I published an article in the Harvard Business Review this month, summarizing some of the work comScore has been doing with clients to evaluate the effectiveness of online advertising. As with most things in business, the return on investment is what drives future plans, especially advertising plans. One of the benefits of our two million person online panel is the ability to match our panelists with clients’ sales databases to measure the purchases that people exposed to online advertising make in bricks and mortar stores. The results of these studies help quantify the ROI from the online advertising. The studies demonstrate consistently positive results showing that online display ads work to build traffic to an advertiser’s website, to increase sales on their website, and to increase sales through their in-store channels.

Use this link to read full article. A summary chart of the findings runs below.

Results from 18 studies in the finance, travel, telecommunications, and retail sectors collectively show that online ads have a powerful effect on off-line sales. Running search ads tends to be more effective than using display ads, and combining both types is more effective still. From the Harvard Business Review, April 2008.

The Advertising Research Foundation’s 54th Annual Meeting and Convention just concluded in New York City. This was a watershed event, with over 700 paid attendees sharing presentations over three days. The organization is made up of advertisers, their agencies and media planning partners, the media, and market research companies. At the meeting, companies demonstrated their latest, most innovative media offerings, creative product, use of media and sharing their research tools and studies advancing the measurement of ad creative, media, advertising effectiveness, and customer feedback.

I call it a watershed event because so much of the focus of the event was on digital advertising and social communication on the web. A year ago, digital media much less on everyone’s tongues. comScore, as a platinum sponsor of the event, presented a special session called “Online is the New Primetime,” documenting the immense size of the online audience and its development as an advertising medium. Despite the fact that consumers spend at least 17% of their media time online, online advertising only accounts for 7% of advertising spending. We shared work we have done with our clients to demonstrate the results they are getting from online display and search advertising—some uniformly impressive results.

We posed the question that given the huge audience and proven effectiveness of online marketing efforts, “Why are some advertisers so slow to adopt online ads?” We turned to a panel of advertising experts from Yahoo!, Google, MSN, P&G, CBS Interactive, and Mediaedge:cia to discuss the reasons. Those comments will be the subject of future blogposts. Here I would like to share some of the most interesting data on the audience size and invite you to a replay of the webcast that was broadcast on April 16. Click here for the replay.

Television is still the pervasive medium and the bedrock of most major brand advertising plans. Network television generates large reach numbers (not as large as a few years ago, but the most of any medium per exposure) and high engagement. However, the Internet has risen to be the second or third highest cumulative reach medium, depending on the source of the numbers.

One striking finding presented in our session was that during most waking hours, more people (age 15+) are using the Internet than are watching television. It is only for the last two hours of primetime and into late night, when most people seem to wind down their Internet usage, that TV consistently surpasses Internet usage. We presented the following chart which shows the hour-by-hour comparison of Internet and television usage.

Sources: National People Meter Sample, comScore

Another analysis that was part of the presentation was one prepared by our CEO, Magid Abraham that quantifies the impact of the Internet as an advertising medium compared to television. Based on our tracking of online ads compared to an estimate of the number of ads run on television and average TV ratings, it appears that the Internet delivers forty percent more gross rating points than TV in the course of a month and 120 percent more impressions. It was surprising, even to us, the heavier advertising delivery of the Internet versus TV.

Source: comScore estimates

If you would like to get a copy of the slide deck from the “Online is the New Primetime” presentation, please click here. For a replay of the webcast, please click here.

What's in a name? That which we call a rose by any other name would smell as sweet
  - William Shakespeare, 1594

When I first joined the media industry a few years ago, the big buzz was around “converging media.” What began as a vision of a brave new world in which magazines would be mobile (imagine that!) and toasters would read out the morning headlines, was quickly hijacked as a fashionable euphemism for the migration of content online. The Internet it was feared, would become something of a “threat” to traditional media…the big black hole in the corner swallowing up everything and anything that it could.

And so we come to the present day. And a world in which 57% of the U.K.’s total population is watching videos online…a world in which the BBC, the godfather of the “traditional television” industry as we have come to think of it today, is beginning to build upon an already formidable online presence, with the launch of the BBC iPlayer. Significantly, the broadcaster has just signed a deal that will allow this service to be accessed through the Nintendo Wii – that’s the BBC, being broadcast over the Internet, soon to be appearing on your TV screen.

According to comScore Video Metrix, which was launched outside the U.S. this month, over 5 million people watched over 2 million hours worth of video content on BBC Sites in December. This audience accounted for just over 10% of the total U.K. country population and (just for the record) 15% of the total U.K. online population – which of course, is an ever decreasing void. What I like about this statistic is that the iPlayer wasn’t even officially launched until Christmas, so expect to see these numbers rise even further over the course of 2008, especially given that the iPlayer brings with it full length BBC shows!

