The legend of Picasso is at the heart of a contemporary challenge in the advertising industry - the value and cost of ideas. There lies the problem. As an industry we are obsessed with ideas. We complain when these ideas are not accepted. We feel cheated by having to put a price tag on the enterprise of our ideas – how can I be asked to price passion and the selfless pursuit of an idea?

When we recognize we are in the business of “value creation” can we begin to shift our thinking from “’What does it cost us to generate work and ideas a client wants?” to “What is the value of the services and materials we are creating for the client?”

Value creation forces us to decentralize the idea creation process. Instead, everyone’s job must become value creation. Value creation forces us to establish a strong personal and commercial relationship with our clients; truly understand their business as opposed to their latest brief. Value creation demands we measure and place more value on the outcome of our work.

Our latest idea is more than a campaign concept; it is value creation. Was the agency responsible for creating the Staples’ plastic Easy Button, a $4.99 gadget (that’s sold more than 1 million units since its launch in 2005) aware of that? Apparently not because they received no financial reward beyond their original fees. 

Financial advisors are paid on the basis of value creation. This is accepted given their decisions have a direct and measureable impact on wealth. Digital marketing, like no other channel allows us to directly measure the value created for a brand, be it revenue or perception. This is part of the problem with digital marketing, value creation has been completely tied to quantitative metrics – sales, revenue, ROI. 

If value creation is proven and measured every day, the degree of compensation then becomes a question of positioning. If clients regard an agency as just another operator on their marketing conveyor belt, value creation is not possible. Value creation requires partnership. Unfortunately most clients regard their agencies as just operators in a large conveyor belt.  In response, and to extend their control and influence, agencies try to be the “jack of all trades”, operators in all realms of digital marketing. The focus is then on depth of offering as opposed to value creation. These new services are generally sold to clients at a discount – lowering overall compensation levels.  

Client and agency must be willing to invest in value creation. When this occurs, the conversion of two intangibles - time and ideas – translates into a tangible and sustainable compensation model.

webliquid agency compensation value creation Pablo Picasso

Media companies and agency networks tell people the digital space is just another media channel - it isn’t. The digital space is about participation, ecommerce and community. It can’t be sold or planned as just another channel. Agency networks tend to try to turn digital into a commodity - and lets face it, sooner or later this will not work for clients.

When digital is turned into a commodity it is managed through integration. When digital is recognized as more than a media channel it is managed through collaboration.  

Having spent my formative years in advertising working for a large global network I can appreciate the benefits of  integration. As the steward of my clients media budgets I would happily report on the cost efficiencies realized by pooling offline and online budgets. I relished the opportunity to broker cross media agreements - that elusive target audience would not stand a chance - print, outdoor, television and online. However I quickly realized the large agency that employed me, as well as my clients operated in functional silos. Without the appropriate organizational structure, internal culture and accountability, integration will turn digital into a commodity.

Dave Morgan, evp, global advertising strategy at AOL, said media shops have a faltering business model, with armies of comparatively low-paid digital media buyers propping up a layer of high-priced executives from the traditional side of the aisle. The inefficiencies created by this approach are no longer tenable, and current trends will yield “leaner” agencies well versed in using digital-buying platforms.

Sir Martin Sorrell, the chairman of WPP, one of the “cradles of integration”, points to the need of a new agency structure. “The agency of the future will reclaim upstream marketing consultancy work by delivering a seamless service; one that starts with the most fundamental of market analysis and ends with the finished creative artefacts.” 

Forrester Research paints a grim view of the current state of advertising, which it believes is in “a world of hurt” because consumers are tuning out the messages the industry is predicated on producing. Instead, it believes shops need to be organized around communities, not disciplines.

While not as sexy or grand as integration, collaboration works for us and our clients. At the heart of collaboration is the idea that digital extends beyond media. Digital becomes a “hub” at the heart of our clients organization, bringing together revenue management, customer service and marketing teams. Through collaboration we become consultants to our clients, partnering with non digital specialists of their choice. Through collaboration we have to listen as opposed to dictate an approach towards integration. 

