A debate about the prospects of online advertising has been raging at TechCrunch following a guest post by Wharton Professor Eric Clemons titled “Why Advertising Is Failing on the Internet.”

According to TechCrunch, the post: “Sparked a blogstorm and 600-plus comments, most of them filled with rage. Even Danny Sullivan, the normally unperturbable editor-in-chief of SearchEngineLand, couldn’t believe that Clemons could be serious, and let loose in his own post.”

You can view the fight, aka “Steel Cage Debate On The Future Of Online Advertising: Danny Sullivan Vs. Eric Clemons”, here: http://www.techcrunch.com/2009/03/28/steel-cage-debate-on-the-future-of-online-advertising-danny-sullivan-vs-eric-clemons/?ref=nf#comment-2675629

I couldn’t resist joining the fray and posted the following comment:

“How about citing some valid and relevant research about the effectiveness of online advertising in this debate? For example, at comScore, based on more than 200 studies, we've definitively established the effectiveness of online display ads in increasing site visitation, trademark search queries and both online and offline sales -- despite minimal click rates and irrespective of whether users want / don't want to see the ads: http://www.comscore.com/press/release.asp?press=2587 Our research will be published in an upcoming issue of the Journal of Advertising Research. Perhaps the good doctor should read it. Online advertising will continue to grow because it works.”

Twitter seems to be just about everywhere these days, infiltrating pop culture and challenging traditional communication channels as people answer the simple Twitter question, “What are you doing?” Many people have hopped on the Twitter bandwagon - from businesses to celebrities to professional sports players to President Obama.

Over the past several months, we at comScore have watched how quickly traffic to Twitter has exploded. Worldwide visitors to Twitter approached 10 million in February, up an impressive 700+% vs. year ago. The past two months alone have seen worldwide visitors climb more than 5 million visitors. U.S. traffic growth has been just as dramatic, with Twitter reaching 4 million visitors in February, up more than 1,000% from a year ago.

Reuters reporter Alexei Oreskovic recently authored an interesting blog post about the demographics of Twitter users. What he discovered was that 18-24 year olds, the traditional social media early adopters, are actually 12 percent less likely than average to visit Twitter (Index of 88). It is the 25-54 year old crowd that is actually driving this trend. More specifically, 45-54 year olds are 36 percent more likely than average to visit Twitter, making them the highest indexing age group, followed by 25-34 year olds, who are 30 percent more likely.

The skew towards older visitors, although perhaps initially surprising for a social media site, actually makes more sense than you might think at first. With so many businesses using Twitter, along with the first generations of Internet users “growing up” and comfortable with technology, this is a sign that the traditional early adopter model might need to be revisited. Not only teenagers and college students can be counted among the “technologically inclined,” which means that trends are much more prone to take off in older age segments than they used to. And with those age 25 and older representing a much bigger segment of the population than the under 25 crowd, it might help explain why Twitter has expanded its reach so broadly so quickly over the past few months.

Keep an eye out for the March U.S. Twitter data, which should be available later this week. An early peek at the data suggests it’s going to be another HUGE month for the increasingly popular site. Follow comScore on Twitter and be the first to find out how the site did! You can also follow comScore chairman and co-founder Gian Fulgoni on Twitter to hear his thoughts and insights on the digital media industry at large.

I’m delighted to report that at the annual Advertising Research Conference in New York last week, comScorians were the recipients of numerous awards.

To begin, Lars Jensen (Senior Client Service Analyst) and Kevin Levitt (VP) from comScore were members of a team consisting of comScore, Google and MediaVest that won a coveted “ARF David Ogilvy Award” for their work in optimizing an online advertising campaign for Continental Airlines. The Ogilvy Awards celebrate the critical role of consumer research in creating successful advertising. They are named after the legendary David Ogilvy in recognition of his spirited advocacy (and dogged defense) of the importance of research in making good advertising even better.

comScorians also featured prominently in the ARF Great Mind Awards. Honoring research innovation, rising research stars and important member contributions to the field, the ARF Great Mind Awards recognize individuals who contribute to the excellence of, and advance the art and science of, advertising research.

