 2010, the average ROI boost of printed circulars was 20% compared to 28% in 2005. Retailers are faced with the challenge of maintaining and/or expanding the reach and efficiency of circulars in a declining print market.

In many ways, the internet has replaced the Sunday paper. According to an Audience Insight Survey released in December 2011 from interclick, two thirds of Americans are learning about in-store deals online. In addition, 42% of consumers prefer online advertising to newspapers and other sources, and those consumers who see in-store deals online are more likely to visit a brick and mortar store. This is especially true for electronics, grocery, drug, department, and clothing retailers.  Many retailers have made circulars available on their websites; however the associated user experience of these is fairly poor and very few can be viewed on tablet or mobile devices.

Google has acknowledged this challenge and recently launched a new product that offers an interactive and personalized circular experience aptly named Google Circulars. This product was launched in October 2011 with a small alpha test of US retailers including Macy’s, Best Buy, Home Depot and others. The success of the alpha has led Google to move this product into a beta release launching in Q1 2012 with an expanded set of retailers and vendors.

Google has always had an emphasized focus on the retail industry, and many of the beta opportunities they have rolled out over the past few years have been designed specifically for retail partners. They have increasingly understood the challenges retailers face in utilizing online channels to drive in store purchase. With Google Circulars, they are hoping to further bridge this gap by offering a more robust and user friendly digital circular solution.

Google Circulars presents an exciting new opportunity to utilize digital circulars in a highly customized and targeted way. The breadth of data that Google has access to use in serving personalized circulars is unprecedented and this new ad format has shown early success. As with any new marketing opportunities, there are risks involved in being an early adopter. The lack of proven success, as well as the potential resources required to run such a program, are very real barriers. In addition, the monthly minimum media spend would result in incremental cost or reduced spend in existing tactics. Success of this initiative is ultimately dependent on consumer adoption and engagement. While it’s too early to say whether or not Google Circulars will be a success, this product offering does attempt to fill a growing need of offer communication between retailers and consumers.

To read the full Razorfish Health POV on Google Circulars, click here.