ADOTAS – Last week, RevTrax released the results of a study, conducted in conjunction with Yahoo, that analyzed the influence of online paid search on not just online sales, but also (and in particular) in-store sales. ”For a long time, [studies] have been measuring online-to-online,” RevTrax COO Seth Sarelson pointed out in a recent phone conversation, but “the value of ROI is ecommerce plus offline.” RevTrax was interested in figuring out how paid search affected “multi-channel merchants who do 80, 90 percent of their business in-store,” he explained.

The results were striking. When it came to revenue generated by paid search, say the study’s results, for each dollar generated in online sales, $6 were generated in offline sales. The average click on a paid search ad brought in around $15 in in-store revenue — some retailers saw as much as $28. Around nine percent of clicks on a paid search ad led to an in-store sale, but for some retailers, that figure went up to 26 percent. Some retailers noted between 40 and 50 percent of the customers pulled in by paid search were new customers for them.

The study took coupons redeemed in brick-and-mortar stores that customers had downloaded from the web (printed coupons as well as mobile landing pages), and traced each coupon backwards, using its unique bar code, to the search the customer had conducted that led him or her to that coupon. By tracing the sale back to the key words a customer entered into a search engine, Sarelson explained, “it adds a degree of transparency, or perhaps that transparency hasn’t been there before.” The study included associated data “back to the beginning of the impression — average order size, the time from when the coupon was printed to redemption, the number of clicks, total spend.” And from there, he said, “clients can start to optimize campaigns.”

RevTrax took two years to research this study (August 2009 through August 2011), but Sarelson said his company’s efforts are “not static. Phase two is an offline data feed, if you will, that’ll go into these data pools and optimize on the fly.”

For now, Sarelson acknowledged retailers should take a look at how online search affects not just their online sales, but their in-store sales, so they can give credit where credit’s due. “Our clients are making sure [of] internal attribution for people responsible” for bringing in their revenue, he said. “All media drives everywhere.”

Social media — from blogs and forums to networks like Facebook, Twitter and YouTube — have inserted a very powerful force into the buying process: peer-to-peer dialogue on a network scale. While shoppers always have been able to talk with a few friends and family members to seek out a product recommendation, today they can talk with experts on a specific product or service anywhere in the world. They can find reviews of their prospective purchase in just seconds online and rapidly compare features and prices for competing brands.

So where does the terror enter the mix? How do you measure and quantify these discussions?  Where are the most important conversations taking place within the social grid, and how can marketers keep on top – let alone activate – the same?  The sheer pace of digital innovation has made it difficult for marketers to feel proactive and confident about how to measure progress and what really matters to their brand portfolio.

Furthering the fear factor is one matter of the discussion that may not be on the new marketing radar. My company MotiveQuest’s analysis finds that as many as 90 percent of online conversations are not about brands at all — they are about categories and the motivations that drive people within those categories. Dashboards and other numerical ways of measuring favor in social media may help in calculating a brand’s reach, but marketers must dig deeper to learn what consumers actually are thinking and what really will persuade consumers to buy. Marketers then need to try to connect their brands to those specific motivations. Dashboards won’t provide the intelligence that marketers need to capitalize on motivations in the marketplace — only listening where the conversations are really happening and analyzing the motivations behind the words — will do that.

Stop Asking and Start Listening

The best and only valid way to measure what is driving the market is to stop asking questions and start listening to conversations. In this new social environment, we can actually observe the buying behavior of consumers, rather than merely asking them about their behavior. We can measure if, how and why people are talking about a product. Instead of asking them if they like it, we can measure the positive or negative words and context they are using. Perhaps of greatest importance, we can observe individuals as they make recommendations to friends, acquaintances or even strangers in a group or forum.

It turns out, not surprisingly, that the sorts of things people talk about around the kitchen table are the same sorts of things they talk about online. Of course, social media conversations are just a sample of all conversations, but online forums enable us to overhear those networked conversations, which were already happening but which we had no way of listening in on before.

A Stunning Discovery

We have previously noted the motivations that drive conversations in social networks are the real treasure to be mined by marketers, because the more we explore online conversations and reveal the motivations that are common to all of us, the more effectively we can position our brand, and ourselves, to be unique. But the consequences of examining motivations extend beyond brand positioning — they can be a precise and predictable indicator of future sales.

To understand the correlation between social media and sales, we must first determine which aspects of online conversations we should measure. Five years ago, MotiveQuest began working with statisticians at Northwestern University to examine all the components of these conversations and attempt to find the most impactful elements.