Tania Yuki, Director of Product Management for comScore’s Video Metrix service, won a Bronze Award as a Rising Star. This award recognizes those who, in their first seven years of professional experience, have stood out by their contributions and young leadership.

Also recognized for their research distinction among the “next generation of research stars” were three finalists from comScore in the Rising Star Awards category: Dorothy Advincula, Senior Survey Research Manager in comScore’s San Francisco office, Agil Manizada, Client Service Manager in comScore’s San Francisco office, and Andrew Lipsman, Director of Industry Analysis in comScore’s Chicago office.

Gian Fulgoni, comScore’s Chairman, and Magid Abraham, comScore’s President & CEO, were honored with ARF Member Recognition Awards, which are given to individuals who rise above the daily fire drills and find a way to contribute in a lasting way to the ARF and therefore to the industry.

Congratulations to these award winners and, indeed, to all of comScore’s talented employees who work tirelessly delivering innovative research value to comScore’s many clients.

comScore chairman Gian Fulgoni (fourth from left) celebrates with other ARF honorees.

comScore ARF honorees Agil Manizada, Tania Yuki, and Dorothy Advincula celebrate their awards.

This WSJ article caught my eye and, at first, I couldn’t believe what I was reading. How on earth could the government think that VC firms represent a systemic risk to the financial system? Has the pendulum swung so far that the government now thinks that any financial entity is a potential threat to the stability of the financial markets and needs the government’s control. With all due respect, Mr. Geithner, the solution to a drought isn’t a flood.

I decided to poll a few of my venture friends to get their reaction to the article. Without naming names, here are a few of the verbatims. You’ll quickly see the emotion that is at play here:

“I agree with the article but unfortunately we may be in an environment where the government has declared war on entrepreneurs and the investor class that builds companies and creates the bulk of the net job increase in our country. Regulating hedge funds and credit default swaps (CDS) makes sense and is likely needed. Regulating venture funds is solving a problem that does not exist and can only further slow economic development and technological innovation.”

“It is a deep disappointment to me to see the Obama administration move the wrong way here. Instead of cleaning up the ecosystem and restoring it to health, if this is true, the ecosystem will be more polluted.”

“I think they are lumping buyout & venture into one Private Equity bucket. It has happened with the tax on carried interest discussion (thank you Schwartzman), happens when the Pensions & such make allocations (x% to private equity) and happens often in the press. You see this in his comments around fears of firms/deals being over-leveraged. I see it in the Illinois Legislative activities we are involved with. We have had to spend a lot of time educating state legislators about the differences of the two sub-classes. Perhaps we need a VC independence movement from the Private Equity class...we seem to keep getting drubbings as a result of our Buyout friends' issues and excesses.”

“I am just astounded by how someone in Geithner's position could be so ignorant. He's an idiot, simple as that.”

What do you think?

I was looking over the most recent online ad data from the Internet Advertising Bureau and discovered some rather interesting facts. The IAB and Price Waterhouse Coopers (who compiled the data) reported that display-related advertising spending in Q4 2008 declined by 4.3% versus the corresponding quarter a year ago. That’s not surprising in light of the horrendous economic conditions that have been affecting the online advertising industry and many others.

However, if you dig into the composition of “display-related,” you find some fascinating statistics. First, one needs to realize that the definition of display-related includes banner ads, rich media, video and sponsorships. Here are the relevant numbers:

What I find really surprising (and somewhat of a positive) here is that these data are saying that banner advertising continued to grow in Q4 and that the overall decline in display-related spending was driven exclusively by a drop in rich media and in sponsorships.

How to interpret these trends? Is it, perhaps, that the tough economy is behind these shifts, causing advertisers who are already using the Internet to shift dollars from more expensive rich media and sponsorship formats to cheaper banner ads? I think it’s very likely that that is indeed happening. It’s also possible (and I hope this isn’t just wishful thinking on my part) that advertisers are beginning to recognize that a display campaign overlaid on a search campaign can produce some valuable synergy. The results of comScore’s research have certainly shown that this synergy exists.

