The digital revolution has touched us all, bringing extraordinary services to our finger tips and improving our lives in ways that would have been inconceivable just a short time ago. In recent years, Chicago has seen a variety of new technology companies explode onto the digital scene. While Groupon has understandably garnered a huge amount of attention on its own, there have been many other successful Chicago startups, some since acquired but many others still growing rapidly and independently in a variety of fascinating digital sectors. Every week, it seems, a new digital company is born in Chicago.

Recognizing the importance of capital to early stage companies, but also the critical role that an experienced mentor can play in helping a CEO navigate turbulent early stage waters, a group of founders from Chicago have come together to found and fund a unique venture capital effort: The Chicago FireStarter Fund. The fund has $5.7 million in committed capital from 42 founding members. The founders each have a successful track record in starting and growing digital companies and bring investment capital plus extensive management experience to the fund. I’m delighted to be one of the fund’s founders, helping Chicago-area entrepreneurs as best I can.

comScore’s roots were seeded here in Chicago when my co-founder Magid Abraham and I first met while both working for Information Resources (IRI), so it’s a pleasure for me to be able to help other Chicago area founders as they build their businesses. The Chicago area has long been associated with successful information and technology companies, with comScore, IRI and Groupon immediately coming to mind. Who knows, maybe even the next $5 billion IPO will be one of the portfolio of companies funded by FireStarter!

The fund will focus its investments in companies that are:

• Digital Media & Marketing, Software as a Service or eCommerce (with a focus on social, mobile and big data)
• Incorporated in the U.S. The fund can invest in companies anywhere in the United States. However, given that all of the fund’s members are based in Chicago, it is likely that most of the investments the fund makes will be in the greater Chicago area, Illinois and the upper Midwest.

FireStarter will source investments directly from through its member network and through its relationships with many venture funds, entrepreneurs and industry leaders Companies that would like to apply for a potential investment by FireStarter can find all of the relevant information here.

For those of you who may not be aware, Saturday, January 28th is the fourth annual Data Privacy Day, a day devoted to promoting best practices to help equip business and consumers to protect their online data and privacy. comScore is delighted to be helping lead this effort as Data Privacy Day Champion.

In support of this critically important issue for our industry, I particularly enjoyed participating in the OnlineTrust Alliance panel at the Mid-America Club in Chicago this week along with three industry leaders: C. Steven Baker, Director of the Federal Trade Commission, Midwest Region; Chris Babel, CEO of TRUSTe; and John Roberson, Executive Director, Small Business Development & Resource Center, Chicagoland Chamber of Commerce. The panel was moderated by Craig Spiezle, Executive Director & President, Online Trust Alliance.

From Left to Right: Chris Babel, John Roberson, Craig Spiezle, C. Steven Baker, Gian Fulgoni

The panel focused on the importance of privacy and data protection for businesses large and small in the digital information age. Never has it been more important for any business to adhere to best practices and establish the proper procedures and protocols to prevent data incidents from occurring. In fact, I made the point during the panel discussion that I believe privacy and data protection should rank high on the priority list of every company CEO.

As a market research data and business analytics provider, comScore has long recognized the importance of this philosophy. In fact, I wrote a blog post about this several years ago that you can read here. comScore has invested substantial resources in making our data collection and privacy practices the best they can possibly be. Central to this effort is adhering to industry-accepted best practices regarding the collection and secure storage of the data collected by the software that our panelists provide us explicit permission to install.

The panel agreed that the vast majority of businesses want to get data privacy and protection right and do right by their customers. But to achieve this end, we must remain vigilant as a community, be proactive in our collective approach to these issues, and continue the education process so that businesses that are not adhering to best practices can get on board. It can take years for businesses to establish trust with their customers, yet erode that trust with a single incident of data loss, so taking proactive steps to ensure such issues never arise is vitally important in this day and age.

We thank the OTA for hosting this valuable event with us, and we look forward to continuing to champion the causes of data privacy and protection.

With 2011 behind us, I thought you might be interested in some observations regarding what the holiday shopping season told us about the state of the consumer economy.

comScore reported that e-commerce had a strong season, with sales for the period from Nov 1 through Dec 25 increasing by 15 percent over the corresponding days the year earlier. The National Retail Federation reported that it expects total sales to be up about 3.8 percent versus year ago, which falls short of the 5.2 percent growth recorded during the 2010 shopping season, but is still a respectable growth rate. Nonetheless, with a growth rate about 4x faster than total spending, it’s clear that consumers continue to be attracted to the convenience and lower prices offered by the Internet.

So, how should we interpret these data? Are we seeing an improvement in the U.S. consumer economy? The answers seem to be mixed.

One reason we’re seeing increased consumer spending may be because the personal savings rate — the percentage of after-tax income that is not spent — fell to 3.5% in November from 3.6% in October. As recently as June, households were saving about 5% of their earnings. And, until July, the savings rate had consistently been at 4.5% or higher since late 2009. The latest savings rate is still better than the housing bubble months of 2005-07, when it generally hovered between 1% and 2%. Even so, the recent drop in saving indicates that although consumers want to buy things they put off during the shaky recovery, they don't have the income growth to support a more robust ramp-up in purchase activity.

Another reason for increased spending is likely because debt has been increasing. The government recently reported that household borrowing on credit cards, car loans, student loans and other kinds of installment debt rose at a 9.9% seasonally adjusted annual rate in November, the fastest monthly increase since November 2001.

On the jobs front, we’re seeing slow improvement. The government reported last week that December’s unemployment rate fell to 8.5% from 8.7% in November. That’s the lowest level in three years, suggesting that the U.S. recovery is gaining traction despite high oil prices and European turmoil. The economy added 200,000 jobs in December, double November's pace, with all of it coming from the private sector. This good news, however, was tempered by the fact that the labor market still faces big challenges. More than 13 million workers are jobless and another 10 million are underemployed, and it will take years—even if job creation accelerates sharply—to whittle down that number. Most economists agree that about 125,000 jobs need to be created each month just to keep pace with the growth in the population.

Finally, it’s clear that the consumer economy continues to be under stress. Going in to the holiday shopping period, comScore surveyed consumers regarding their view of economic conditions and found that 60 percent considered them to be poor, approximately the same level we observed six months earlier.

Consumer spending this holiday season was boosted by retailers, who were very active with promotions and discounts, both online and offline. In addition, online retailers offered free shipping to a degree we haven’t previously seen:

Each year, it seems that retailers’ promotions occur earlier in the season. This year was no different, with attractive deals appearing well ahead of Thanksgiving. Shop.org estimated that more than 90 percent of online merchants offered promotions over the Thanksgiving weekend, with 8 out of 10 offering promotions on Cyber Monday also. As a result, we saw Cyber Monday rank as the heaviest shopping day of the season for the second consecutive year, with total sales of $1.25 billion. At the same time, as consumers’ confidence in shipping has increased we’ve seen heavy online buying also occur later in the season. This year, for example, 2,600 merchants participated in Free Shipping Day (Friday December 16), offering free shipping with guaranteed delivery by Christmas Eve. Consumers responded enthusiastically, spending $1.072 billion and making it the sixth heaviest buying day of the season – which is particularly notable since Fridays tend to be one of the lighter online spending days of the week.

Consumer response to retailers’ deals on Cyber Monday was so strong that a significant shift occurred in the time of day that purchases were made online:

As a result of retailers’ heavy communication of deals ahead of Cyber Monday, coupled with consumers’ ability to easily locate them using both fixed and mobile Internet connections, we saw a significant increase in early morning buying as consumers chased deals to make sure they got them before they were sold out. And with retailers continuing to push promotions throughout the day, we also saw heavy buying continue later into the evening than in previous years.

