New Tool Helps Starcom Figure an Ad's Worth

Better Estimates of ROI Could Change Where Online Dollars Go
By Abbey Klaassen
Published: January 02, 2007

NEW YORK (AdAge.com) -- One of the biggest myths of online advertising is that it offers a clear-cut, simple formula for figuring return on investment. After all, when someone clicks on your online ad you know it worked, right? But what about all the online ad impressions that led up to that click? How does one assign credit to those? It's not as simple as it sounds -- and figuring it out has flummoxed advertisers skilled in what's long been considered the most accountable of media: the internet.

Monitoring the combo
Indeed, when online advertising came on the scene 10 years ago, it was billed as the most accountable medium. "But that very moniker is working against us at this point," said Jeff Marshall, senior VP-managing director at Starcom, which is trying to solve the problem by creating a tool that monitors combinations of search and display ads and figures out how much each contributes to a conversion.

The problem? In online advertising, the ad servers only assign a favorable action -- a click or a purchase -- to the most recent ad to which a consumer was exposed. In other words, while many impressions can ultimately lead to a sale, the only ad that gets credit for the sale is the most recent one viewed. A rich-media home-page takeover can be assigned less value than a simple button farther down a cluttered page, despite the fact the rich-media takeover is a much more expensive, often more effective, ad unit.

Sussing out the mix
The accountability model was based on direct response and doesn't account for the various advertising impressions made over time. A recent study by Yahoo, for example, showed that search and display are linked. But it's hard for agencies to figure out what the mix of ad formats and units should be -- and to allocate those online ad dollars as effectively as they should.

Starcom has dubbed its solution "multiple-attribution protocol" and hopes it will determine the right combination of ads to increase sales. More simply, it's a system that can in real time monitor the mix of search and display ads responsible for a conversion.

"You've got to remove the search, display and web-site reporting silos," said Mike Zeman, VP-media director at Starcom. "And you've got to throw out the myopic most-recent-exposure reporting approach."

The Starcom tool is created using technology from a couple vendors, Blackfoot and Theorem Analytics, to see what creates the optimal returns. The deal isn't exclusive. Right now it optimizes between multiple types of online advertising but it's not unrealistic, said Mr. Marshall, to envision a system that some day integrates offline media as well -- IPTV or digital cable could be added to the mix once its available in a usable form.