It’s also interesting to see that video advertising continued to grow strongly in Q4, albeit from a small base. I think this is saying that the appeal of “sight, sound and motion” is so strong for some advertisers that they are still willing to put some incremental money against the video format even in tough economic conditions.

I’d be interested in your thoughts as to how to interpret these data.

Based on the results of a study comScore released two weeks ago regarding the state of automotive online advertising, we know that the industry has continued with strong online marketing efforts for SUV models - even in the face of severe financial difficulties during the current economic downturn. Despite the financial headwinds of the moment, however, businesses still need to advertise and promote their brands and products if they hope to generate sales. Right now, cost-effective marketing is more important than ever, and that may be a key reason why the auto industry is increasingly moving its ad spend online.

In order to understand how automakers have taken to the online channel for marketing purposes, let’s take the example of one of the larger model-specific campaigns that ran in January: GMC Yukon. Using comScore Ad Metrix, our competitive display advertising intelligence service, we learned that the Yukon went to market with an online media strategy that delivered ad impressions across a broad set of site categories and achieved a commanding 34% share of voice versus its SUV competitors, with the campaign reaching 4.4% of the total U.S. Internet population an average of 2.7 times per person in just one month.

January 2009, Total Campaign Levels:

In addition to examining total plan levels, I returned to Ad Metrix to compare the Yukon advertising strategy to that of the overall SUV category. Was there something else at play here that could both contribute to an interesting blog post, as well as lend insight to help other marketers? You betcha. The data showed that Yukon executed a plan that was concentrated in different site categories than its SUV competitors. For example, Yukon allocated more than one-half of its impressions to the News/Information category, while only 20% of SUV ads ran in the same category. Consequently, Yukon achieved an impressive 78% share of voice (SOV) in the category, enabling it to stand out among its competitors. Let me repeat that… a 78% share of voice! Below is a view of the top 10 site categories in which Yukon advertised compared to those of SUV advertisers in total.

January 2009, GMC Yukon SOV by Site Category:

Clearly, the ad placement strategy of Yukon differed greatly from that of its competitors, so I then decided to look at the Yukon campaign in more detail. As a former media planner, I regularly checked total audience delivery numbers in combination with targeting data to best understand the value of the consumers reached. So, I used Plan Metrix, comScore’s leading lifestyle and product consumption service, to conduct an in-depth analysis for the Yukon campaign. The Plan Metrix data revealed that Yukon placed display ads across site categories that delivered a high reach of SUV owners (e.g. News/Information sites can reach 78% of SUV owners), as well as categories that delivered a highly concentrated audience of SUV owners (e.g. Real Estate sites are 55% more likely than the average site category to deliver SUV owners). This type of media strategy is common advertising practice within any medium, and helps to ensure a sufficient reach of the target along with deeper engagement of those consumers most likely to make a purchase in the product category.

January 2009 Site Category Delivery of SUV Owners:

Aside from smart media planning tactics, the Yukon campaign also employed a unique creative message that its competitors could not match. Yukon is the recipient of the 2009 Consumer Guide Best Buy Award. In addition to providing competitive advertising data, comScore Ad Metrix allows media planners to visually analyze a campaign by viewing the actual creative executions. The analysis of Yukon’s creative revealed an emphasis on its 2009 Consumer Guide Best Buy Award, a message that was apparent in more than two-thirds of its ad placements. At a time when there is much debate about the overall quality of autos being produced, this is a particularly strong message.

The Yukon creative and media strategies reveal a campaign that is highly differentiated from those of its competitors. And, it certainly appears to have the elements of a very effective strategy.

Successful advertisers are always seeking to outsmart the competition, and that can best be achieved through a strong creative execution in tandem with an effective media placement. In this case, the Yukon campaign accomplished both with its Consumer Best Buy messaging and ad placement that focused on site categories that are under-utilized by its competitors. (Incidentally, one potential ancillary benefit of this latter strategy is achieving a more cost-effective campaign by steering clear of the placement of competitive ads, which can drive up CPMs. This is clearly a significant benefit, and may have played a role in the media planning process.)