More importantly, through collaboration, digital is not tied to media outcomes but to ideas and tangible returns.

webliquid  media integration martin sorrell

In 2007 we generated GBP £125,422,639 (USD $251,655,481) in revenue for our clients, delivering a return on investment of 23. In simple terms for every £1 a client gave us to invest, we gave them £23 back in revenue. This represents a 34% increase from the previous year.We know it is not all about the numbers either. At the core of these results is a comitment to service and taking care of our clients’ budgets, knowledge and personal objectives.

Delivering these results while maintaining operational efficiency is a challenge. A challenge we have met two years running.

 Every day, one simple statement helps us focus our efforts.

“As our clients trust us with a larger portion of their marketing dollars, and the contribution to the bottom line of those investments grows; increased creativity, service, insight and accountability is required - an environment of thinking:returns.”
 

Webliquid return on investment ROI

While positioned as a way of countering Google’s dominance in search, the Microsoft/Yahoo alliance has all to do with 1) display advertising 2) social media and 3) communication platforms (email and instant messenger). Display advertising is the second largest online ad format at 33% of total worldwide online advertising. Google currently owns less than 2% of the display market and Microsoft and Yahoo together own nearly 30% of the display market. The growth of video advertising (predicted to account for 11.5% of online advertising by 2010) and behavioral targeting will accelerate the demand for display based advertising. Yahoo and Microsoft also rank No. 1 and 2 in financial news, and No. 2 and No. 1 in instant messaging, according to comScore. In web-based email, Microsoft share would rise from 25 percent to 80 percent (Google Gmail has a 5 percent share).   

In sharp contrast,  Microsoft and Yahoo would have about 16 percent of the worldwide Internet search market — still far behind Google’s 62 percent share, according to comScore Media Metrix. Google’s dominance in the search space was strengthened by the acquisition of Doubleclick and its search division Performics (which does create a conflict of interest at the heart of Google’s “do no evil” mantra).

Google well aware of its dominance in search is hoping to influence the outcome of the decision by offering Yahoo! an alternative to maximize shareholder value. Enter Option B for Jerry Yang - sell individuals pieces of Yahoo - under the premise that “the sum of the parts are worth more than the whole”. Yahoo Finance, for example, could be sold to a company like the News Corporation at a premium. More interesting and widely covered by the New York Times is the option of outsourcing all search advertising to Google. While it would be a true admission of defeat in the battle for the “minds and hearts of searchers”, the agreement would maximize shareholder value. Citigroup Global Markets analyst Mark Mahaney in a Friday research note estimated that Yahoo could boost its cash flow more than 25% annually by outsourcing all its search advertising to Google.

Yahoo has recently began restructuring its service offering to maximize shareholder value. Yahoo today announced it was to abandon its YMU music subscription service, and will move current subscribers to RealNetworks-MTV’s joint venture, Rhapsody America.

My bet is on Microsoft’s 50-50 cash and stock offer for Yahoo! being accepted. What about the outcome of the acquisition from a regulatory perspective? How about the challenge of integrating both corporate cultures, audiences and offerings? Stay tuned. 

Yahoosoft, Microsoft, Jerry+Yang microhoo webliquid

. Creativity
. Return on investment
. Understanding business
. Data Collection
. Collaboration
. New Technology
. Act strategically
. Act technically

True to its mantra of thinking : returns, Web Liquid received a score of 9.27 (out of a possible 10) on its ability to deliver Return on Investment, a score of 9.18 on its ability to Understand business and a score of 9.36 on its ability to Act strategically.

When was the last time your agency satisfied you?

ROI Webliquid

The difference boils down to consumer confidence - advertising and marketing messages are inherently persuasive and rightly perceived as biased whereas WOM messages naturally build (or diminish) confidence without perceived bias. Studying the combined influences of persuasion and confidence upon an individual consumer as she considers a purchase is critical to understanding consumer behavior and marketing effectiveness. The tipping point where there is just the right combination of confidence and persuasive influences to justify the purchase, and when she ultimately decides to buy, is the nexus of persuasion and confidence.

