Earlier this morning, comScore chairman Gian Fulgoni announced our Cyber Monday 2010 spending total with the news that people spent to the tune of $1.028 billion dollars on U.S. websites, making it the heaviest online spending day on record and the first to eclipse the one billion dollar threshold.

This spending bonanza marked a 16-percent increase vs. Cyber Monday 2009, and more than double the spending we observed just five years ago. It’s pretty amazing to see how far this day has grown over the years.

Importantly, Cyber Monday is not – nor has it ever been – the heaviest online spending day of the season. That notion is a misconception that seems to have been perpetuated over the years. Cyber Monday is actually the first significant increase in online spending we see each season, far heavier than Black Friday, but it is then followed by several days of continued heavy spending into the middle of December.

So what will be the heaviest online spending day of the season this year? Most likely it will occur either Monday, December 13 (sometimes known as “Green Monday”) or Tuesday, December 14. Last year’s heaviest spending day occurred on Tuesday, December 15 when we reached $913 million, the first time we had surpassed $900 million in spending. This year, it seems likely we’ll reach the billion-dollar spending threshold at least a couple of more times.

This online holiday shopping season is clearly off to a great start – let’s hope this momentum continues.

This post was originally published at ClickZ.asia on November 18, 2010.

The Internet was coined ‘the most measurable medium’, largely as a result of the industry’s reliance on click-through rates (CTRs) to measure online advertising. But over the past several years, and through a variety of industry research, we’ve learned while clicks can be measured, they do not necessarily matter, at least not to the extent that many might have believed.

There are several reasons why CTRs are not the appropriate measure of display advertising’s effectiveness. Perhaps most notably is the fact that the majority of Internet users do not click on display ads, and the percentage of users who do is continuing to decrease over time.

In March 2009, only 16 percent of U.S. Internet users clicked on an ad, according to our research with Starcom USA. That’s a 50 percent decrease compared to July 2007.

And the same trend in rates has been seen across global regions, according to the DoubleClick annual benchmark report (PDF).

If a campaign’s effectiveness is only measured using clicks then the campaign is ignoring 84 percent of Internet users – a major missed opportunity for the majority of brands.

How do online direct response ad dollars measure up to other media?

Using click-throughs to measure effectiveness is essentially making the Internet a direct response medium. A look at how the online channel is utilised for advertising versus other media such as TV, print, and radio revealed vast differences in the brand versus direct response dollar split. Of the $186 billion spent on media vehicles outside of the Internet, 63 percent is spent on brand marketing; while 37 percent of the total dollars is spent on direct response marketing, according to Lehman Brothers/ThinkEquity Partners. In comparison, of the $26 billion spent on online media, only 23 percent of dollars is spent on brand marketing; while 77 percent is spent on direct response marketing.

But what will it take to move the industry beyond viewing the online channel as a direct response medium where the click is king?

The industry has been slow to move beyond the idea of the online channel as a direct response vehicle measured by click-throughs to utilising it as a branding vehicle, where the true potential of the digital economy can become a reality. There is clear and mounting evidence in support of the Internet’s ability to build brands and the industry is beginning to recognise and act on the potential. As addressed in our company report, ‘How Online Advertising Works: Whither the Click?’ even with dismal CTRs, display advertising has been shown to lift site visitation for the advertised brand, to lift trademark search queries and to build both online and offline sales.

As an increasing percentage of brands’ budgets move to digital, marketers must be able to effectively measure the total impact of their digital advertising campaigns, which includes many other more meaningful measures other than the click, and to develop strategies and execute campaigns that will result in the greatest return-on-digital investment.

The digital environment is increasingly complex, but with this complexity comes an immense amount of opportunity for innovative and forward-thinking brands to seize the potential that comes from this engaging and far reaching platform. Before planning and measuring your next campaign, here are a few things to keep in mind:

Digital Advertising: What to Remember and Forget About the Click

• Clicks on display ads are a misleading metric, and one should only use clicks for direct response ad campaigns (or search).
• Clicks do not reveal information on brand building. Clicks don’t measure all of a campaign’s sales impact nor the cumulative (latent) impact of ads.
• Click-through rates continue to decrease as more content is created and more advertising inventory is available.
• The majority of clicks come from a small percentage of the total population. One of our company studies found that heavy and moderate clickers only represent a combined 8 percent of the U.S. Internet population, yet they account for about 85 percent of all click-throughs.
• Clicks are not the right metric to use for measuring online branding. Better metrics such as ‘reach and frequency’ help establish online media on the same playing field as traditional media to provide continuity in planning.
• Although it might be coined ‘the most measurable medium’, brands need to understand what metrics (and there are many!) are important in measuring their digital success.