Our simple goal was to determine which elements in online conversations have the biggest influence on sales and market share. We looked at correlations and metrics related to such factors as the number of times a brand is mentioned, likeability of the product or service, and the power of influencers. We uncovered what ultimately became a stunning discovery: The highest correlation — and a direct, measurable correlation – between social-media conversations and offline sales occurred when people online went out of their way to pick a brand and recommend it to a friend.  Statements like, “I would recommend the iPhone” — rather than, “You might like the iPhone, Samsung or Nokia brands” — led to precise correlations with offline sales.

We began to linguistically pull together all the ways people talk about recommendations, and from these cues we developed an Online Promoter Score, an index of the strength of the online community’s recommendation of a brand.

The Best Metric of a Brand’s Health

The most important, unalterable finding that we drew from listening to and scoring the ways people recommend products is that these recommendations — actual advocacy of a brand in online conversations — continue to correlate with offline sales in virtually every category. The type of product doesn’t matter; in these conversations, only the level of advocacy influences sales. The best metric of a brand’s health in online conversation, we were able to declare, is advocacy — the number of individuals actively promoting the brand.

Note that advocacy measures the number of individuals making recommendations, not the number of conversations. And further, understand that advocacy, not sentiment, offers the highest correlation with changes in market sales or shares.

Finally, metrics must be based on insights — and insights are not gathered through an automated process; rather, they are developed by applying hard work, thought and analysis.

In our research for a national financial services company, we measured the number advocated a particular brand to other people. Among those who discussed more than one brand, we assigned a score to their most favored brand.

Our analysis showed, with statistical significance, that people’s willingness to advocate for the brand online is a leading indicator of the brand’s new-customer acquisition. Even in relatively low-interest, low-engagement categories like personal finance, then, what people say online allows us to predict shifts in consumer behavior offline.

A Canary in the Coalmine for Market Shifts

All this is not to say that the correlation between online advocacy and offline sales means that online advocacy necessarily causes increased sales. What it does mean is that advocacy is an indicator of the offline and other unmeasured conversations that are going on around a product. The Online Promoter Score is the canary in the coalmine for brands, telling us something is going on in the real world, as well as in online conversations, that is boosting sales or forcing them to plummet.

The power of listening for recommendations produced astonishing results for Sprint, the phone carrier. Sprint was losing a steady stream of customers to rivals AT&T, Verizon and TMobile, but it didn’t know why. MotiveQuest launched a project for Sprint designed to find the reason and the solution. We built custom linguistic models to understand the essence of the conversation about the company online, categorizing those who posted their opinions in social media as current or former Sprint customers. We then aggregated carrier advocacy conversations — messages in which one brand was being actively recommended over another — to learn what drove recommendations and retention.

We discovered that customers had three primary reasons for staying loyal to a carrier:

1. Customer service

2. Models

3. Coverage

Sprint trailed competitors in all three areas. The company determined that its best opportunity resided in upgrading its customer service; we discovered that it was the biggest driver of carrier advocacy, ahead of models and coverage. Sprint implemented a number of initiatives to revamp customer service, including the retooling of its programs and rewriting scripts for call centers based on the consumer expectations revealed in our research.

Subsequently, a Consumer Reports satisfaction survey of carriers ranked Sprint second, and five months later, the American Customer Satisfaction Index ranked Sprint first in customer service. Most importantly, after listening to the advocacy conversations, Sprint’s reinvigorated customer service efforts pulled in 644,000 net subscribers in a single quarter, an astonishing turnaround from its loss of 565,000 during the same period the previous year. Six months later, it added 1.1 million net new customers in a quarter.

The Secret of Boosting Online Advocacy

What, then, is the secret to boosting online advocacy for your brand? Above all, consider ways to create products and services that are remarkable; inherently, that’s the best way to ensure people remark on them to each other. Social networks turbo-charge this process, accelerating good products to the forefront and quickly killing off products that are disappointments.

For your product to become remarkable, you should attach it to a core passion or movement in the marketplace in a three-step process: 

• First, identify what your best customers are most passionate about. 

• Then, figure out how you can be useful around that passion — how you become part of the movement. 

• Finally, create buzz-worthy products and services that help serve the passion. For instance, Apple created MacWorld, a conference that is little short of a religion for its advocates. MacWorld is a movement.

Connect your brand to a passion, something people care about at their core, and you create the foundation for advocacy that can lead to higher sales offline and improved market share.