Rarely are the persuasive and confidence influences equal at the nexus or time of purchase because brands/products/services with high degrees of consumer confidence don’t require a lot of persuasive messaging. Inversely, those brands/products/services with low degrees of consumer confidence must be very persuasive for one to justify the purchase.

From an economic perspective, maximizing persuasion is an expensive proposition. Many of the most effective marketing campaigns are so because of the scale of investment in terms of creative production values, media investment and also price discounting. Meanwhile it can be argued that maximizing confidence is significantly less costly as the confidence building channels, such as WOM, are often free and little if any price discounting is necessary.

It’s logical then that we’re seeing a renewed interest in WOM as marketers become more savvy and cost conscious, and as the internet continues to facilitate the distribution of WOM from peer to peer via online communities, forums, blogs and review sites. The key for marketers today is to leverage these online WOM channels effectively to build confidence in their brands, without abusing the opportunities they present or alienating consumers in the process.

The Solution: Web Liquid seconded two team members into Hilton, having one of the Founding Partners based in Hilton’s International headquarters in Watford three days a week. During the six-month project Web Liquid was responsible for supporting all central Online Marketing programs providing guidance to the local Marketing teams in the United Kingdom, Germany and Japan.  The project focused on the following initiatives:

•         Channel management and planning – managing a central eCommerce budget ensuring the most efficient allocation between eMail Marketing, Search Marketing, Affiliate Marketing, Display Advertising and Affiliate Marketing.

•         Process integration with central Marketing team responsible for offline communications.

•         Localization of global online brand guidelines based on “Travel Should Take You Places” global advertising campaign. 

•         Managing online channel specialists agencies including LUON (email), Bigmouthmedia (search), Cheetah Mail and local online agencies in Germany and Japan.

•         Digital Marketing training programs and advocacy for Online Marketing funding and initiatives among Regional Marketing Directors across the EMEA region. 

Ring. Ring.

Following months of speculation, Google formally announced it is entering the mobile phone market. While the announcement did not introduce a working operating system or phone, Google’s statement it would start shipping its mobile devices by the end of 2008, set the industry in motion. Google’s much anticipated entrance into the mobile sector is based on four foundations:

1. Collaboration
Google’s mobile operating system known as Android (name taken from its acquisition of Android Inc. back in August 2005), will be a Linux-based open source platform, aimed at creating a flexible platform for developing applications, software and content. Google’s Android will compete directly with the leading mobile-phone operating systems: Symbian, partly owned by Nokia; Microsoft’s Windows Mobile; and Research In Motion’s BlackBerry. Google’s Android has an uphill battle against leading mobile operating system Symbian, which has roughly 70 percent of the market.

The reality is that fragmentation has always been the biggest barrier to the growth of mobile applications (especially in the enterprise sector); Google’s Linux based OS could drive consolidation into a common mobile platform. However, Google will have to enforce some rules, such as requiring developers to use the same type of Linux software, in order to avoid a fragmented platform. Furthermore, the freedom of the open-source license, which gives developers, handset makers and carriers a lot of freedom to add proprietary extensions and modifications, could increase technical fragmentation without established rules.  

Google collaboration strategy was further supported by the formation of the Open Handset Alliance, comprised of more than 30 technology and mobile industry companies including Motorola, Qualcomm and T-Mobile. However major smartphone vendors and carriers are missing, including: Microsoft, Vodaphone, Nokia, Palm, Verizon and Symbian. Their absence not only underscores the fact Google will have to contend with large industry gatekeepers but cements the notion that phone carriers avoid such groups because they would rather keep their networks and the devices that run on them close to their pockets.  

2. Advertising
Unlike Microsoft, Google won’t make its money from licensing (industry analysts estimate Microsoft generates license revenue of $8 to $15 per handset, depending on configuration). It will make money from the advertising that’s heading mobile. According to Opus Research, mobile advertising spending in North America and Western Europe will reach a combined US$5.08 billion by 2012, up from an estimated $106.8 million at the end of this year. This represents a compound annual growth rate of 116 percent. While these projections are tremendously optimistic they serve Google’s business plan well.