But, to really confirm whether a campaign was effective or not requires a deeper layer of analysis. To gauge the actual impact of the online ad exposures, an advertiser or media planner might want to conduct a post-buy analysis to answer key ad effectiveness questions, such as:

• What was the view-through rate of the ads?
• Did brand awareness of the Yukon increase? If so, by how much?
• What was the consumer recall of the brand? Of the ad?
• Did the ad-exposed consumers become buyers?
• Did Yukon sales increase?

Beyond the auto industry, and the specific Yukon example, marketers generally turn to online advertising for its cost-effectiveness, flexibility, accountability, and appeal to consumers. On a final note, a key contributing factor to online marketing success is choosing the right data partner to help you address important media planning issues. You can guess who my choice would be!

Last week, Sarah Radwanick posted to the comScore blog about Twitter’s exponential growth curve during the past twelve months, and that the growth appeared to be driven by older Internet users. The post set off a firestorm of commentary to say the least, generating dozens of comments on our blog, pages upon pages of retweets on Twitter, and several stories in the media.

Well, we might be about to do that again with the March U.S. comScore Media Metrix data released today, which shows that the number of visitors to Twitter.com jumped 131% in March to 9.3 million visitors! That’s 5 million more visitors than in February – a pretty astounding figure if you think about it. The chart below illustrates just how dramatic a jump it was:

Unique U.S. Visitors (000)

One interesting theory alluded to by several people in last week’s discussion was that the mainstream media attention on Twitter is really helping fuel its growth. And there may certainly be some merit to that. It seems you can’t get through a typical newscast anymore without some mention of Twitter.

If you watched the news this past week, you might’ve heard that Newt Gingrich levied criticism of President Obama’s response to the Somali Pirate stand-off over Twitter. I mean, we’re talking about the highest levels of government here, and a microblogging site is being used as a top politician’s primary media outlet?

It just goes to show you how much social media, and specifically a site like Twitter, has become woven into the fabric of our daily media lives. News broadcasters like CNN’s Rick Sanchez have actually incorporated Twitter into their live broadcasts, and it seems like just about every other journo these days has a presence on Twitter. We have also seen Twitter turn more average citizens into journalists, such as when when news and pictures of Flight 1549 landing in the Hudson broke on Twitter. Like it or not, Twitter is quickly revolutionizing the way our entire news ecosystem operates, from journalist to consumer, and blurring the lines in between.

Given the natural synergies between Twittering and news consumption, I wondered if comScore data might confirm any overlap in behavior. (It might also go a long way towards explaining why we’re seeing so many older users on Twitter.) When I looked at the percentage of visitors to Twitter.com who also visited the websites of some of the top online news brands and compared it to that of the total U.S. Internet audience, I found a particularly strong level of overlap. The average Twitter user was often 2 and 3 times as likely to visit the top online news brands as the average person. For example, while 17 percent of the total U.S. Internet audience visited CNN.com in March, more than double that percentage (38 percent) of Twitter.com visitors did so.

Cross Visiting Report of Twitter.com Visitors and Selected Leading Online News Sites

So these data firmly establish that there’s a strong relationship between Twitter users and news consumption. But the chicken-and-egg question continues to gnaw at me: Is it that the real-time "newsiness"of Twitter inherently attracts news junkies, or is it that the mainstream news attention on the site is pushing more and more news consumers to get on Twitter for the first time?

I tend to think it’s probably a little from Column A and a little from Column B. There’s some sort of virtuous cycle occurring between “breaking news” and “making news” that is feeding on itself, and it is only under such conditions that we can realistically see the sort of growth that we’ve seen at Twitter over the past few months. At least that’s the best explanation I can come up with for now.

What do you think?

A few weeks ago, I had the pleasure of doing the kickoff keynote presentation at OMMA Global Hollywood and then participated on a panel discussing the state of the advertising industry. We touched on the relative merits of direct response versus branding advertising. And, for the next day or so, as I listened to the other presentations and panels at OMMA, I was struck - as I have been many times previously - by the dichotomy that exists in our industry. It seems to me that we often have one group advocating the value of branding advertising, while another larger, and more vociferous one, claims that the secret to closing a sale is simply a matter of putting the right message in front of the right target audience at the right time. The latter view seems to have prevailed more often than not online because it’s clear that the majority of Internet advertising dollars have been spent on direct response advertising. In fact, I estimate that direct response advertising accounts for about 80% of all ad dollars spent online, while in traditional media the situation is reversed. There, branding dollars are estimated to make up about 75% of the market. Why the disparity?