So, the picture on the consumer economy is blurry. Spending is up but so is debt. At the same time, the savings rate is dropping. And while unemployment is slowly declining, the rate of new job additions is still slower than we would like to see at this stage of the recovery. We also can’t ignore one other key question that will remain unanswered until retailers report their financial results for the holiday season: to what degree have discounting and free shipping depressed gross margins? Because, while growth in consumer spending is on balance a good thing, if it does not yield higher profits for businesses then it’s unlikely to promote continued growth in jobs.

The following blog post formed the basis for an article that was published in Ad Age on October 31, 2011.

It’s no secret that the global recession has devastated many industries. And while some have recovered, consumers continue to feel the pain in a variety of ways, leading them to fundamentally alter their brand buying behavior.

The unemployment rate remains stubbornly high at levels above 9%, with no evidence that it will decline any time soon. That translates into 14 million Americans without a job. Another 7% of consumers are under-employed, meaning that they can’t find full time jobs, while a further 1% have simply decided to stop looking for a job. The negative impact on consumers’ spending power has been brutal. A recent report from Sentier Research shows that average U.S. household income has fallen by 10% from December 2007 through June 2011. Even for households headed by a full-time worker, median income has fallen by more than 5%.

At comScore, we’ve been able to quantify the impact that this loss of spending power has had on brand choice. To do that we have been tracking consumers’ response to the question: “Do you buy the brand you want most?” We began the study in 2008, just before the recession hit home and we’ve updated it in each year since then. We examined brands in the health & beauty aids, over-the-counter (OTC) medicines, food, household products and housewares categories. The results aren’t pretty. In 2008, about 54% of consumers said they bought the brand they wanted most. By 2010, this had dropped to 45% and fell further to 43% this year. Declines were observed in every category, with the overall decline being most severe in the OTC medicines category where preferences fell by 17 points and least in the household category, but with a 6 point decline nonetheless.

So, if consumers aren’t buying the brand they want most, what are they buying? It turns out that consumers are often switching brands when another “peer” brand is on sale, with 38% in 2011 saying they did this compared to 33% in 2008. But, they also more frequently turn to buying a cheaper product -- generally Private Label -- to save money. About 19% of consumers switched to Private Label in 2011, up from 14% in 2008.

Marketers are reacting in a variety of ways to this new economic reality. Some are introducing lower priced brands. P&G, for example, recently announced a bargain price Gain dish soap in an effort to retain those consumers whose incomes have dropped, causing them to fall from the middle-America demographic segment to the lower income sector.

Yet another result of the new economy is a shift by manufacturers to introduce smaller product sizes. But, this can also cause consumers to shift brands. When comScore asked those consumers who had noticed a downsizing in the brand they usually bought if it caused them to switch to another brand, 14% said it usually did with another 54% saying it occasionally did. That means about two thirds of a brand’s franchise is at risk with this downsizing strategy. That said, when asked which cost-controlling action they would prefer to see, 62% more consumers preferred to see smaller sizes over a price increase. So, brand marketers would appear to be backed into a “damned if you do, damned if you don’t” corner when pursuing either a price increase or downsizing strategy today.

One bright spot for marketers is the growing realization that digital advertising can be an extremely effective way to drive top-line growth but at a lower cost. In fact, the IAB reports that online advertising grew by a staggering 23% during the first half of this year, well ahead of the 3% growth reported for all measured media. Both search (+31%) and display-related (+27%) advertising registered impressive gains. Research we’ve conducted at comScore has shown that digital is beginning to be used by consumer packaged goods (CPG) marketers as a substitute for print to communicate price and promotion messages. At the same time, evidence is accumulating that digital is also a powerful branding technique on a par with other more traditional media. Information Resources has reported an average 8% lift in brand retail sales over the course of a year as a result of TV advertising. This matches the sales lift comScore has observed from digital advertising over the course of a three month period. The faster sales lift from digital traces to a greater use of price and promotion messaging when compared to TV but also because digital’s superior targeting ability allows more ad impressions to be delivered against a target audience in a given period of time.

Looking to the future, it’s evident that the economy will continue to be a challenge for brand marketers for some time because, unlike previous recessions, the economic situation isn’t likely to improve quickly. The Department of Labor reported that the number of long-term unemployed people – those without a job for 27 weeks or more -- actually increased to 6.2 million in September from 6.0 million in August. It’s clear that we have entered a “new normal” for brand marketers that features, for the foreseeable future at least, cash strapped consumers. While this suggests we’ll continue to see strength in digital ad spending, it’s also apparent that for brand marketers the future is going to be a bumpy ride.

This article originally appeared in AdAge on September 7, 2011.

My friend Arny Granat is a successful producer who co-founded Jam Productions in 1972 and is also a partner in Jam Theatricals, where he’s been the recipient of numerous Tony awards. Over his 40 year career, Arny has produced thousands of shows and seen a lot of market research. At a recent dinner, we were discussing how one can best predict if a show will be a success or not. I listened intently as Arny said there is no special formula but there are five key words that, if spoken by anyone who has seen a show, can help make that assessment:

“You’ve Got to See It!”

When people say this, Arny’s experience is that a show’s success is well on its way to being assured.

As I pondered the “Arny factor,” it occurred to me that that it could well reflect the quintessential value of Facebook (or other social media channels) to marketers. A Facebook analysis of the top 100 brand pages suggests that for every Fan, there are an additional 34 Friends of Fans that can be reached. So as Fans talk with their Friends on Facebook, Arny’s theory suggests that brand-related communications (i.e. “you’ve got to see, try, like, etc.”) have the potential for great influence.

At comScore we recently set out discover the extent to which this viral spread of brand messages occurs in practice. We selected three well-known brands for our analysis: Starbucks, Southwest Airlines and Microsoft Bing. Using comScore’s new Social Essentials service, we measured the occurrences of these three brand’s unpaid communications with their Fans and the degree to which these communications were seen by the Friends of Fans. Finally we examined the appeal of these brands to their Fans and their Friends using site visitation and buying metrics. The results are compelling.

The first thing we found was that the reach of these brands’ communications were increased by a factor of between 125% and 169% when Friends were included. In other words, more Friends of Fans actually saw impressions of these brands than did Fans. That’s terrific amplification.

But what’s even more impressive is the appeal of the brands to Fans and Friends of Fans. Not surprisingly, we found that Fans have a much higher likelihood than the average Internet user of visiting the brands’ web site (4.6x higher for Southwest Fans) conducting a search query (1.7x more searches using Bing) or buying the brand (8% higher transactions for Starbucks). What was perhaps unexpected is the extent to which Friends of Fans also exhibited consistently higher interaction levels with the three brands than did the average Internet user according to these same metrics. For example, Southwest Friends of Fans visited Southwest.com 2.7x as often as the average Internet user.

Now, one could argue that these results simply reflect the dynamic that “birds of a feather flock together” -- that is, the preferences of Fans and their Friends are inherently similar. I’m sure that is part of the explanation. But, I also think our findings reflect the persuasive influence that Fans have on their Friends. You could call it the amplification impact of a trusted communication.

You could also call it the “Arny factor,” because similar to Arny Granat’s conclusion that an audience’s recommendations to their friends determines the success of a Broadway show, the persuasive influence of a communication among trusted friends appears to affect brand preferences. If this is indeed the case – and at comScore we’ll be conducting additional research to determine whether there is such a causal link – then it means that Facebook represents a breakthrough opportunity for brands to leverage the influence that we all experience from people we trust.