Google’s advertising funded mobile model would allow is to share revenue with mobile phone operators, allowing it to offer consumers and enterprises services for free or at a minimal cost. Three words describe Google’s advertising model for mobile. Localization.  Localization. Localization.  Google’s recent launch of AdSense for Mobile, a contextually targeted ad platform for mobile website content is not the answer. The answer is in opt-in personalized local services, applications and content that pulls relevant advertising offers.

3. Services
Unlike phone manufacturers or Apple, Google will aim to gain market share for its mobile services with software rather than hardware. The focus on services and applications combined with a Linux platform could propel Google in the lucrative mobile enterprise sector providing the company with some time to tackle the consumer market in which sleek hardware, design and usability are paramount.

4. Access
For months Google has been lobbying to enter the auction for the 700MHz spectrum in the United States, which is regarded as the last piece of real-estate left among wireless airways; extending the delivery of mobile broadband services. A review of Google’s “strategic goals”, “What is going to make the Internet most available to the broadest number of people at the lowest price possible?” makes a bid very possible and significant. Drew Clarke at GigaOM.com has an informative piece on the 700MHz spectrum.

One thing is clear from Google’s announcement. There is no gPhone, and likely won’t be a gPhone. An exclusive device branded by Google for it does not follow the company’s stated goal of getting its search, applications and software in front of as many people as possible.

While Google might have the engineering and business resources to succeed in the mobile sector, mobile phone subscribers will ultimately decide the future of Google’s mobile offering.

google+android, android, google+mobile

This year’s eMarketing Symposium taking place at the Crown Plaza Hotel in Dublin, focussed on optimising the marketing mix in a digital world as well as using information effectively to convert business.  The latest developments in branding in an online world, maximising data and information using analytics and search engine marketing, as well as Tourism Ireland’s international web strategy and online platforms, were discussed.

Other featured speakers included Valentina Doorly, Marketing and Sales Manager for Guinness Storehouse, Asmundur Saevarsson, Manager eMarketing, Icelandair and Daniel Kerzner, Online Marketing Regional Director with Starwood Hotels & Resorts Worldwide.

The award given by the National Customer Service Awards in conjunction with SOCAP (Society of Consumer Affairs Professionals) is the only award SOCAP gives outside of its professional body.

The accolade was the culmination of months of monitoring and benchmarking of Consumer Generated Insights (CGI) leading to the development and launch of the We Try Harder blog. The advanced program involved the integration of the Avis Marketing and Customer service departments and has resulted in significant increases in the approval rating for Avis (over 200% Net Approval Index) placing them well ahead of their competition.

Online conversations in forums, blogs and review websites are having an undeniable influence on consumer behaviour. Aware of the power of user generated content, Web Liquid and Avis instigated the CGI centric program to leverage these channels, taking a holistic approach to harness the power of online word-of-mouth. Ultimately this was achieved via the Avis blog and through continual monitoring of consumer sentiment, provided by the excellent services & technology of web monitoring company Market Sentinel.

David Shiell, Managing Director of Web Liquid commented, “We are incredibly proud of our involvement in this project as strategically it crosses the boundary of Digital Marketing into the channel of Customer Service and Brand Management.”

The award further demonstrates the continual growth of the online channel and its ability to take the communications lead within the marketing mix. Shiell added, “Such an award highlights the strength of this medium and the great lateral thinking coming out of Web Liquid and our partners, showing our ability to develop and lead successful through-the-line programs that permeate all levels of our clients business. This program (and the award) was very close to the heart of Avis and their ‘We try harder’ proposition. It was approved at Board level, adding additional exposure and pressure to the project and all involved. Obviously we didn’t disappoint! Our clients are ecstatic about the win!”

The agency - with offices in London and New York - also raced up the overall Top Marketing Agencies from 40th place in 2006 to 24th in 2007 thanks to their turnover of £4,618,806 (year to date November 2006) a 67% year on year growth from 2005 to 2006.

