Features

Media Attribution Metamorphosis, Part 1

Written on
Dec 14, 2010 
Author
Mark Hughes  |

frog_smallADOTAS – Each year, $90 billion dollars are spent on TV and Internet Advertising in America. Most TV dollars are loosely tracked (and dare I say, wasted).

Internet advertising, however, is the most trackable form of advertising on earth. No problems there, right? Actually, most online advertisers have no idea the fundamental measurement systems dictating what works online… are completely wrong.

Yes, wrong. Here’s why:

Imagine you’re overseeing a multimillion dollar online ad budget. And imagine one day, you discover that today’s outdated online ad tracking systems give 100% transaction credit to the very last clicked or last viewed ad before an online transaction.

Example: if four Internet ads contribute to a transaction; today’s outdated systems allocate entire credit to the fourth, last ad–ignoring the first three ads, which actually drove the revenue.

Zero credit to revenue drivers, and 100% credit to the last ad placed. Yes, wrong.

But enter the full funnel media attribution model: robust media attribution systems that recognize credit should be assigned to a team of Internet ads versus just the last one. At a basic level, credit is assigned to Originators, Assists, and Converters within a transaction.

A media attribution model should capture all online media sources from the top of the funnel where sales are originated all the way down to the very bottom of the funnel. So for a $100 transaction, an Originator would receive a fraction of that $100 attributed to them — and an Assist and Converter would get their fractional credit attributed to them of the $100 respectively (100% credit can never exceed $100).

So 100% of revenue credit is attributed and split among Originators, Assists, and Converters—accounting for the actual drivers of revenue, and then matched to media cost to determine (you guessed it) return on investment… or a simple ratio called, Attributed Revenue-to-Spend ratio.

Using a media attribution model that captures any form of paid media (especially display) in real-time, is beginning to catch on with smart advertisers. After completing the longest running media attribution model case study of its kind (two years) the ROI increase of the advertiser’s online ad budget increase 56% versus baseline (both search and display grew in ROI).

So good news for our $30 billion U.S. Internet ad market: the efficiencies are like shooting fish in a barrel with robust media attribution systems. But, markets do change, and are changing now. And industry leaders try to think like Wayne Gretzsky—they play where the puck is going to be.

The change will be in mobile.

Smartphones are being used more and more to surf online, and we’re seeing an explosion of tablets. Right now, the emerging war for both smartphones and tablets is being waged between Apple and Google (with its Android operating system).

When it comes to e-commerce, smartphones are used more for research and less for purchase. The images on smartphones are obviously smaller, and most e-commerce sites are not optimized for mobile.

But as smartphone and tablet use continues, the dichotomoy of “surf on smarthphone but buy from computer” throws a wrench into the elegant media attribution model detailed above. Perhaps not today, but most definitely in five years.

The question is: how do you reconcile the three ads seen on a tablet or smartphone, plus the two ads seen back on the computer, which led to the final purchase? Call it a conundrum of a cross-device attribution model. Where is this model and what are the solutions?

The first solution is the Android operating system powering most of today’s smartphones, plus near-field communications (NFC) first seen in the Google Nexus S phone launched with T-Mobile.

NFC is essentially “beaming” of information securely between devices at very close range (about five inches currently).

If consumers “surf on smartphone but buy back at computer,” the gaping hole for advertisers is which ads actually Originated or drove my revenue, but Converted on a different device (tablet or computer)? Device disconnect in full funnel attribution.

But imagine… if the Android OS captured all mobile ads seen and clicked and then transferred that valuable ad information with NFC-style technology into an attribution system, when the consumer bought back at their computer? Naturally, NFC range would have to be extended beyond five inches, but those challenges are solvable. This would solve device disconnect and cross-device media attribution.

Come back tomorrow for details on the second solution!





Mark Hughes is the CEO & Co-Founder of C3 Metrics. Hughes grew eBay’s Half.com from zero to 8 million online customers as its VP of Marketing in less than three years. Half.com was sold to eBay for over $300 million six months after launch. He has spent close to $100 million online ad dollars, which planted the seeds for creation of C3 Metrics’ attribution algorithms and arrival in 2008—seeing the need to help Advertisers and Networks discover previously missed revenue drivers and increase ROI. Hughes brings a wealth of creative and quantitative experience in consumer marketing from PepsiCo’s Pizza Hut Division; Pep Boys, the automotive aftermarket retailer; and American Mobile Satellite (now XM Satellite Radio). Hughes is the son of a Pulitzer Prize winning journalist, and Hughes’ own book, Buzzmarketing, is published in 14 countries. In its first year of release it was heralded by Fast Company as one of ‘The Ten Best Business Reads of the Year’ and named by The Financial Times of London as one of the ‘Best Business Books of the Year’ along with Freakonomics. Mr. Hughes holds his MBA from Columbia Business School in Marketing & International Business.

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