In earlier posts, I’ve lamented the sad plight of small retailers. They were hurt far more than their larger competitors by the recession and its aftermath, being unable to match large retailers’ aggressive pricing and discounting tactics. So, it was with relief that I noted some improvement in small retailers’ share of the online marketplace over the most recent three quarters:

However, it’s important to put this positive trend in perspective and realize that small retailers’ 33.6% share in Q2 2011 is still well below their 37.2% share back in Q4 2009. This depressing statistic points to continued weak consumer demand due to high unemployment and concerns about the country’s economic future.

In fact, the National Federation of Independent Business (NFIB) recently reported that its Small Business Optimism Index declined in July for the fifth consecutive month:

Fifth Consecutive Month of Decline
"For the fifth consecutive month, NFIB’s monthly Small-Business Optimism Index fell, dropping 0.9 points in July—a larger decline than in each of the previous three months—and bringing the Index down to a disappointing 89.9. This is below the average Index reading of 90.2 for the last two-year recovery period. Expectations for future real sales growth and improved business conditions were the major contributors to the decline in optimism."

In recent comments, Bill Dunkelberg, the NFIB Chief Economist, sounded particularly bitter:

“Given the current political climate, the protracted debate over how to handle the nation’s debt and spending, and the now this latest development of the debt downgrade, expectations for growth are low and uncertainty is great. At the two year anniversary of the expansion, the Index is only 3.4 points higher than it was in July 2009. And considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course. Perhaps we might begin referring to the 'Small-Business Pessimism Index' from now on."

Consistent with comScore’s observations in e-commerce, the NFIB reported that the percent of owners citing poor sales as their top problem—the long-time primary complaint of firms—has faded a few points, and reports of sales trends are much better than a few months ago. However, the July survey anticipates slow growth for the remainder of the year, high unemployment rates, inflation rates that are too high and little progress on job creation.

As a result, it appears that we cannot look to small businesses with any degree of confidence that they will help in the near term creation of the jobs necessary to quickly get us out of the unemployment quagmire in which the country now finds itself:

This post was originally published in Ad Age on July 08, 2011.

In today's digital world, it is clear now more than ever before that pricing power is rapidly shifting to the consumer. The digital medium has brought transparency to prices and made it easy for anyone with a computer or mobile device to quickly find the lowest price for any product. The typical online purchase now involves the use of either a price comparison engine, a search for online coupons or discounts, a free shipping offer, a daily deal or some other incentive that reduces the price paid.

But this is no longer relegated only to online commerce. Consumers have also become accustomed to using the Internet to root out the best price for any product before they buy in a retail store. And, the rapid emergence of smartphones – which are now being activated at the rate of nearly 1 million per week – has made these pricing tools mobile, giving consumers the ability to use them in brick-and-mortar locations in addition to online. As one retailer recently proclaimed to me "I never thought I'd be competing with Amazon in my own stores!"

This of course spells trouble for any manufacturer or retailer who doesn't have either the low price advantage or some other more compelling value driver that appeals to consumers. As merchants are forced to appeal to these other value drivers, it places a premium on great advertising. It is this new reality that has convinced me we may now be on the verge of a renaissance in advertising, where compelling multimedia creative emerges as the antidote to low prices.

Advertising's role in this new world becomes not just a demand driver but also a counterbalancing force to price as the main determinant of consumer choice. Ad spending trends certainly support this conclusion: TV ad sales rose 9% in the first quarter of this year, while the IAB just reported a 23% growth in online advertising. Tellingly, in 2010, display advertising grew faster than search - for the first time since the IAB began reporting its data - driven by a 35% increase in spending on video ads.

These numbers indicate a new-found focus on branding advertising at the expense of direct response or price / promotion communication. And, if the growth in ad dollars spent in branding media is indeed driven by advertisers' efforts to garner higher prices, then it's possible we can also expect to see an increased focus on creative. It's been about twenty years since some ad agencies first concluded that they were able to make more money through media planning and buying than through their efforts at developing great creative. I remember vividly one advertiser telling me sarcastically that it almost looked as if "agencies had outsourced creative." Those days might well be history.

Dion Hughes, the creative director at Persuasion Companies, points out that investing in a better brand experience all 'round is a clear way to differentiate and create value. And by all 'round, Dion isn't just referring to paid-media communications, but "what the brand does, how it talks, what it looks like, where it appears, what it stays away from, etc." Dion also believes that we're undergoing a creative revolution, and not necessarily just in digital, though that's where it might look like it's happening. As he sees it, the revolution (or maybe it's the frontier) today is in orchestrating a brand's behavior across so many different media channels.

In an age of consumer pricing power, we need to remember that advertising plays a key role in building consumer demand and creating the willingness for consumers to buy a more expensive "premium brand" rather than a lower priced alternative, or a generic, or private label brand. In fact, research conducted by comScore ARS has shown that TV creative is responsible for 52% of the changes over time in a brand's market share, four times greater than the impact of other elements of the media plan.

That said, it's vital that marketers make sure that their creative is doing its intended persuasive job by testing it. I wrote about this in a blog post entitled "Four times zero is still zero", pointing out that even dramatically increased spending behind poor creative will not move the needle. That's the bad news. The good news is that it's been proven time and again that great creative helps build great brands... and great brands don't have to join pricing's race to the bottom. Today, especially, that's a vital point for marketers to remember.

The Journal of Advertising Research (JAR), published by the Advertising Research Foundation (ARF), recently celebrated its 50th anniversary. In that span of time, the JAR has published more than 2,000 articles written by leading academics and practitioners. As part of the 50th anniversary special issue, the JAR asked me to summarize my perspective of Internet-based research over the years with a view towards the future. I thought you might be interested and have included my article below.

The Internet has outpaced every other medium in terms of the speed of consumer adoption. At this writing, more than 1.3 billion people worldwide age 16 or older have online access via fixed ISPs or mobile devices¹. And they use the Internet regularly for communication, entertainment, commerce, and as a timely source of information about a broad variety of issues. In fact, online activities in the U.S. now account for about 25 percent of consumers’ media consumption time².

With such extensive consumer-based online activity, it’s not surprising that marketers are using the medium aggressively as both a sales and marketing channel. This activity also has driven the need for researchers to provide marketers with metrics on how consumers use the Internet. At the same time, the market-research industry has adopted the use of online surveys as a fast, inexpensive way to obtain consumer insights that can be used by marketers in both the online and offline worlds.

The emergence of online research has not been without controversy. Described as “the most measurable medium ever created,” the Internet initially was believed by many to be easily and accurately measured using website servers that recorded every visit to a site or every ad delivered. By placing a cookie (a small piece of computer code) on each visiting computer, it was thought that the number of unique cookies would reveal the number of visitors to any website.

It was only when the market-research industry used using time-tested approaches (continuously tracked behavioral panels, for instance) to show that cookies were being deleted by about 30 percent of all Internet users - and that these so called “deleters” were doing so about four times per month - that it became apparent that counting cookies had led to dramatic overstatements of the actual number of unique visitors to websites. Similarly, it was concluded that using ad servers and placing a cookie every time an ad impression was delivered to a computer in an attempt to measure the reach and frequency of an ad campaign simply led to an overstatement of the reach and an understatement of the frequency actually delivered.