At the date of the survey, Web Liquid had 7 full time staff, giving efficiency (turnover/staff) of £659,829.43 per staff member, 103% greater than their closest competitor in the number 2 position.

David Shiell, Web Liquid Co-Founder and UK Managing Director explained why such accolades are important? “The interactive marketing space is extremely resource intensive. Running an efficient shop that doesn’t ‘burn out’ staff takes a reliable and validated methodology coupled with intelligent data mining and long term committed clients that believe in true agency-client integration. There is a plethora of inefficiency out in the market place and we are extremely proud to be leading the country in this category of efficiency, whilst growing our business at a steady rate”.

The Google Best Practice Funding program requires participating agencies to have at least five clients, generate a minimum of USD $100,000 in spend for every client on a quarterly basis and two Google certified professionals in order to qualify for quarterly payments (tiered to a maximum of 12% of total spend on Google).

Conveniently Google does not consider its Best Practice Funding scheme as a direct financial incentive but rather a “best practice and training fund”. The reality is that the Google Best Practice Funding scheme has perpetuated the ill driven media practice of bulk buying – a phenomemum inherited from traditional media. The model, effectively a rebate, rewards bulk buying with no regard for effectiveness or performance. It rewards investment quantity as opposed to investment quality. Back in April I wrote a piece entitled “Granular vs. Tonnage Media Buying“, which addresses some of the issues with the existing approach to media buying across display and search. 

The reality is that the large majority of search agencies have not used the Google Best Practice Funding scheme to train and disseminate best practices. Instead, the majority of search agencies have used the Google Best Practice Funding scheme to: 1) increase their margins 2) establishing an artificial advantage by passing the quarterly rebates directly to clients and 3) subsidize loss making accounts. 

The much anticipated end of the Google Best Practice Funding scheme is positive. It should bring forward a more transparent model of billing, performance reporting (does the last click get to much credit?) and business relationships. Search agencies will have to hone their consulting skills as opposed to their billings and salesmanship skills to grow their margins. Clients will have to recognize that the value in a strong agency relationship is not a commodity purely driven by price but by the long-term sustainable return of that relationship. If you currently employ a search agency, I invite you to review one of my earlier posts entitled “Ten Questions to Ask your Search Agency”.

I see the following trends starting to emerge later this year as clients and agencies begin to contemplate life without the Google Best Practice Funding (BPF) scheme:

• Search specialist agencies, without much success, to venture into the display advertising seeking higher margin projects
• Third party ad-serving contracts and relationships to be renegotiated or changed in an effort to reduce serving costs and increase efficiency through technology.
• Super Affiliate PPC specialists such as Click2Customers to grow in prominence, becoming a real alternative to the traditional and established PPC agencies.
• More clients will contemplate bringing PPC search in-house as the overall value proposition of outsourcing becomes less attractive given the increase in operating and service costs.

But in recent years the standard purchase funnel has faced some opposition as marketers become more precise with their efforts to make people customers; drafting the skills of ethnographers and anthropologists to further define and illustrate how people behave as consumers.

Forrester recently published a report eschewing the traditional funnel for a model that’s based upon engagement. Scott Weisbrod has a nice recap here with the illustrations and Forrester’s suggested model for measuring engagement. Meanwhile David Armano proposes a marketing spiral that takes the idea of engagement into consideration. It seems everyone has their own take on the the old funnel these days, including us.

Our proposed evolution of the purchase funnel comes out of our study of CGC’s influence on consumer behavior - leading up to the purchase as it is consumed as part of the consideration and research phases, and subsequently created after the purchase when the individual consumer shares her experience with the product.

This model places a greater emphasis on the purchase funnel as the experience of an individual intertwined with the funnels of many others. A critically important point because of the ease with which the experience is shared via online WOM and the influence that shared experience has on another others’ purchase behavior, having reached them at a critical time in their own purchase process. It’s not enough to study a single purchase funnel without considering how that funnel intertwines, is influenced and influences the individual funnels of other people.