I think there are a number of things at work. Most important, I believe that the very nature of the speed of the Internet and the young technical minds that first created online advertising both led to a focus on immediate response. The click metric is a good example of that. One can argue that the click came into vogue as a relevant metric simply because it could be measured and not because anyone had considered its relevance to all forms of advertising. As a result, and almost by default, the industry established a belief in the minds of online advertisers that they could expect to see immediate results. Direct response campaign dollars followed and search advertising was born shortly thereafter. Today, however, as we look to the source of the future growth of the industry, I believe it’s important that we step back and remember the fundamental differences between direct response and branding, because unless we do that we’re not going to maximize the movement of branding dollars from traditional media to the Internet.

In my mind, the two strategies differ fundamentally in how they view “time to purchase”. Direct response ads aim at closing a sale or a transaction right here and now. Branding, on the other hand, means investing ad money in building brand equity, which is to say, establishing a brand’s value proposition in the minds of consumers. The return from that investment is probably not going to occur immediately. It may take weeks, months or even years.

Let me give you an example. Let’s say I’m BMW. Do I care about reaching a 20 year old, well-educated male with a promising career ahead of him, but who can’t afford to buy a BMW today? Or should I just ignore him and focus instead on those people who can buy the BMW today? Direct response proponents would say: “Ignore him; BMW should target their ads only to people who are deep in the purchase consideration funnel and able to buy a BMW today.” Branding advocates, on the other hand, would say. “Hold on a sec. Some day that 20 year old is going to be able to afford to buy a BMW and will have to decide between buying a BMW or a Mercedes or a Lexus, and when that happens he needs to have been previously informed and influenced to believe the image that BMW wants him to have of their cars. We need to invest a good portion of our ad dollars building the value of the BMW brand in his mind today.”

My view is that it’s not an either/or situation. For direct response ads to work well, it’s important that a brand’s equity have been communicated in advance of the consumer’s purchase decision. Put another way, the heavy lifting of establishing a brand’s value in the consumers’ psyche has to have already occurred. But, for an advertiser to be willing to make that kind of longer-term advertising investment prior to the sale requires patience. It’s actually the antithesis of instant gratification. It requires the wisdom, long-term perspective and understanding of the many ways in which advertising works that, perhaps, only comes with age. They say that experience makes the best teacher, and perhaps it’s not until one has actually had the experience of building a brand that one can really understand the value of branding advertising. Maybe that’s why the more experienced advertising executives are generally put in the position of making those kinds of spending decisions.

So, how do we ensure that the Internet gets its fair share of the brand-building ad market? One place to start, it seems to me, is research. In that regard, I believe it’s vital to take into account all of the marketing stimuli that affect consumer purchase behavior, not just that which occurred just prior to purchase. For example, we should be wary of attributing 100% of the credit for a purchase to a click on a search ad. Search might well have closed the deal, so to speak, but there is often a lot of other marketing activity that led the consumer down the path to purchase and, without which, closure might not have occurred. The Atlas Institute, Microsoft Advertising’s research division, has done some valuable research in that regard and has shown that “users exposed to both search and display ads convert at a higher rate: an average of 22 percent better than search alone…” Yahoo! has also recently espoused this principle and funded research with similar findings.

At comScore, we try to do our part. For example, we’ve now conducted hundreds of online advertising effectiveness studies, a good portion of them focused on measuring branding effects. We’ve demonstrated the ability of display campaigns to increase brand awareness, brand favorability, purchase intent and sales - both online and offline. We’ve shown that display campaigns - whether consisting of banners, rich media or video formats – set up the consumer to be more receptive to search advertising. And, as you can imagine, we’re taking advantage of every opportunity we get to communicate our findings at industry conferences and in client meetings.