At about the same time, market researchers using behavioral panels were showing that online advertising was not just about direct response and that the click on a display ad (or lack thereof) ignored the latent branding impact of advertising on subsequent brand choice. Put another way, consumers can respond positively to online ads even without clicking on them. This was especially surprising to the many new Internet advertising practitioners who had no previous experience with advertising research. This finding, however, was less surprising to market researchers who had toiled for years in the advertising arena prior to the emergence of the Internet and who understood the many different and complex ways in which advertising can affect consumer behavior.

All of this is not to say that web servers don’t have a place in online market research. Just that one needs to carefully consider what the servers are actually counting. They do indeed capture all of the visits to a website and all of the ad impressions that are delivered. But they also capture “bot traffic” (i.e. computer-driven) site traffic and non-requested pages (sometimes called “push traffic”) which must be filtered out of any visitation metrics, and they are unable to determine which specific individual is using a computer at any point in time. For example, if a single person visits a website from his/her work computer and also from his/her home computer, the website server will count this as two unique visitors, whereas in reality it is one unique person visiting the website twice. Or, if two different people in the same household visit the same website at different times using the same computer, the website server will count this as two visits by one unique visitor whereas in reality it’s two unique visitors. These are obviously important distinctions that any marketer or researcher needs to understand.

Interestingly, leading edge research today is increasingly centered on the use of integrated website server data and continuously measured behavioral panels. By leveraging the strengths of each database and taking into account their respective weaknesses, it’s possible to provide faster, more accurate and more granular insights into online consumer behavior. This is particularly important as the research industry seeks to understand how marketers can best utilize the Internet in a world where social networks are changing the manner in which consumers seek out, receive and use information that affects their brand choice.

On the survey side, substantial research has been conducted by individual survey research companies as well as the ARF to demonstrate that online panels - even if not built according to strict probability sampling rules - can be used to provide fast, accurate and inexpensive insights into consumer attitudes, sentiment and even behavior. Today, research is ongoing to determine the limitations of online survey panels and the situations or applications where probability-based samples are still required.

To a certain degree, what we’ve observed with the emergence of Internet research is the reality that, when attempting to measure a computer-driven medium, one needs to carefully consider what metrics the computer is counting and providing. As Albert Einstein famously said some time ago: “Not everything that can be measured matters.” Ultimately, marketers need to understand the behavior of people and not just computers.

¹ comScore, 2010
² Research conducted by Knowledge Networks for TVB

This year, the Advertising Research Foundation (ARF) is celebrating its 75 year anniversary. Founded in 1936 by the Association of National Advertisers and the American Association of Advertising Agencies, the ARF leads key industry learning initiatives that increase the contribution of research to better marketing, more effective advertising and profitable organic growth. At the upcoming ARF conference March 21 – 23, I’ll be participating on a panel that will review the past 50 years of advertising and advertising research. The ARF asked me to answer a few relevant questions in advance of the conference (which they have published on the ARF web site) and I thought I’d share those with you here.

What do you see as the most important changes and breakthroughs the advertising industry has undergone in the last 50 years?
Technology has been the catalyst for many of the major breakthroughs we’ve seen in the advertising industry over the past 50 years. The introduction of new technologies has not only dramatically changed the way advertising messages can be communicated but also how marketers can measure the impact of their advertising campaigns.

In the 1980s, for example, the availability of point-of-sale scanner data provided a much-needed solution for Consumer Packaged Goods (CPG) and other industries. For the first time, marketers had the tools needed to quickly and accurately measure the impact of price, promotions and print / TV advertising on brand sales, develop sophisticated market mix models, and link sales lift to various promotional and advertising levers. Prior to scanner data, marketers relied on manual store audits and consumer purchase diaries that were considerably less accurate and timely. During this same period, the People Meter was introduced, providing a much improved solution relative to viewing diaries for measuring people’s TV viewing behavior. All of this undoubtedly had a significant impact on the advertising industry, helping marketers better understand TV audiences as well as the advertising effectiveness of the channel. Ironically, at least in the CPG industry, with the availability of more granular and timely measurement of short term sales response, we also saw the emergence of a far greater reliance on price and promotion spending at the expense of investments in branding advertising.

Finally, and perhaps most importantly, the rise in popularity of the Internet throughout the most recent decade provides yet another example of a technologically-driven change driver in the advertising industry. From the development of sophisticated algorithms that paved the way for the massive search ad market to the ever-evolving display advertising eco-system and powerful targeting capabilities, the Internet has impacted all facets of the advertising industry.

More recently, we’ve seen disruptive technologies pave the way for Internet usage via an array of sophisticated mobile devices, providing yet another compelling new avenue for marketers to communicate with consumers

Which challenges have still not been resolved?
A concern I have for the future of the advertising industry relates to the increasing focus on short term sales via direct response tactics and messaging centered on price and promotion versus longer-term brand building advertising strategies. When it comes to digital advertising, for example, the Internet has certainly proven to be an efficient means of communicating with consumers, but it’s clear that this has come at the expense of strong creative and branding advertising. Many times, display ads will communicate only price-oriented messages, and while this can certainly help to generate immediate sales, one has to wonder at what cost in terms of brand value? Do these short-term tactics simply train consumers to buy on the basis of price alone? This problem is compounded by the continued use of inappropriate metrics such as the click on an ad. While relevant for search advertising, the click on a display ad has been proven to be at best an incomplete, and at worst, a misleading metric. However, the click is fast, easy and inexpensive to compute and, unfortunately, its use persists.

Sadly, the rise of the Internet has also seriously damaged certain media channels -- such as print -- as consumers’ media consumption shifted to online. The future of newspapers and magazines, both of which rely heavily on ad revenue that has seen catastrophic declines, is very uncertain.

What do you see as the most critical topics advertising research will be concerned with in the future?
With the fragmentation of media channels, come increased challenges for measuring multi-media audiences and the effectiveness of advertising across channels. While it is true that the research community has done a good job of figuring out how to measure the separate impact of advertising on TV, on radio, on the Internet and in print, it has yet to fully understand how to measure the combined benefits of advertising across all of these channels. As the industry becomes ever more fragmented, the challenge of doing this accurately and cost-effectively only becomes greater. Undoubtedly of paramount importance is the need to measure TV, Internet and Mobile media consumption on a “single source” basis.

In a recent comScore survey, it became clear that while consumers are feeling better about economic conditions in the U.S., the majority still feel that that we have problems:

As we’ve tracked consumer sentiment over time, it’s clear that to fully understand the trends that are occurring one has to look at the differing attitudes of the key income segments. In the following chart we ask consumers to identify their single most pressing economic issue from a list of four: rising prices, unemployment, the financial markets and home values.

While jobs remain a key concern (with 36% of all consumers citing unemployment as their key economic issue), the rapid emergence of rising prices as the number one concern is all too evident, especially within the lower income segment where prices have supplanted unemployment as the number one worry by a significant margin. Even among the upper income segment, rising prices are now on a par with unemployment concerns. And when one delves into the price issue, it’s clear that gas prices dominate, with “rising gas prices” being cited by at least 20% of each income segment as the main economic concern. Below is a chart showing the rise in gas prices over the past three months:

While the turmoil in the Middle East and North Africa has driven up oil prices significantly, as yet we’ve not seen any disruptions in production or supply. However, the current Libyan unrest appears to have spread to a major oil producer for the first time, causing the price of “Brent” crude to hit $105 per barrel — a level not seen since September 2008. Going forward, it will be important for the digital economy to keep a close eye on oil and gas prices because a look back in time tells us that rising oil prices have historically had a dampening impact on e-commerce spending, as the charts below illustrate:

As gas prices began their rapid climb in 2007 (and later as they caused a knock-on increase in food prices) this gradually reduced the amount of disposable income in consumers’ wallets - to a degree that caused a slowdown in e-commerce growth beginning in late 2007 and into 2008. By the time gas prices had dropped again at the end of 2008, we were in the midst of a full blown recession with the meltdown of the financial markets, plummeting house prices and soaring unemployment. It took us until 2010 to see a recovery in e-commerce spending and the return of double digit growth rates.