So who’s right? What is the correct 2.0 version of the purchase funnel? Is the purchase funnel an antiquated model altogether? Or are we all right, in part? Consumers, their behaviors and the new marketplace are perhaps a bit too complex for any one model.

cgc, marketing, purchase funnel

If your brand was a person, what type of person would it be? How would it act, what it would look like? More importantly would its value be solely determined by how many people knew of it?

 These questions are at the heart of branding and the value of branding.  

Branding is normally defined as “activities that increase a potential customers ability to identify (recognize or recall) the brand, within the category, in sufficient detail to make a purchase” (Advertising & Promotion Management, 2007).

This standard definition would dictate that large established brands such as British Airways or Mercedes Benz, with high degrees of awareness and recognition, have little need for branding online. 

The reality is that branding is not solely about awareness but association. Like a person, a brand is not defined solely by its level of recognition but defined by key attributes such as its tone of voice and character. In an environment where social networking and word of mouth are becoming increasingly influential, shaping and influencing the way brands are associated has never been so important.

The role of branding is then to “associate the brand to specific emotional and cognitive attributes, leading to an increase in sentiment, interaction and purchase consideration”.

Let’s put this theory to the test with one of our clients. As part of its sponsorship of the Formula One McLaren team, Hilton in partnership with Mercedes Benz, another key sponsor of the McLaren team, developed an ad featuring Lewis Hamilton and Fernando Alonso. The aim of the ad was not to create awareness of Mercedes Benz or Hilton. The purpose was to associate both brands with the attributes of Formula 1, exploiting through humor the widely publicized rivalry between both drivers. Through humor and association the ad aimed to communicate the desirability and quality of the Hilton and Mercedes product and brand. While largely a product placement for Hilton, this ad succeeds at some level as it delivers a degree of association for the brand. While the ad might not generate immediate car sales for Mercedes or room bookings for Hilton, in the long term it helps shape the way the brand is perceived, considered and associated. 

Earlier this decade me and the other two founding partners of Web Liquid had the responsibility of developing British Airways’ online media strategy and capabilities. The airline aimed to become a pioneer in the online space; recognizing the commercial benefits provided by the online channel from a distribution, cost of sale and brand positioning perspective. In August 2000 the airline announced it was to change the structure of commissions paid to travel agents. Prior to that decision, British Airways gave travel agents 7% of the ticket price as commission, an expenditure of nearly £300m a year. It was a bold move considering travel agents accounted for 85% of sales, with online contributing a mere 1% of total sales. For the next three years the airline embarked in an aggressive online marketing program, aimed at driving channel shift and growing the usage of its new flagship site ba.com. At the heart of its online communications and acquisition strategy was the concept of innovation. British Airways recognized that the online channel was not purely a distribution or sales channel but a channel in which its brand would live permanently. While the airline could have focused their online marketing investment on tactical direct response programs, it invested heavily in branding online. We didn’t assume its brand heritage or high level of brand awareness would organically transfer online.

The case for online branding can sometimes be challenging in a commercial environment focused on maximizing profit and immediate return on investment from advertising investments. While the value of branding is recognized, it is usually ignored. Lets examine some of the questions raised when considering branding online.  

