Does Search Get Too Much Credit?

NEW YORK While search continues to dominate Internet ad spending, new research questions whether it gets too much credit for closing sales at the expense of branding initiatives.

AQuantive’s Atlas unit studied conversion data and user behavior collected by cookies and found that nearly all advertisers give too much credit to “the last click” for leading to sales. Instead, it found two-thirds of customers who took actions on advertiser Web sites were reached multiple times by ads on several sites.

Only counting the last click—which often comes through a search engine like Google—leads advertisers to discount what led to the action: the awareness created by ad impressions on other sites.

“Search is getting more credit than it deserves—that’s because if you go upstream from those clicks, a lot of users have been to the advertiser Web site before because they’ve been exposed to other advertising,” said Young Bean-Song, vp, analytics at Atlas.

Search advertising has become a dominant force in the online ad industry, thanks largely to Google’s popularity and its ability to deliver quantifiable results. According to the Interactive Advertising Bureau, search accounted for 40 percent of all Web ad spending in 2006.

Performance-based marketing, which includes ad networks, accounted for 47 percent of the total.

But the simplicity of much of performance marketing—advertisers can precisely measure returns on their campaigns—hides the overall complexity of reaching consumers, Atlas has found. In fact, in a study released last year, it found searchers who were first exposed to a brand’s display ads converted 22 percent more often.

Josh Stylman, managing partner at Reprise Media, part of the Interpublic Group, does not believe clients should shift budgets away from search campaigns. They should, however, make sure their online display and offline campaigns complement their search initiatives. Since IPG bought the shop last month, Reprise has been able to work more closely with shared clients’ media agencies to plan for search activity triggered by TV ads.

“The offline guys love it because they’re getting credit for something they didn’t before,” he said.

The latest study examined data collected by the Atlas ad server of 5 billion ads and 1.7 million conversions. It found that the 30 percent of users reached on multiple sites accounted for a disproportionate 69 percent of conversions. Even on conversions where a user was reached on a single site, such as a portal, 86 percent saw multiple impressions. Thus, attributing success solely to the final ad would not give an accurate picture of what led consumers to act, Song said.

“Your sales are coming from people you’re reaching across many sites,” he said. “[The] reporting that you’re using to make your media decisions is not paying attention to that.”

The need for more sophisticated accounting of the effects of various forms of Internet advertising will grow as big brands shift chunks of budgets earmarked to awareness and consideration online, said Jeff Lanctot, svp, media at Avenue A/Razorfish, also owned by aQuantive. It could also change the preponderance of budgets devoted to search and direct-response ad networks, he said.

“For the clients we’ve done custom ROI-attribution analysis for, it’s had a measurable impact on their budget allocation,” he said. “When you measure these interactions higher up in the sales funnel, it changes how you allocate your media dollars.”

For now, Lanctot does not believe search budgets will shrink, although Avenue A/Razorfish is now typically giving the last click just 60 percent credit for a sale and spreading the rest to prior ad interactions.

“It’s been less about saying, ‘Lets move dollars away from direct response and search,’ but more, ‘Lets add dollars to increase awareness and intent,'” he said.