As I write this blog post about the continued but inappropriate use of the click for evaluating the effectiveness of display ads, I’m reminded of Henry II’s famous quote when he obtusely referred to Thomas Beckett, the Archbishop of Canterbury: “Who will rid me of this meddlesome priest?” Back in 1170, some Knights in armor were only too happy to help Henry rid himself of the Archbishop. If only it were so easy to rid ourselves of the meddlesome display ad click today. Where’s a good Knight when you really need one?

I thought it had become evident to everyone that the click is an inappropriate metric to use to gauge the effectiveness of display ads, since the evidence of the irrelevance of the click is overwhelming. Consider the following:

• comScore research conducted in conjunction with Starcom showed that only 16% of all Internet users now click on a display ad in a month, down from 32% a year earlier.
• Doubleclick has reported that click rates on individual ad campaigns around the world average about 0.1%. If one uses the click, the low click rate would lead one to conclude that online advertising doesn’t work.
• Yet, research conducted by comScore here in the U.S. and in Europe has shown that display advertising does indeed have a substantial and positive impact on consumer behavior – even in the absence of a click.

In light of this extensive evidence, it’s puzzling that some in the online advertising industry still stubbornly cling to the use of the click. A recent study of the online advertising ecosystem conducted by Advertiser Perceptions and sponsored by Collective found that about two-thirds (64 percent) of advertiser and agency executives continue to use click-thru rates (CTRs) to evaluate ad network performance. The study also found a disparity between senior- and lower-level agency decision makers, with the latter relying heavily on CTRs and the former leaning on other metrics. This would appear to suggest that the industry needs to do a better job of education.

In a recent blog post, Forrester analyst Emily Riley wrote:

Marketers must move to the "equal credit" measurement model and abandon "last click." I can't tell you how many marketers and agencies I know that still run ads across 10 or more ad networks or portals and don't measure frequency, exposure or share of voice across the entire media buy. Most importantly, they aren’t distributing credit across all ad exposures, but are still tied to the last click model, ensuring that they capture no early funnel value at all.

Why the fascination with the click? I suspect one reason is that computing clicks on display ads is fast, cheap and easy. In a world where time and money are of the essence, these factors may well be sufficient for some to put aside concerns about the click’s relevance. If correct, that’s certainly not a positive commentary on the state of the online ad business.

During a recent client meeting, I was asked how click rates on display ads compare to those on search ads and how the two approaches compare in terms of behavioral impact. I thought you’d find the answers to be interesting and, hopefully, the following discussion will help move more executives to use non-click metrics when evaluating the effectiveness of display ad campaigns.

• 63% of all Searchers Click on any Paid Search Ad
• 97% of all Searcher Clicks on any Organic Link
• 16% of all Internet Users Click on any Display Ad


• 3.5%: Average Click Rate on a Paid Search Ad Campaign
• 0.1%: Average Click Rate on a Display Ad Campaign


• 4.0% of Clickers on Retailer Search Ad Buy Following Click
• 2.0% of Clickers on Retailer Display Ads Buy Following Click

First, we can see that searchers (who represent fully 90% of monthly Internet users) are far more likely to click on an organic link (97%) or a paid search ad (63%) than Internet users are to click on a display ad (16%). This isn’t surprising. Searchers are, by definition, much more likely to be “in the market” for a product or service and based on the fact that they conduct a search are very likely to be looking for information. So clicking on a link (paid or organic) in the search results is not surprising.

The average click rate (defined as the percent of paid ads that were clicked on) for paid search campaigns (3.5%) is massively (35X) higher than for display ad campaigns, reflecting the fact that the click is a far more relevant metric for search as opposed to display advertising. Still, the vast majority of even paid search ads (about 96%) are not clicked on by searchers.

The advantage of search over display as a direct response tactic is not just reflected in its far higher click rates; we can see from the data above that clickers on search ads are twice as likely as clickers on display ads to complete a purchase during the Internet session where they clicked. So, as a direct response tactic, it’s clear that search works better than display because it elicits a far, far higher click rate and a higher conversion level among its clickers.

However, this is not to say that display advertising doesn’t have value as a branding strategy or as a supplement to a paid search campaign – because, as we’ll see, display ads can substantially increase the number of trademark search queries while also lifting brand sales. This is where it’s important to go beyond the click when evaluating the effectiveness of display campaigns and measure consumers’ response to advertising over time.

Here’s what comScore has found. We used the comScore panel of 1 million U.S. Internet users whose behavior we track. For a variety of retailer ad campaigns, we analyzed the offline buying behavior of three groups of consumers:

1. Those who were exposed to paid search ads but nor display ads
2. Those who were exposed to display ads but nor search ads
3. Those who were exposed to both search and display ads.