Last, but not least is education. In that regard, I think it’s incumbent on the more experienced advertising executives to educate their younger brethren to the importance of investing ad dollars in building a brand. And, that probably needs to begin sooner rather than later. Ted McConnell, Director of Digital Marketing Innovation at P&G put it best when he said: “It’s important that we identify the truths that transcend change.”

With comScore chairman and co-founder Gian Fulgoni, and comScore mobile expert Paul Goode, both speaking at the event, I travelled to Valencia last week to attend the Festival of Media.

The sun shone brightly on the modern senate building, providing a welcoming emblem of an ancient industry transitioning itself towards a Web 2.0 world. Inside the congress centre, allegory gave way to action, as the impressive surroundings rang-out with a pragmatic and pioneering determination to find genuine answers to the key questions facing the industry today.

In this respect the Festival was one of the most rewarding industry gatherings that I have attended in some time. The recession has sparked newfound momentum in the industry’s quest to integrate itself into the advertising world, and that focus made for an electric atmosphere throughout the two day program.

For our part, we were glad to be involved in the debate, and able to emphasize the importance of accurate quantitative tools in helping move the flow of ad-dollars online.

If there a few remaining outlaws in the media world who still refute this approach, then I would cite my own allegory to emphasize the impact that good research can have on media content and advertising. When Will Smith moved to Hollywood for the first time, he sat down with his agent and together they researched a list of the top 10 highest grossing movies of all time. From that list they found that:

• 10 of those movies involved special effects
• 9 of those movies involved special effects with some form of creature
• And 8 of those movies involved special effects with some form of creature AND a love story

This kind of data collection empowered “Big Will” to become a most successful film actor, and highlights that even an industry that trades upon its creativity and individuality must employ quantitative analytical techniques if it is to truly excel.

With that in mind Mr. Fulgoni took to the stage on the morning of the first day to brief the room on how relevant and reliable data can provide the catalyst for changing media markets and specifically in today’s digital climate, move ad-dollars online.

His presentation was followed by a press conference examining online media business models alongside Hernan Lopez, COO of Fox International Channels, and Saul Berman, Strategy & Change Practice Leader for IBM Global Services. For exclusive highlights of this press conference stay tuned for another update here on the comScore blog later this week!

The media industry still has a long way to go before it is able to realize its full potential on new and growing digital platforms, but what I witnessed in Valencia was an industry not only now set-up to deal with that change, but ready to welcome it with open arms. Just as we know that people like going to the movies, we also know that they like going online – over one billion people accessed the Internet around the world in March. The key now will be to find those digital platforms that involve special effects and a creature and a love story, to facilitate the monetization of content online.

Two weeks ago, I was invited to speak on a panel at the World Economic Forum’s conference on Latin America. Readers of this blog will remember that comScore was named by the WEF in 2007 as a technology pioneer, the only market research company to have received this honor. So, it was a particular pleasure for me to make the trip to Rio to discuss the role that technology can play in helping businesses in Latin America navigate the economic downturn.

The consensus view of the panel was that information technology is a key enabler that can boost productivity, and that companies in Latin America are indeed well poised for such an evolution. Nevertheless, more can certainly be done on this front. I pointed out that the use of the Internet as a marketing tool is still lagging in Latin America and that expanding its availability and use would help disseminate knowledge about products and make them available to more consumers in the region.

Latin America is already one of the fastest-growing Internet markets, with its online population and time spent online increasing faster than most other regions of the world. In order to effectively capitalize on this growth trend, marketers must be able to understand and quantify digital consumer behavior. The need for sound metrics and enhanced media accountability in the Latin American market has never been more evident.

At comScore, we’re working hard to help achieve that end. We now report Internet behavior in a number of countries in Latin America, including Brazil, Mexico, Colombia, Venezuela, Argentina and Chile. We’re seeing a very enthusiastic response from companies in the region, as well as from the large multinationals, to the availability of robust data on this important market.

Alex Banks, comScore Managing Director for Latin America, is fluent in English, Spanish and Portuguese, and will be happy to address any questions you might have about our services in the region. Please don’t hesitate to reach out to him at abanks@comscore.com.