Most teens and tweens, 85 percent, believe that people will buy or use a specific product because it is mentioned on TV, according to a new study by Pangea Media, an online quiz and quiz technology company. The results of its latest “Pangea Pulse,” which tracked the attitudes and preferences of its tween and teen users towards brands, found that 77 percent of teens and tweens rely on friends to find out cool new brands, followed by seeing those brands in the store, 71 percent, or on a TV commercial, 51 percent.

When asked how they typically find out about new brands online, 26 percent said they see an ad when using a search engine and 24 percent said they learn about new brands on the social networking sites Facebook or Myspace. When asked to cite which social networking site had the “coolest” information about new products or brands, 46 percent said neither, followed by 23 percent who said Myspace. Most teens and tweens, 71 percent, responded that they are not “fans” of a brand on a social networking site.

With regard to technology, most respondents preferred the Google brand, 74 percent, to Yahoo, 21 percent, and Bing, 5 percent. Few teens and tweens listen to music on a Zune—91 percent of respondents said the iPod is cooler. Similarly, teens and tweens prefer YouTube, 94 percent, over other video services.

In a nationwide survey of permission-based email recipients, 63 percent said they were more likely to buy from the sending companies, and 55 percent said they have a more favorable opinion of those companies as a direct result of the communications, according to the latest Epsilon research. Fifty percent also said they feel more loyal towards the sending companies and their brands.

“In the travel industry where so much activity has moved to the online arena, it’s crucial that companies communicate effectively and efficiently with their customers and cater to their personal needs,” said Kevin Mabley, senior vice president, Epsilon Strategic Services. “Our research demonstrates the many online and offline, measurable and immeasurable benefits of email marketing campaigns. Those benefits start with direct online airline ticket and hotel reservation transactions and extend to brand loyalty in multiple channels.”

Epsilon’s email branding study is based on a mid-October 2008 survey of 1517 consumers. The survey was conducted by ROI Research, of Lancaster, PA. It explored the general impact of permission-based email marketing as well as specific product categories that included, in addition to Travel, Financial Services, Retail, Consumer Packaged Goods, and Pharmaceuticals-Healthcare.

Other results:

- 86 percent of respondents who opt to receive email from travel companies do so to learn about sales, discounts and special offers;

- 51 percent subscribe to learn about existing packages and destinations;

- 48 percent subscribe to receive coupons;

- 46 percent subscribe to hear about new packages, routes and destinations;

- 69 percent want to receive personalized content based on their website activity and past purchases, rather than generic content;

- 48 percent of respondents who receive permission-based email from a travel company said the email has a direct impact on offline purchases.

The Epsilon research was intended to analyze activities that take place offline or cannot be measured by click-thru rates and email open rates. The findings showed that 71% of recipients of an email from a travel company visit an aggregator site as a direct result of receiving the email; 33% type or copy a URL directly into their browser and 14% contact a travel agent.

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In a survey by the Chief Marketing Officer Council, 58 percent of 480 executives said their companies do not compensate employees or executives based on customer loyalty, satisfaction improvements or analytics. Nearly 40 percent said their companies have no programs in place to track or spread positive word-of-mouth among customers. In addition, only 29 percent said their companies rate highly in their ability handle and resolve customer problems or complaints.

“Customer experience is one of the most critical determinants of brand strength and business growth. Yet, most organizations and senior marketers suffer from major blind spots and gaps in the way they interact, handle and respond to customer issues or problems,” said CMO Council executive director Donovan Neale-May. “CMOs must assume ownership for the customer experience and establish enterprise-wide measures and disciplines to ensure continuous improvement. We are missing a major opportunity to turn customer pain into competitive gain at every touch point through better use of web and contact center technologies and processes.”

Sponsored by Satmetrix, the study reveals critical deficiencies in the way companies measure, optimize and leverage customer experience to drive loyalty, improve brand value and increase business performance and growth, including:

- Insufficient availability and aggregation of real-time customer experience data across touch points that should be shared across the organization

- Poor use of customer interactions to collect insights and intelligence or maximize up-sell and advocacy opportunities
Lack of Internet processes and systems to track online word of mouth and drive customer advocacy

- Intermittent or deficient monitoring of customer experience that fails to provide true and timely insights into problems and opportunities

- Too few compensation programs tied to customer experience, loyalty and satisfaction gains

Customer listening, learning and leveling are critical qualities that need to be part of an institutionalized corporate culture, notes the CMO Council. But the survey shows most companies don’t use these opportunities to drive company-wide performance improvement and business growth. Instead, most companies treat customer interactions around service situations and incidents only as a problem that needs quick resolution.