We measured the panelists’ offline buying by linking them to their retail store loyalty card data which gives us a direct measurement of their actual in-store buying activity. As a control, we also looked at the buying behavior of a balanced control group of panelists who did not receive either a search or display ad. The following chart shows the lift in retail sales within the exposed groups relative to the control group over a four week period following initial exposure to the ads:

Among those who were exposed only to display ads, the lift in sales over a four week period following exposure to the ads was 16% (even though the average click rate on the ads was only about 0.1%). By using a four-week period subsequent to ad exposure, we’re able to tease out the latent impact of advertising and move beyond a measurement of just the immediate impact. In essence, we’ve proved that online display ads work in the same way as traditional media by building sales beyond the initial exposure – and that an immediate click isn’t a relevant metric. To an experienced advertising practitioner this is probably obvious, but to those in the digital ad world without prior advertising experience, this is likely to be valuable new insight.

As might be expected, the lift in sales among those exposed only to search ads (+82%) was greater than the lift among those exposed only to the display ads (+16%). This reflects the fact that searchers are much more likely to be “in the market” (i.e. way down the purchase funnel). However, there is synergy when a display campaign is overlaid on a search campaign, with the combined impact (+119% lift) being greater than the sum of the parts.

There’s more to the story however, because valuing the sales impact of display versus search advertising isn’t complete without addressing the higher reach that’s possible with display advertising. There is a natural limit to the number of people that can be reached with a search ad, which is a direct function of how many people search using the keywords purchased by the advertiser. On the other hand, display ads can theoretically be delivered to all Internet users, whether they are searching or not. When one factors in the typical reach that comScore has observed for display ad campaigns relative to search, the total sales lift from a display campaign can be substantially higher than for a search campaign, as can be seen below.

Search is a very powerful tactic to use when you’re intent on reaching consumers far down the purchase funnel, but smart marketers would be advised to always consider the use of a display campaign as an overlay to a search campaign. With this approach, they can reap the benefits of the synergy that exists between search and display advertising and have the best of both worlds – latent branding impact and immediate short term response.

But when evaluating the importance of your display ad campaigns, steer well clear of the meddlesome click. Henry certainly wouldn’t approve.

With the online holiday shopping and buying season in full swing, I thought it might be helpful to debunk five myths about e-commerce that still seem to be making the rounds in the media. Many of these myths have tended to originate as a result of the use of inappropriate research methodologies

1. Cyber Monday (the first Monday following Thanksgiving) is the heaviest online buying day of the year
   In the ten years that comScore has been tracking online buying via unobtrusive electronic measurement through our opt-in panel of 2 million Internet users, we have never seen this to be true. While Cyber Monday is certainly the day when the online shopping season sees its first major spike in sales, the heaviest online buying day actually occurs much later, generally around the middle of December. So, while Cyber Monday this year crossed the $1 Billion threshold and is - as we stand here today - the biggest day in e-commerce history, I fully expect its spending rate to be surpassed later this month.
2. People do most of their online buying from home
   The fact is that buying from work still accounts for about a half of ecommerce sales despite the increase in high speed Internet connections at home. The main reason appears to be that buying from work affords a level of privacy when buying gifts for family members that’s unavailable at home. In addition, with the increase in dual wage earners in many households and the attendant pressure on spare time, there are likely to be more time slots at work (e.g. lunch hour) in which to squeeze some gift buying.
3. Surveys of consumers can be used to determine the answer for #2 above.
   While surveys have many valuable applications, one has to be careful when asking very sensitive questions such as “How much of your holiday shopping did you do from work?” I’ve seen guilt compel many a survey respondent be unwilling to truthfully answer that question - or to even answer it at all.
4. Surveys of retailers can be used to accurately obtain an estimate of total industry growth rates
   As in #3 above, one has to be very careful when using surveys of retailers to get at sensitive issues. Retailers whose sales didn’t grow much (or at all) just aren’t going to be willing to admit to that in a survey. As a result, the survey responses will almost certainly be biased towards the retailers whose businesses performed well and, as a result, will tend to substantially overstate actual industry growth rates.
5. Purchasing over mobile devices is a significant driver of e-commerce today
   Much has been written about how mobile devices will change the way we purchase, and on that point we can agree. But some have suggested that consumers are using their devices to actually make purchases, and while this may be truer than in years past, the behavior is still fairly insignificant relative to the total size of the e-commerce market. Smartphones, a key driver of more advanced web browsing functionality (such as e-commerce), still account for less than 30% of the U.S. mobile phone market. And, even among those who own a smartphone, just 15% visit a retail site on their phone in a month, with transactions being far, far smaller. Additionally, due to the small screen size of mobile devices, some consumers may never feel comfortable making certain purchases over this medium when they need to be able to see the item in full view. Mobile devices are certainly being used today to obtain pricing information and to receive ads and promotions and have enormous potential to facilitate and enhance the consumer shopping experience even further, but the device is not currently used as a transactional medium and it may take some time before that behavior really takes hold.