And when you consider that the iPlayer is still a U.K. specific product, in a company that derives around 60% of its online traffic from overseas –- the potential for the iPlayer is – to go a little bit “TV drama” on you for this one – monumental! Let’s also not forget, that unlike the traditional publically funded model that the BBC runs on in the U.K., overseas the company is allowed to sell online advertising, and it does so, very successfully.

But what this all really symbolizes is the change in attitude that the industry has privately been undergoing for some time now. While the spotlight was focused on social networking in 2007, online TV was quietly making its mark. And while all that was going on, data from my U.S. comScore colleagues recently showed that the Internet now delivers 40% more Gross Ratings Points of advertising than television. The fact that the CPM’s are so much lower on the Internet is what holds down the total advertising dollars spent online.

Being able to increase CPMs for online advertising might just be the catalyst that turns these two households’ rancor to pure love, because if television broadcasters can demonstrate that they can create even more ROI for advertisers by delivering their programming content online, then a marriage between these two mediums makes for an irresistible development. If that happens, we could soon find ourselves living in a world that asks: Is this Internet television? Or television online? But in the end, what’s in a name?

Many investors are breathing a sigh of relief after Google announced earnings on Thursday beating the consensus street estimates. In recent months, investors have become understandably concerned that the decline in U.S. consumers’ spending could translate into a cutback in online advertising, an industry many thought would be immune from an economic downturn. And with the dearth of public information available on Google’s key revenue drivers, the market turned much of its attention to comScore’s paid click report to help understand what might be going on with one of the key determinants of Google’s revenue.

comScore reported that Google’s U.S. paid clicks in Q1 were up 2% vs. year ago, and down 9% vs. Q4 ’07. During the earnings call, Google noted a 20% increase in aggregate paid clicks vs. year ago and a 4% sequential gain.

Why the discrepancy, you may ask?

As is always the case, we need an apples-to-apple comparison. comScore’s paid click report refers to domestic paid search clicks only, while Google’s “aggregate paid clicks” refers to global search and also includes affiliate site ads (i.e. AdSense). Two fundamental components of Google’s reported number – international clicks and AdSense clicks – are not currently included in the comScore report.

Google reported Q1 ‘08 revenue growth of 7% vs. Q4 ’07, with international revenue up approximately 14% and domestic growth (excluding the DoubleClick acquisition) essentially flat. If we take Google’s overall revenue growth of 7% and their reported 4% increase in aggregate paid clicks, we can estimate that the average cost-per-click (CPC) increase during the quarter was approximately 3%.

Now, if domestic paid click revenue was flat while CPC was up 3%, we can conclude that aggregate domestic paid clicks declined about 3% during the quarter. This brings us a lot closer to our estimated 9% decline in paid clicks. The remaining delta can likely be partially explained by strong revenue growth from Google’s YouTube and the Adsense network. In fact, comScore’s U.S. Video Metrix numbers show YouTube is up ~20% vs. Q4 in terms of video views.

comScore has always cautioned that there are multiple factors that needed to be considered when projecting Google’s earnings this quarter. In a February blog post on the subject, comScore CEO Dr. Magid Abraham and SVP James Lamberti concluded “There is no obvious reason why the economy would negatively impact" Google’s paid clicks, based on our analysis of the paid click activity at other search engines.

Moreover, when asked by the Wall Street Journal’s Kevin Delaney on Wednesday – one day before Google reported -- what our paid click data might indicate for Google, Dr. Abraham said he believed that comScore’s paid click data were consistent with 5-10% revenue growth. In retrospect, the prediction proved to be quite accurate.

In summary, a closer analysis of the Google results confirms that: 1) U.S. paid clicks have indeed softened, 2) that the softening is not due to the economy, and 3) Google’s overall revenue performance was driven by strong international growth and CPC increases. comScore has been consistent in its assessment that U.S. paid clicks alone would not tell the full story without considering CPC increases, that macroeconomic factors did not appear to be weighing on Google, and that Google might well have solid revenue growth in Q1.

Tuesday, April 22 was Earth Day. The celebration that started in 1970 has evolved significantly from its early grassroots beginnings into a day when cities, schools and increasingly more corporations promote environmental consciousness, as well as their own reputations, within communities and among consumers. The going green phenomenon has continued to gain momentum in recent years prompted by increasing media attention on environmental and energy concerns, mainstreaming of green products from food to clothes to cars, and celebrity endorsements to supply the very important trendy factor (think Hybrids at the Oscars and Live Earth).