1. My brand already has very high levels of awareness and consideration. Why should I investment in branding online? Unfortunately awareness and consideration are not perpetual, they fluctuate and become susceptible to change 1) relative to the larger environment in which the brand operates in and 2) the customer experience with the brand. Furthermore, while consumers do not view brands different online or offline, the transparency of prices and content online can challenge the baseline perception and awareness of the brand.
2. Measuring branding online is challenging. How can I demonstrate return from my investment? Measuring the qualitative impact of brand advertising can be achieved by leveraging proven traditional methodologies. To isolate the impact of online advertising an exposed/control methodology is used to measure increases in key metrics such as 1) purchase intent, 2) brand favorability, 3) message association and 4) brand awareness. Furthermore, leading research providers such as Dynamic Logic provide the opportunity to benchmark these metrics against specific industry category segment. The value of branding online can also be measured by leveraging the Net Promoter Score a metric that has become a leading indicator of our consumer generated insight programs. The Net Promoter Score (% Promoters - % of Detractors) is a metric that quantifies the likelihood a user would recommend or support a brand. Unlike the traditional model of exposed vs. controlled, the value of a consumer is not based on their stated perceptions but on his or her actions. While the Net Promoter Score can be used to measure the impact of online marketing, it should complement a larger consumer generated insight effort aimed at understanding the key brand drivers online.
3. Branding online is expensive. How can I combine branding with my sales and distribution efforts to ensure some degree of immediate return? Online branding does not have to be expensive to be effective. Unlike traditional media, the effectiveness of online branding efforts is not purely based on overall reach and coverage. Online branding can be achieved through narrowcasting of the message to specific audiences and prospect segments
4. Consumers are increasingly using online to research and transact. Are they going to take notice of non price /offer-lead messages? Research published by the Online Publishers Association indicates people are shifting their behavior and now spend nearly half their online time visiting content, a 37% increase in share of time from four years ago, compared to a 35% gain for search, a more transaction oriented channel. However, the total time spent with search remains low, accounting for just 5% of Internet users’ online time in 2007. While consumers are indeed transacting online, they now consume large amounts of content, which becomes an important part of their overall brand and purchase consideration process.

The nature of online branding is an evolution of traditional branding, relying more on brand personification, as people’s online behavior and brand interactions become more frequent, less transaction oriented and more personal. So, now ask yourself this question.

What is the personality of your brand online?

branding, brands, webliquid, lewis hamilton

As early as 1989, advertisers and research firms such as Millward Brown, proved the value of combining multiple media and advertising programs to maximise effectiveness. The “Media Multiplier” theory emerged, stating that when two or more media are taken into account, the combined impact is more than the sum total of the two individual media. While this theory has been widely accepted and translated into Digital Marketing, most advertisers are blind to its true magnitude and impact.

Why the last click gets too much credit?

This is largely because the large majority of advertisers still subscribe to the industry standard which attributes a transaction to the last ad interaction. Furthermore, the “rule of attribution” set as a default within third party ad-servers is based on the last click.

This attribution rule has lead to what is referred as “click through tunnel vision” - focusing on the last click before a transaction – under-estimating the value of the media that preceded that last click. From a practical perspective, the “rules of attribution” are taking precedence over the “rules of advertising” providing a skewed perspective on the optimal balance between PPC advertising and display based advertising.

Under the “last click” rule of attribution, click driven channels such as PPC search, are attributed and credited for a disproportionate amount of transactions. While PPC advertising is an effective online advertising channel, it benefits from being widely used at the start and end point of the consumer purchase cycle. By attributing 100% of a transaction to the last click, there is a danger in underestimating the contribution and value of impression based channels. After all, advertisers don’t just measure the success of a poster by how many people buy the product advertised from the nearest shop.

The evidence

A study conducted by the ATLAS Institute, titled “How Overlap Impacts Reach, Frequency and Conversions,” asserts that 90 percent of the consumers that converted were reached by placements other than the last ad clicked, and that far too often the proper credit for the sale is inappropriately given to search. The study also found that two out of three consumers who eventually took a responsive action were reached by ads across multiple sites before actually going on to make a purchase, and that consumers reached across multiple publishers were twice as likely to convert as those reached only on a single publisher.

As discussed earlier, it is not a question of display based programs being more effective than PPC Advertising or vis-versa, it is a about how both channels work together. This synergy between PPC advertising and Display based programs is confirmed by a study conducted by the ATLAS Institute indicating conversion rates from search advertising is 22% better when used in conjunction with display based programs. Further research indicates 80% of users exposed to display advertising and completed a search, completed a booking within 8 days . What is the reason for this uplift in conversion?

1. Display advertising generates brand awareness and increased purchase intent, reinforcing messages from other channels.