So, as we look forward in the hope that job creation picks up, we need to also keep our fingers crossed that gas prices will settle back. History has shown that consumers’ willingness to buy online is heavily influenced by what they have to spend at the pump, for food and for the other necessities of life.

The most recent report from the National Federation of Independent Business (“the voice of small business®”) showed a modest increase in optimism, but this positive trend was blunted by small business owners’ continued skepticism about the future and continued hesitancy to spend and hire:

“Manufacturing and exporting are leading the recovery—industries and activities that are not labor intensive—while construction, an industry historically dominated by small firms, remains depressed,” said NFIB chief economist Bill Dunkelberg. “While recent political rhetoric favors small business, it is belied by the actions of policy makers whose new policies and activities almost exclusively support big businesses. While the economy is moving forward, albeit at a snail’s pace, it is not nearly fast enough to dramatically improve the unemployment situation, which continues to languish.”

The sluggishness in hiring by all companies following the most recent recession is dramatically shown in this chart from the Calculated Risk blog:

The current loss in jobs has been deeper and lasted longer than we have seen in any recession since the end of World War II. The trend line suggests that it will be years until we get back to an unemployment level of 5%, which is generally considered to be acceptable.

Another indication of the employment challenges we face going forward can be seen in the recent employment data and summarized by Charlie Cook in the National Journal Daily:

“While the unemployment rate fell to 9.0% (the best since April 2009 and the second consecutive month of declines in the rate, which went from 9.8 percent in November to 9.4 in December), only 36,000 new jobs were created, the lowest level in four months and nowhere near the 150,000 to 200,000 generally considered necessary to keep up with population growth and chip away at chronic unemployment.”

Despite the economic challenges that remain, comScore data show that in the online world small-to-mid size smaller retailers have begun to slowly regain some of the e-commerce market share they lost to their larger rivals during a period when the 25 largest retailers were able to leverage their greater financial resources and be more aggressive in terms of price reductions and deals:

As can be seen in the above table, while small-to-mid size retailers have lost 5.6 share points over the past twelve months, if we look at the most recent two quarters (i.e. Q3 to Q4 2010), their share has increased by 1.5 percentage points. I believe this improvement is the result of two factors that became clear during the 2010 holiday shopping season: (1) more retailers finally being able to step up their promotional efforts and offering more aggressive deals (e.g. free shipping, which increased dramatically in importance during the past holiday shopping season) and (2) increased spending in the online channel by all consumer income segments, with a larger number of retailers benefiting from this positive trend.

Looking forward, e-commerce should continue to gain an increasing share of consumers’ spending. The convenience and savings from shopping online are simply too attractive to resist. As this trend continues, it is to be hoped that all retailers – large and small -- will continue to see an improvement in their sales and that this will increase both their business confidence and their need to hire additional employees. The U.S. employment situation clearly needs all the help it can get.

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.

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.

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.

The other day I was interviewed by CNBC about the rapid growth of group buying sites such as industry leading Groupon and I thought you would be interested in the following statistics I compiled from the comScore database, as well as some information I obtained directly from Groupon in preparation for the interview.

Groupon was founded in Chicago in November 2008 and claims to have been profitable since June 2009. That in of itself is a staggering accomplishment. But there’s much, much more. In October, comScore data show that 6.4 million people visited Groupon.com, up 657% from a level of 849,000 a year ago. On a worldwide basis, comScore reports that groupon.com attracted 21.4 million unique visitors, with 34% coming from the U.S., 14.5% from Germany and 11.4% from the U.K. The amazing growth in visitors in such a short period of time clearly reflects the popularity of the group buying business model.

comScore data also reveal that Groupon’s visitors are skewed towards females (58% of all visitors), upper income households (with those earning over $100,000 being 22% more likely to visit the site than the average Internet user) and visitation from home computers (60% of traffic).

Groupon uses a database they’ve assembled of some 30 million global subscribers who are e-mailed its daily deal offers. About 17 million of these are located in the U.S. Groupon now covers 300 markets in 31 countries, which includes 130 North American markets. They run about 400 deals per day worldwide with 175 per day in North America. The Groupon business is supported by 3,000 employees.

According to comScore data, the majority of Groupon transactions fall into the $10 to $30 range. Groupon says that they offer discounts of 50% to 90% off with an average deal being 60% off. They take about half of the revenue but say that this can vary depending on the size of the business and how many deals they anticipate selling. The most popular category of deals is restaurants, followed by health / beauty, activities, events, retail and services for home / auto. Groupon says that 16 million Groupons have been purchased since inception of the service and that this has saved consumers more than $730 million.

Not surprisingly, the success of Groupon has spawned a wide variety of competitors, the most notable of which is Living Social. comScore data show that livingsocial.com attracted about 4 million unique visitors in October, up 812% from a year earlier. But, Living Social is only one of hundreds of group buying sites that have been launched. As has happened in other Internet businesses, we have also seen the emergence of “aggregators”, who sweep up all the deals that are being offered and summarize them in one neat e-mail that is sent to subscribers. Dealradar.com from Local Area Network in Chicago is one leading aggregator. They claim to collect and distribute approximately 500 offers per day across 86 markets in four countries.

It will be very interesting to see the impact of group buying on holiday shopping this season. As befits the industry leader, Groupon has invented its own holiday, Grouponicus, celebrated with the opening of the Grouponicus Holiday Store. The store will offer a host of deals in the top 20 Groupon markets – deals that are available for 3 – 5 days covering a mixture of new merchants and some of consumers’ favorite deals from the past year. That said, it’s important to note that the Groupon Daily Deals will be featuring some major national retailers on occasion but that the lion’s share of deals will be local merchants. This indicates that the big retailers still need to rely on other means to communicate their promotions. Fortunately, on the Internet there is no shortage of ways to accomplish this, from the use of display ads to social network communities on Facebook to the growing use of Twitter. With Groupon and the e-commerce market in general, it’s shaping up to be a very merry and busy Christmas season online.

This post was originally published in AdvertisingAge on February 15, 2010. However, it is still very much relevant today for CPG marketers and retailers as the industry continues its slow but inexorable march to the Internet.

By any measure, sales of consumer package goods represent an enormous industry - convenience and club stores, supermarkets, supercenters and drug stores, macaroni, mouthwash, mustard and other daily necessities generate more than $1 trillion in annual sales.

So it's no surprise that, for years, the online-ad industry has eyed CPG giants' vast marketing budgets, knowing that shifting just a few percentage points of traditional-media spend would do wonders for its share. But here's an idea: If the internet really wants to take a bigger slice of the CPG ad pie, it should look beyond the tens of billions of TV advertising and focus on where the real money is spent: the trade and consumer-promotion budgets.

According to a recent SAP report, while manufacturers allocated 25% of their 2008 revenue to marketing, most of these dollars (78%) were actually spent on promotions, with media/TV accounting for a much lower 22%. Importantly, the vast majority (86%) of manufacturers' promotion spending took the form of trade deals -- which represented 17% of revenue.