A couple weeks ago, I discussed the overall significance of free shipping to holiday e-commerce purchasing, indicating that we expected it to once again play a major role in how consumers transacted online. We recently crunched some numbers to look at just how significant it has been to the 2010 holiday season, and the results were pretty staggering.

We found that, in the first three weeks of the season, the percentage of transactions including free shipping closely resembled last year’s pattern, where it began at around 45% and climbed to 50% by November 21. However, in the two weeks since, the patterns have looked very different. In 2009, the percentage of transactions using free shipping declined to around 45% again, while this year the number surged to 55% in the week ending November 28 and came in at a still very high rate of 51% in week ending December 5.

Perhaps these numbers should not be such a surprise, with e-commerce leaders Amazon and Walmart offering free shipping in a big way this year, and other retailers being compelled to follow suit.

Such a prevalence of this incentive might cause concern for retailers over its tendency to compress margins; however, as I mentioned in my previous post, consumers are spending a lot more on transactions with free shipping than they do on those transactions with paid shipping. This increase in basket value can certainly help offset some of the negative impact of free shipping on retailers’ margins.

For the week ending Dec. 5, 2010, transactions using free shipping were $125.20 on average, 45% higher than those with paid shipping. So any retailers worried about the costs of offering free shipping should remember that consumers will be more willing to open their wallets when they can take advantage of this important incentive.

This post was originally published in MediaPost on December 21, 2010. This article is intended as humor and should not be construed as comScore’s policy position on privacy.

'Twas the week before Christmas, when alone in my house
I was finishing shopping, with a click of the mouse;
Then I cleared out my browser cache, cookies deleted,
In hopes of nefarious snooping, defeated.
Yea, the whole ecosystem lay snug in their beds,
While visions of cookies alit in their heads;
But these weren't the cookies you baked, or you ate,
That you left out to cool, on a red and green plate.
No, these cookies told advertisers about you,
About all of the things that you wanted to do.
Did you buy electronics, a guitar from Fender?
Were you that most precious, an auto intender?
In what Zip did you live, And in what DMA,
And to whom were your eyeballs worth the most, today?
The consumer press had quite a panic created
Over issues of privacy wholly invaded
And now there was talk about some "Do Not Track"
Which the whole ecosystem feared would set us back.

Well, my head was a whirl with this "What They Know" chatter
When out on the lawn there arose such a clatter,
So I reached for my smartphone, and issued a tweet,
And let Foursuare know too, since friends might like to meet.
Then I made my way down to the yard, in the snow,
Keeping Facebook appraised, as along I did go.
When, what to these cynical eyes should appear,
But a miniature sleigh, and eight tiny reindeer,
The sputtering, cursing driver gave pause,
But I knew right away this was ol' Santa Claus.

So I asked him, "Good sir, on this crisp winter's night,
What has caused you such anguish? You do look a fright."
More rapid than eagles his answers they came,
And he heaved up, and listed each of them by name;
"Oh pixels, Oh DSPs, real-time bidding,
Oh persistent cookies, oy! Who are we kidding?
Aggregators, exchanges, oh optimization,
Analytics, ad servers, and verification!
Ad Ops, infrastructure, and technical specs --
And we wonder why people think this stuff's complex?"

He was on a roll now, and I stared at him, rapt
For I knew that the things he was saying were apt.
And the more that he spoke, well, the more he became
Rolly, jingly, and jolly, befitting his name.

"But what are we to do then?" I asked the great man
And he smiled at me, and said, "Josh, I've got a plan."
"Yes, I thought that you might," I said back to Saint Nick,
"But I've used up my word count, so spell it out quick."
Fleshy hand on my shoulder, we walked through the snow,
And he said, "Let me tell you the things that I know.

"When you're building a brand in the digital space,
It isn't a big algorithmic arms race.
It's still about people, like me, and like you
And telling them just what your product can do.
And for heaven's sake, son, when you're doing the telling,
It matters a lot if the telling's compelling.
(In fact," he confided," that's why it's called selling.")