As buzz continues to grow around the green movement, the Internet has become a place for the growing environmentally-conscious population to congregate as well as a place for newcomers to find information on the barrage of green products, terms and tips infiltrating the market place and daily conversation.

TreeHugger.com, one of the more popular green sites, has seen visitation reach 515,000 people in March 2008, an 81% increase from March 2007. Freecycle.org, a site which connects people in communities to exchange items they no longer need or want for free, gained 15% from the previous year to 322,000 visitors in March 2008.

Beyond just niche environmental sites sprouting up and gaining popularity, search has also been vital to the growing green industry as people seek information about current environmental issues and how they can live greener lives.

I used comScore Marketer, our search intelligence tool, to investigate several green search terms and came up with a number of interesting finding. Terms such as “ecotourism” and “climate change” have experienced large search query increases in the past year, with “ecotourism” growing 574% to 12,864 searches in February 2008 while “climate change” jumped 167% to 9,542 searches. Searches for “hybrid cars” also gained (up 48% to 68,332 searches), while basic environmental word searches have also seen growth, including “recycle” (up 35% to 72,779 searches) and “pollution” (up 58% to 32,788 searches).

Perhaps counter-intuitively, the top environmental search term — “global warming” — has seen its searches decline 54% decline in the past year, to 232,000 in February 2008. However, this decline should not be interpreted as a decrease in overall environmental interest, but rather as a natural decline from the term’s stratospheric popularity over the past couple of years surrounding interest in the Al Gore documentary An Inconvenient Truth and the release of the United Nations Intergovernmental Panel on Climate Change assessment report. (The first portion of the report was published in early February 2007 making it a particularly strong month for the term). As you can see, searches for the term were actually peaking around this time last year.

So even though we may be less likely to partake in an Earth Day rally today than in the 1970s, it’s clear that environmental activism is alive and well – it’s just that much of it has moved online. The accessibility of green communities and content on the Internet provides granola-lovers and non-recyclers alike with ways to be a little more earth-friendly, as well as a place for green marketers to reach and communicate with this growing niche audience.

The following is a letter that I published today which may be of interest to readers of our blog:

Unfortunately, many pundits attempted to draw conclusions about Google’s worldwide revenue performance based on comScore’s domestic paid click data, resulting in an apples-to-oranges comparison. Had they used comScore's domestic paid click data to better understand Google's domestic revenue trends, they wouldn't have missed an important U.S. story and they also likely would have avoided making the wrong call on Google’s worldwide business.

Following several historical quarters of strong sequential domestic revenue growth (including the seasonally equivalent Q1 2007), Google’s Q1 2008 revenue growth was essentially flat, which represented a significant change for Google’s domestic business. Such an important trend was also evident in comScore’s paid click data.

The chart below shows the directional association between comScore’s domestic paid click trends as compared to Google’s domestic revenue trends, representing a 94% correlation.

Of course, this is not a perfect correlation because the comScore data do not include the impact of changes in Google’s price per click and do not include paid clicks from partner sites like AOL, Ask, Washington Post, etc. nor paid clicks from the AdSense network. But the strong relationship of the two trends is undeniable.

There is of course a lesson to be learned here. To extrapolate a single data point across all aspects of a company's business can lead to wildly inaccurate conclusions.
Finally, to confirm the accuracy of the comScore paid click data, we previously published an apples-to-apples reconciliation on this blog. This analysis reconciles the comScore data with metrics shown in Google’s Q1, 2008 financial report. In short, comScore got it right – both quantitatively and qualitatively. What was wrong were the conclusions that some people drew based on inherently flawed comparisons.

Last month I looked at the overall penetration of universal search - in this post I’ll break down the various types of universal results.

In January, I examined search results during a single week on Google. During that time, 17% of all results were universal search results, and 58% of those who searched Google saw a universal result at least one time. By a large margin, most saw video and news, followed by images and maps/stocks/weather. Maps constitute the majority of that final bucket with stocks and weather in the low single digits.

The “multiple” column indicates that 15% of the audience was exposed to two or more different types of universal results on one results page. This figure may not rapidly increase if search engines move slowly so as to maintain an optimal consumer experience. However, if it does increase one can imagine a truly multi-media experience on the search engine results page.

Looking at the share of universal search results by type, video and news clearly dominate. Is this driven by consumers? By marketers? It's actually largely driven by a combination of consumers and Google itself. Video results on Google are mostly links to YouTube, where Google has a tremendous inventory and knowledge of the content and a huge base of consumer usage. However, as marketers create more relevant material, that new content will likely start to surface on the results page and change this dynamic.

Next: Click Performance for Universal Search Results