Trade deals are the monies that manufacturers pay retailers in return for in-store displays, temporary price reductions and newspaper feature ads that communicate those price reductions. Supermarkets have used newspapers almost exclusively as the medium in which to advertise the week's special prices. When you consider that Sunday newspapers also account for about 90% of all cents-off coupons, print has been the medium of choice for the CPG industry. The use of TV has been mainly reserved for manufacturers' brand-building efforts.

Recently, however, I've been seeing some changes afoot. First, manufacturers are beginning to realize that the internet can be a powerful branding medium and are accelerating their testing and measurement of the ROI from online advertising.

On the promotion front, as cash-strapped consumers seek savings in every way possible, overall coupon redemption has increased for the first time in 14 years. More and more, retailers are using the internet as an efficient and secure distribution vehicle for manufacturer coupons.

comScore data show that almost 40 million people visited coupon sites in November, up more than 40% in the past two years. Individual sites such as Coupons.com (a high of 15 million monthly visitors in 2009), Eversave.com (7 million) and CoolSavings.com (5 million) have built substantial traffic.

Will supermarkets' websites be the place that consumers visit to obtain their coupons? Don't count on it. Traffic to supermarket sites has just not grown to meaningful levels. The leading supermarkets haven't been able to attract more than 1.5 million monthly visitors to their individual websites. It might well be that consumers have come to expect to view all of their options for discounts and coupons in one location.

Interestingly, in contrast to supermarkets, other channel retailers have been able to generate much higher website visitation levels. Walmart.com attracted 31.9 million monthly visitors; Target.com saw 29.5 million; Walgreens.com drew 6.3 million. Why the disparity? Well, for mass merchandisers, the main driver of traffic appears to be the appeal of non-grocery e-commerce.

For supermarkets, however, a compelling reason for consumers to visit their websites en masse has yet to materialize.

That means supermarkets need to "fish where the fish are," and some have begun offering their coupons on third-party sites that promise to attract higher levels of consumer traffic. Kroger and Safeway, for example, are integrating coupons with their loyalty cards, on their own sites and others such as ShortCuts.com (owned by AOL). Forget clipping coupons. Rather, you log on to the website with your loyalty card number and select your desired coupons; the savings are automatically loaded to your account and applied to your bill when you check out.

Retailers also need to understand how to distribute their information in line with how consumers use media. ShopLocal is digitizing retailers' localized price and product data and placing it not only on the retailers' own sites, but also on high traffic sites such as Yahoo. Other companies are busy placing price incentives in mobile phone apps, in shareable widgets for social communities and in out-of-home digital screens.

Looking to the future, retailers and manufacturers will have to recognize the declining audience for print newspapers as well as understand how they can better use some of the internet's inherent advantages. And media sellers will have to continue touting these messages. But the good news? The recession may well have accelerated the dawning of that day.

I recently attended the World Economic Forum (WEF) “Annual Meeting of the New Champions”, also known as the Summer Davos, in the northern port city of Tianjin, China. The three day WEF conference attracted some 1,500 high profile leaders, academics and business leaders from almost 90 countries. I was flattered to be among the invitees.

Back in 2007, comScore was honored to be named one of 47 Technology Pioneers by the WEF. To be selected as a Technology Pioneer, a company must be involved in the development of life-changing technology innovation and have the potential for long-term impact on business and society. In addition, it must demonstrate visionary leadership, show all the signs of being a long-standing market leader – and its technology must be proven. So, you can imagine how much I was looking forward to the meeting in Tianjin -- where comScore was named one of twelve companies described as ‘Global Growth Shapers’.

The theme of this year’s conference was “Driving Growth Through Sustainability”, which, in the words of the WEF, recognizes that achieving sustainability requires committing to a new mind set – one that is determined to challenge long-held economic assumptions, rethink business models and explore scientific and technological solutions to foster innovation and creativity within organizations. It is also a theme that highlights the role of the New Champions and calls upon us to embrace a new holistic systemic and integrated approach to sustainability, focusing on not only environmental but also economic and social impact.

There were four main pillars to the conference:

1. Improving competitiveness through science and technology
2. Creating new value from business models and for future markets
3. Facilitating economic and social change
4. Designing effective global, industry and regional solutions

I was particularly interested in the fourth pillar because it meshed with one of comScore’s strategic imperatives: global expansion. comScore now offers services in 43 individual countries, so I wanted to absorb any and all information about global trends.

Just prior to the start of the conference, the WEF published its “Global Competitiveness Report 2010-2011” (compiled by PricewaterhouseCoopers), which is one of the world’s most respected assessments of national competitiveness, providing valuable insights to the policies, institutions, factors that enable robust economic development and long term prosperity and providing a unique benchmarking tool for policy makers and businesses.
I thought you would be interested in seeing some of the data contained in the report, so I’ve assembled some of the more interesting slides below. Note the much higher future economic growth that is expected in emerging countries but also the required need for these countries to install the infrastructure necessary to grow the consumer consumption portion of their GDP.

China’s Premier Wen Jiabao spoke at the conference and was particularly bullish on China’s prospects, saying that the surge in foreign investment demonstrated China’s continuing attraction to foreign investors and stressed Beijing would continue to “improve” laws and policies related to foreign enterprises. According to figures cited by Mr. Wen, more than 470 of the top 500 global corporations had established a presence in China. By July, China had received $1.05 trillion of foreign investment in cumulative terms, ranking first among developing countries for 18 consecutive years. In the first seven months of this year, foreign investment in China increased by 20.7% over the same period last year.

Mr. Wen added: “China’s economic growth has provided major development opportunities for multinationals and created huge demand for major economies and neighboring countries.” He said China would pursue and establish a long term mechanism to expand domestic consumption. Innovation, an upgrade of industrial infrastructure and advances in technology would lead to more sustainable development. The country’s economy certainly appears to be moving in the right direction and according to Justin Yifu Lin, chief economist of the World Bank, is predicted to grow by 9.5% this year! In comparison, the U.S. GDP grew by only 1.7% in the second quarter, marking the second consecutive quarter of decline as the effect of the government’s stimulus wears off and unemployment remains stubbornly high at 9.6%. It’s not a pretty picture.

The August government jobs report showed that unemployment remains stubbornly high at a level of 9.7% of the civilian labor force and rose marginally by 0.1 percentage points from July. The loss of jobs during the current recession has been deeper and more prolonged than was seen in any other recession since World War II:

The Bureau of Labor Statistics also reported that "In August, the number of persons employed part time for economic reasons ... increased by 331,000 over the month to 8.9 million." Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 16.7% in August from 16.5% in July. The U-6 number reflects the total unemployed people, plus all persons marginally attached to the labor force, plus the total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Whew!

I find the U-6 number to be very discouraging. It means that one in six Americans are either unemployed or working less than they would like. Needless to say, the unemployment problem has had a profound negative impact on consumer spending and I thought you would be interested in seeing how this has manifested itself in e-commerce.

First, let’s look at e-commerce spending trends within income segments:

The middle income segment ($50K-$100K) is the largest segment and accounts for 41% of all online sales, but it’s clear that the spending power of middle-income consumers has weakened considerably. In Q2 2010, they spent 2% less money online than they did the year before and a whopping 9% less than two years ago before the recession really hit home. In contrast, the highest income sector (more than $100K per year) appears to be in good shape, accounting for 37% of sales and growing at a rapid clip (+17%). People in the lowest income sector only account for 22% of e-commerce sales but are also showing strong growth, driven (as we shall see) by financially secure and Internet-literate consumers in smaller households.

The negative impact of household size on spending power is clearly revealed if we look at spending trends according to presence of children within the household.