"So impressions to cookies efficiently sent
May help some in the ecosystem make the rent
But the way to break through all that marketing chatter
Is to use the websites that your prospects think matter
And compelling telling on those websites' pages
With whom your best prospect most deeply engages."

It all sounded so simple, so logical too,
That I knew I just had to come share it with you.
So I turned and said "Thank you, and now I must go" --
But he'd vanished, and I stood there alone in the snow
Not a sign, not a footprint, not one broken twig,
Like he'd never been there, 'twas no Santa Claus gig.

But I tell you the truth of what happened that night
And I can't rightly say, was he wrong? Was he right?
That's for you to decide, in this season of cheer,
I'll just wish you the best, and a happy new year.

A recent article in Fortune got me thinking about the significant changes that have occurred in recent years in how consumers obtain information on prices and deals and the impact this has had on their buying decisions. As comScore has reported, 2010 has been a strong holiday shopping and buying season, so I was particularly struck by the fact that ShopLocal reported an overall decline in the use of display ads by retailers to communicate promotions and special prices:

As can be seen above, while the number of advertised offers per store increased substantially in the few days immediately preceding and following Black Friday, for the season overall retailers were generally running about 6% fewer ads touting their special offers. Despite this reduction in paid advertising “pressure,” however, consumers actually reported seeing substantially more discounts, sales and promotions this year than last.

When we asked consumers immediately prior to Thanksgiving about their perception of discounts and promotions in relation to last year, a net 36% of consumers reported seeing more special offers than in the previous year (45% said they had seen more discounts and promotions vs. 9% who said they had seen less). We asked the same question two weeks later in mid-December and while this proportion had declined somewhat, a substantial net 24% still said they were seeing more promotions.

If consumers are seeing more deals, but they’re not getting them from display ads, it’s clear that they must be receiving promotional information via other means. That encompasses a broad variety of online tools, most of which are very efficient for retailers (on the basis of cost) and consumers (on the basis of time spent). Consider e-mail, perhaps the earliest form of online marketing. Acxiom reported a 40% increase this year in the use of e-mail by big brands while Shop.org reported that 63% of retailers used e-mail to communicate special offers on Cyber Monday 2010, up from 50% in 2009.

In addition to e-mail, which can be characterized as “push” marketing, consumers have a plethora of tools at their disposal which they can use to easily “pull” price and product information when and where they need it. This includes visiting retail sites and coupon sites, accessing social media, conducting search queries, using comparison shopping engines, reading product reviews and using mobile devices. Let’s take a look at the trend in the use of these tools:

It’s clear that the number of people using the Internet to obtain information in support of a buying decision is now extraordinarily high and the year-over-year increase in this type of activity is very strong. As examples, 90 million Internet users visited a comparison shopping engine in November, up 9% versus year ago, while 45 million visited a coupon site, up 19% versus last year. We’re also seeing the emergence of group buying promotional sites such as Groupon, which attracted 10 million visitors in November, a six fold increase from the same month in 2009.

This year, it’s also clear that the use of mobile devices to research prices and product features has reached a material level of importance and should only continue to grow as the number of smartphone users increases:

As part of a survey comScore conducted in the first half of December (Dec. 9-13, 2010), we asked consumers what sources of information they had used to help them in making a holiday purchase decision (either online or in-store). Accessing a retailer’s web site was the most frequently cited source of information that helped drive a consumer’s buying decision (35% of respondents mentioning), followed closely by the use of traditional search engines (33%), visiting coupon sites (25%), e-mails (18%) and comparison shopping engines (17%). Surprisingly, recommendations obtained via social media were cited by only 5% of respondents, marginally ahead of the proportion citing banner ads (4%). The low rating for social media matches what ForeSee Results recently found in an independent survey, with only 5 percent of holiday shoppers saying a social media channel primarily influenced their decision to visit one of the top 40 retailers’ websites. With that in mind, the measurement firm advised retailers: "tried-and-true online marketing tactics should not be abandoned or ignored in favor of newer media."

In summary, it’s clear that retailers have gone far beyond the use of paid online display advertising to cost-effectively communicate deal pricing information to consumers, while at the same time consumers have now become accustomed to using online tools to root out best prices. The more influential tools include retailers’ own web sites, paid and organic search, comparison shopping engines, coupon / deal sites and e-mail, each of which offer retailers a high reach at a very low cost. In many ways, the aggressive acceptance and use of these tools by consumers means that they can easily find the most attractive price for any product and, as such, pricing power has surely moved from retailers to consumers. When retailers release their end of year financial results, we will see if they were able to realize enough cost reductions to allow them to report a profit growth that matches the surge in promotion-driven consumer buying that characterized this year’s holiday shopping season.