The rest of the survey is here.

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Leading brands, including Honda and T-Mobile participated in the study by running campaigns run-of-site on Break.com over and 11 week period. Each campaign used the four IAB standardized ad units: linear non-interactive (pre-roll), linear interactive (interactive pre-roll), non-linear non-overlay invitation ad (non-overlay ad) and non-linear overlay (overlay ad). The ads ran against short-form professional, semi-professional and user-generated content on Break.com with Panache providing the ad delivery and back-end reporting technology to test user interaction and engagement levels with each ad format.

“The standardization of video ad formats by the IAB was a critical first step in streamlining media buying, planning and creative processes across the digital video medium,” said Keith Richman, CEO of Break Media. “Our research was a result of our desire to provide data about the effectiveness of those new standards to our clients and partners, and to lay a foundation for future research initiatives to build and expand upon.”

“For the in-stream advertising market to evolve, the efficacy of ad formats—whether IAB-standard or new emerging formats—needs to be understood in order for our industry to scale,” said Steve Robinson, CEO of Panache. “This research begins to fill the knowledge gap between the formation of standards and the prophetic future of an efficient and scalable online advertising industry.”

“This study offers a window into the measurable effectiveness of new video ad formats, and it moves forward the broader discussion of online brand-building and advertising,” said Daniel Taylor, senior analyst at Yankee Group. “As the industry develops new ways to engage online audiences, it’s important to benchmark the progress we make. By making this study public, Break and Panache have advanced the entire industry.”

This report describes a solution to the problem encountered by video content originators when their material is embedded within a web page that carries companion advertisements (e.g. banner, skyscraper ads) and where the content originator wants a share of the ad revenue earned by the publisher for serving those ads.

The technological solution described also includes the situation where the publisher site that carries the embedded video is being monetized using in-video ads, which could be of any format (e.g. pre-roll, mid-roll, post-roll or any type of overlay ad).

The IAB has released “Digital Video In-Stream Ad Format Guidelines,” created by its digital video committee, a group of industry leaders plucked from 145 top interactive advertising companies.

The guidelines focus on the most popular in-stream advertising products, like linear and non-linear video ads and companion ads.

“The interest surrounding digital video is no surprise,” said Randall Rothenberg, president and CEO of the IAB, in a release. “Consumers have been swift to embrace the digital video experience online, and marketers have incorporated it just as rapidly into their advertising plans. With the creation and adoption of these formats and guidelines, we see no end in sight to its potential for growth.”

The IAB’s digital guide is part of its move to shape the role of digital media online and beyond. Earlier this year, the bureau released “privacy principles” for behavioral targeting ads.

“We believe that advertisers should focus on delivering great creative and compelling messaging — not be deterred by having to figure out which video ad format they should use,” said Michael Walrath, senior vice president of advertising marketplaces, Yahoo. “Yahoo is thrilled to have participated in the development of the IAB’s standards, which will play a critical role in driving the industry forward. Not only will this make it easier for advertisers to get their video creative online, it will also provide a better experience for users.”

For a full list of the guidelines, go here.

When Google reported a 33% growth in net U.S. interactive advertising revenue for the first quarter, it set a high bar for the other three. Google will likely see a 32.1% growth in revenue for all of ’08, eMarketer predicts.

MSN’s ad biz will likely grow 22.4% this year; AOL’s will grow 9.6% and Yahoo brings up the rear with a still-respectable projected 7.9% growth.

“Google is effectively jacking up the averages. Meanwhile, AOL and Yahoo are working hard just to keep up,” says David Hallerman, senior analyst and author of the report, “US Online Advertising: Resilient in a Rough Economy.”

Yahoo came in second with 21.3%. Microsoft, AOL and Ask Network crawled behind, with 9.4%, 4.8% and 4.7%, respectively. However, each site enjoyed an increase in traffic, thanks to the higher number of searches, with Ask Network seeing the biggest hike.

The breakdown:

• Google saw a 10% boost with 6.4 billion core searches
• Yahoo saw a 7% with 2.3 billion core searches
• Microsoft saw a 6% boost with 1 billion core searches
• AOL saw a 7% boost with 521 million core searches
• Ask Network saw an impressive 12% boost with 503 million core searches

In comScore’s analysis of where search activity is observed Google also led the pack with 8.3 billion searches and Yahoo once again received the booby prize, coming in second with 2.4 billion. Predictably, Microsoft, AOL and Ask again followed at a distance with 1 billion, 891 million and 506 million searches, respectively.