We can see that very strong growth occurred within households without children (+27%) but for those households with children, spending is under severe pressure and has declined by 9% versus year ago. The BLS reported that in August the unemployment rate for workers 16 to 24 years of age was a staggering 18.1%, causing many to move back to live with their parents. This simply compounds the already existing financial pressure on the middle class.

It’s also informative to examine spending trends by age of household head:

Here we see that it is the older households (with a head age 45 and older) that are generating online spending growth (+22%). In contrast, households with a younger heads spent marginally less in Q2 2010 than they did the previous year.

So, in summary, we can see the negative impact that the unemployment situation is having on the middle class. The middle class – defined as households in the middle income sector with children and younger heads -- are apparently not in an economic position to be able to increase their e-commerce spending, leaving it to the higher income, smaller and older households to generate growth. This was also well documented in a recent LA Times article.

Looking to the future, the middle class faces a period of great uncertainty. As reported by AP business writers:

Even when the job market picks up, many people will be left behind. The threat stems, in part, from the economy's continuing shift from one driven by manufacturing to one fueled by service industries.

Pay for future service-sector jobs will tend to vary from very high to very low. At the same time, the number of middle-income service-sector jobs will shrink, according to government projections. Any job that can be automated or outsourced overseas is likely to continue to decline.

The service sector's growth could also magnify the nation's income inequality, with more people either affluent or financially squeezed. The nation isn't educating enough people for the higher-skilled service-sector jobs of the future, economists warn.

"There will be jobs," says Lawrence Katz, a Harvard economist. "The big question is what they are going to pay, and what kind of lives they will allow people to lead? This will be a big issue for how broad a middle class we are going to have."

A few weeks ago, I decided to buy a 4G iPhone. Previously, I had used an AT&T Tilt for about three years, having originally bought it because of its ability to reliably synch with comScore’s corporate Exchange e-mail servers. Since I already had an account with AT&T, when I bought the iPhone I simply switched that account from the Tilt to the iPhone. I didn’t have too much time to get used to the iPhone’s functionality before having to leave on a combined vacation and business trip to Europe.

My family is originally from Northern Italy, way up in the beautiful Apennine mountains, so my wife and I were looking forward to spending a few days there visiting with family members and friends before heading down to Rapallo on the Ligurian coast for some R&R. With some free time on my hands, I was able to play with the iPhone and familiarize myself with its remarkable functionality. What I didn’t pay any attention to (or even think about) as my wife and I ate and drank our way across Italy was the mounting bill I was incurring for all the data I was downloading as I received and sent e-mails back to the U.S. and used the iPhone’s browser to perform all kind of online activities, including watching the Pittsburgh Steelers play a preseason game at 2:00 am Italian time. (Incidentally, the quality of the video on the 4G iPhone is remarkable -- I mean HD quality good). Back in the U.S., my comScore colleagues were getting ready to announce our acquisition of Nedstat, the Web Analytics company, so I was also getting copied on a lot of e-mails as we coordinated comScore’s marketing communications plans. Unbeknownst to me, I was consuming a lot of data in a short period of time

Towards the middle of my first week in Italy, I received a free text message from AT&T telling me that my data usage on the iPhone had exceeded my meager 20 MB international plan limit, and that I was incurring substantial additional charges. They kindly provided me with a URL to visit if I so desired and the telephone number of an AT&T client service rep to call. I remember thinking: “Hmm, that’s quite considerate of them to let me know I’m using so much data. They really have no obligation to do that. It’s my own fault for not paying attention.” A day or so later, I called the service number. A friendly voice answered and I explained the reason for my call. No problem, the service rep said, and proceeded to pull up my account data. As he was doing that I asked him where he was located. The answer was Texas. That surprised me since it was 9:00 am Italian time so it had to be very early morning in Texas. I asked if this was an inconvenient time. “Not at all” was the answer “It’s all part of the job.” I was impressed.

The rep then told me the bad news. I had used 70 MBs over my account limit and the additional charge was $5 per MB, or $350. Since I knew I was going to be in Europe for another week, I asked about plans with higher limits and selected one with 200 MBs. The charge was reasonable at about $200 a month for those months when I’m traveling internationally. I asked if I could I cancel at any point, knowing that I wouldn’t be out of the U.S. every month. “No problem,” was the answer. Then I asked a presumptive question: “Can I have the plan implemented retroactively?” I was most pleasantly surprised to hear that the rep could do that. So, AT&T was basically willing to forgive me the $5 per MB charge that I had contractually agreed to pay for data usage above my plan’s limit and instead charge me at a lower rate per MB using a plan that had a higher limit and which encompassed my prior higher level of usage.

In today’s day and age, this kind of exemplary service is worth mentioning publicly. AT&T wasn’t obligated to send me a notice about my data usage, but they chose to do so. And, they did so by texting me a free message. But, most importantly, they certainly weren’t obligated to install my new data plan retroactively.

I’ve used AT&T for years as my mobile carrier (I particularly value their International coverage) and I use them for a variety of other telecom services so it’s very possible that their actions were acknowledging the amount of business I give them. Whatever the reason, I’m really impressed and I can say that this experience has strengthened my loyalty to the AT&T brand. I also believe there’s a lesson here for brand marketers: the power of a surprise.

In a recent comScore press release, I wrote about how brand loyalty has been declining since the advent of the recession. Because of this, there are significant benefits to marketers who take the initiative and provide customers something of additional value that is unexpected. Forrester calls it “strategic generosity”. It’s basically something that surprises and delights and which says: “I truly value your business and here’s something you weren’t expecting that proves it.” Everyone values a pleasant surprise. When a marketer provides it to today’s connected consumers, the result could be a blog post of public praise – just like this one. And, in a Web 2.0 world, that’s a surefire way of increasing the odds of going viral.

I’ve been struck recently by the number of Internet companies that are advertising on television. In no particular order, here are some of the online businesses for whom I’ve noticed TV ads:

Clearly, this trend must reflect an acknowledgment by online businesses - big and small - of the appeal and value of advertising on TV, even as the Internet continues to gain share of all media spending. In fact, over the past decade TV has increased its share of global ad dollars from 38% to 46%, confirming that, despite the illusion created by some media pundits who would have us believe that TV is on the ropes, the reality is that the industry continues to perform quite well.

There are several reasons for the continued success of television advertising. To begin, we need to recognize that the total amount of time spent by consumers watching TV is not declining, but rather is increasing. Sometimes it’s easy for people to confuse the fragmentation of TV viewing with a decline in total time spent. However, the reality is that consumers are watching more TV than ever before. This was persuasively illustrated by Byron Sharp et al of the Ehrenberg-Bass Institute for Marketing Science in a paper published in the June 2009 issue of the Journal of Advertising Research (subscription required). The study found that average ratings halve if the number of channels doubles and showed that declining ratings for individual shows or networks are due to fragmentation (more channels) not to reduced overall TV viewing levels, which are remarkably resilient to social and technological changes and to the emergence of new media. Professor Sharp also noted that audience fragmentation has actually been beneficial for the large broadcasters by driving up the prices for the higher rated shows: “CPMs don’t ignore media value, they monetize it.”

Interestingly, television’s popularity continues even as viewing of online video explodes. But here again, it’s easy to get confused by different metrics. The reality is that despite a dramatic growth in the number of online viewers and the number of videos viewed, the overall viewing of online video represents no more than 4% of total time spent watching TV. This approximates the annual percent growth in time spent watching TV.