2. Display ads can help win over interested users who may be “on the fence” about purchasing. Display advertising “generates demand” for products and services, while search is far more efficient at “meeting demand”.

3. Search may be used as a navigational tool on a repeat visit to sites which users have previously visited via a display based ad.

Furthermore, the last click “rule of attribution” has a significant impact on the reporting of PPC advertising. The “last click” rule under-represents the contribution of generic search terms as part of the research and purchase cycle on consumers on search engines.

A study entitled “Search Before Purchase” published by Doubleclick, provides insight into the way consumers use search; supporting the importance of generic terms as part of the overall purchase funnel leading to a transaction purchase.

• Travel buyers conduct an average of 6 relevant searches in the 12 weeks before purchasing a holiday, car hire, flight or hotel.

• 76% of keyword searches conducted by travel buyers are generic, with only 21.5% being for brand

Implications

The impact of “last click attribution” on the reporting and management of Online Media is significant.

1. Programs and sites that have a significant impact on reaching and driving purchase intent, but are not attributed credit for the transaction; are removed from campaigns and schedules based on attribution to the last click.

2. Investment and budget decisions are purely driven by the ability of the media to generate the last interaction (last click) as opposed to their impact on the entire purchase cycle.

3. Last click attribution negates the impact of overlap. Overlap being defined as users seeing ads across multiple sites or placements. Research indicates that that, while a minority of users are reached across multiple sites, they consume media at a higher rate than users exclusively reached on a single site. More importantly, this overlap group is responsible for the majority of transactions.

4. The true value of behavioral targeting programs and tenancy sponsorships is not considered; by not crediting media placements aimed at driving relevance and consideration prior to the final click.

Solutions

While it is important to identify the issues and implications related to “last click attribution”, it is more important to identify possible solutions. We have listed a series of solutions, providing a roadmap for consideration and enablement.

1. Get “under the hood” of your campaign data. Commission a research study that analyses the “exposure to attribution path” of your online campaigns. By analyzing the third party-ad server log files, including the initial interaction time stamp and conversion time stamp, it is possible to determine a path of conversion and the sites associated with it.

Complement the “exposure to attribution path” with a Time to Conversion Study, which would identify the time lag between first exposure, last click and transaction. This is a significant data point which will reveal the optimal “length of attribution” for your view and click based media. The default post impression and post click window on most ad-servers is set at 30 days. The window of conversion can be modified, ranging from minutes to days.

2. Customize the rules of attribution within your third party ad-server. Leveraging the data from your research and log file analysis customize your attribution rules. The attribution of online sales by third party ad-servers is flexible given they are rule based. Specific rules can be established, replacing the “last click” default. For example, a rule can be defined which states “last click, if exposed to less than two previous views”. This rule would ensure that a transaction was awarded to a click only if it was preceded by less than two views – acknowledging transactions driven by more than two views have been largely driven by display based programs.

However it is important to point out the final decision on the attribution rules should be determined by your overall online media mix. An emerging trend is the weighting of attribution between click and view based media. Sophisticated advertisers, aware of the synergies between online media channels, have started attributing 50% of a conversion to the last view and 50% to the last click.

3. Complement third party ad-serving with site analytics tracking. Assign a referring ID tag to all your online marketing programs, creating a unique referring ID by channel (e.g. email marketing, PPC search, display advertising). While site analytics should never replaces third party ad-serving for the optimization and management of online marketing, it should be used as a supporting measurement tool to validate figures.

4. Assign a place in your media plan for conversion influencers. By committing investment to key sites at the start of the purchase funnel, your bottom cost of transaction and brand will benefit. However this approach requires budget holders, the client, to buy into the value of these investments. This can be challenging given the propensity to measure the value of online media on the basis of attributed revenue. Furthermore, and as discussed in What is Return on Investment, there is a propensity to view return as a mutually exclusive metric, which does not account for exposure or influence.

More importantly, a model that measures and recognizes consumption, as opposed to just interaction, is required to gain a more balanced and accurate view on the contribution of online marketing to the bottom line.

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