A second reason for the continued appeal of TV advertising to marketers is that no other medium can compete with it when it comes to the reach that can be attained in a very short period of time. An individual high-rated TV show provides marketers with a unique opportunity to rapidly communicate advertising messages to the largest cross section of consumers possible in a 30 minute period of time. In today’s challenging economic environment time is money, which makes TV advertising extremely attractive to marketers.

The third and perhaps most important reason for TV’s continued popularity is that there is no evidence that the effectiveness of TV advertising has declined – even in the face of a dramatic increase in the number of media choices available to consumers. This was powerfully demonstrated by Joel Rubinson of the ARF in a paper also published in the June 2009 issue of the Journal of Advertising Research. In his study, Joel used seven different databases – accounting for a total of 388 case histories -- to determine whether there had been a decline in the effectiveness of TV advertising over time. The databases included results from advertising weight tests, market-mix modeling, copy testing (provided by comScore ARS), return-on-marketing analysis from quasi-experimental design and media planning tools. Joel found that over the past 15 years TV has not declined in its effectiveness at generating brand sales lifts. In fact, the study revealed that there has been an increase in the persuasion power of the TV copy being used.

This latter point is important because most television copy is subject to extensive research and testing before the commercial is produced and put on air. Copy research seeks to confirm that an ad is doing its intended job in persuasively communicating the desired message. That type of due diligence is a way of life with branding advertising. There is an important lesson here for online advertising: in a branding world, advertising creative is critical. I discussed this issue in a Mediapost article earlier this year titled “Four Times Zero is Still Zero” where I sought to stress that a poor commercial won’t lift sales, no matter how much spending is put behind it (i.e. 4x0=0). As Internet advertising seeks to increase its currently meager 6% share of marketers’ spending for branding advertising and to move beyond a reliance on direct response marketing, using the right creative will become critical. This will be compounded by the move to the use of more expensive ad formats such as rich media and video. The cost of being wrong becomes substantial. It will be vital for the Internet to take a page out of television’s playbook and focus more of its research dollars on getting the online ad message right.

In a blog post earlier this year, I wrote about the challenges facing small e-commerce businesses, noting that their share of online spending in Q4 2009 showed a 4.2 point decline versus Q4 2008. Unfortunately, the situation hasn’t improved since then. In fact, it’s gotten worse. In comScore’s Q2 2010 e-commerce webinar, I reported that larger retailers had gained 5.6 points of market share at expense of their smaller brethren over the most recent twelve months:

The market share loss suffered by the smaller retailers corresponds to an absolute sales decline of about 6%.

The most recent survey (PDF) conducted by the National Federation of Small Businesses (NFIB) in June of this year gives us some insights into the underlying problems. The NFIB says:

The Index of Small Business Optimism lost 3.2 points in June after posting modest gains for several months. The persistence of Index readings below 90 is unprecedented in survey history. The performance of the economy is mediocre at best, given the extent of the decline over the past two years. The small business sector is not on a positive trajectory and with this half of the private sector “missing in action”, the poor growth performance is no surprise.

The NFIB report goes on to say that the weak economy continues to put downward pressure on prices, concluding that widespread price cutting has contributed to small businesses’ sales declines. It seems clear to me that smaller retailers struggle to match the pricing power of their larger competitors.

The picture continues to be bleak on the hiring front, as well. Over the next three months, eight percent of small businesses plan to reduce employment (up one point), and 10 percent plan to create new jobs (down four points), yielding a seasonally adjusted net one percent of owners planning to create new jobs, unchanged from the May reading and positive for only the second time in 20 months. Since the third quarter of 2009, job creation plans have underperformed the recoveries from the other prior two deep recessions covered by the NFIB survey.

With the country’s unemployment rate continuing to stay stubbornly high at nearly 10%, and with small businesses having historically accounted for about two thirds of the new jobs in the country, it seems clear that the problems facing small businesses are hampering the country’s economic recovery. It’s almost a catch-22 situation. Without strengthened consumer demand, small businesses can’t justify hiring. But with unemployment high, consumer demand will remain sluggish.

In my blog post earlier this year, I pointed out that in an ultra-competitive environment such as we have today, it’s especially important that small businesses stay close to their customers and that one way to do that is by leveraging the power of social media. With the continued growth in consumers’ use of social networks, that advice I offered then would appear to be even more appropriate today:

“I think that using social networking to build communities of customers and then reaching out to them with relevant and frequent communications holds a lot of promise, especially for smaller retailers. They should be able to execute better than their larger competitors. For one thing, they don’t have to deal with the internal organizational bureaucracy and delays that can hinder many larger companies when deciding how CRM / social networking programs should be executed. And, the use of social networking offers significant opportunities to reduce marketing costs, which will help smaller retailers overcome the challenge of their larger competitors’ greater financial resources.”

So despite the difficult environment for smaller retailers, there are still opportunities for growth. It will require using their ability to be more nimble and flexible in responding to consumer demands, and social media offers a great way to do that.

At the same time, it seems to me critical that the administration begin to figure out ways to promote job growth among small businesses. Policies that encourage hiring need to be pursued and anything that raises costs avoided. The small business “engine of hiring” urgently needs to be primed.

This post was originally published at MediaPost on April 09, 2010.

I recently moderated a panel at OMMA Global San Francisco titled "Will Online Advertising Ever Deliver on the Promise of Precision?" The panel discussion focused on the growing use of data in identifying and buying targeted audiences. The session was prompted by a post on Metrics Insider authored by Michael Andrew, Director of Search and Analytics at Mediasmith. In his article, Michael opined that:

Recently there has been buzz around the rise of advertising exchanges, which bring media inventory into a liquid, dynamic environment driven by automation and technology. The exchanges come in many flavors, but they all move in the direction of allowing wide swaths of media impressions to be bought in a computerized manner.

Beneath the surface of this move is a far greater shift that will shake up and unsettle marketing as we know it. It is about data -- data in ways we have never before fathomed. The future of advertising is not about social, not about viral videos, not about mobile, not about any new medium or any new ad unit -- but about data. Those who know what to do with this will be the new kingmakers, the new rulers of Madison Avenue -- or the creators of a new Avenue of media.

In the OMMA panel -- which featured Jeff Hirsch, CEO of Audience Sciences; David Zinman, VP and General Manager of Yahoo Display Advertising; and Jim Larrison, Chief Revenue Officer for Adify -- we explored many aspects of the "data in advertising" topic. We covered the growing use of ad exchanges, the role of ad agencies, the potential disintermediation of ad networks, the risk that the original owner of a "cookied" Web site audience will see that audience bought by competitors on the exchanges, and the role of branded sites in the exchanges, among others.

We also touched on the importance of the creative in targeted advertising campaigns, but because of time constraints weren't able to do the topic justice. So I thought I'd add a few personal observations here.

Let me say upfront that I'm all for targeted advertising. It has benefits for publishers and advertisers alike. It increases the efficiency of a media buy by delivering more impressions against the desired target segment. But I cringe when I hear it suggested that the future of advertising will begin and end with the use of targeting data. Excuse me, but isn't the creative message every bit as important as who we say it to? Doesn't the efficacy of any ad campaign depend to a large degree on the copy being used? If we put such importance on targeting data that we forget we are fundamentally communicating with, and are trying to influence the behavior of, human beings, I worry that we'll fail to realize the full potential of the online channel.

It's been shown that online advertising has captured 30% of all direct-response ad dollars spent across all media, but only 5% of the branding dollars. If we're to increase that 5% share, I believe we must think in ways that are consistent with the needs of branding campaigns. And that means focusing much more on the creative.

Research into the impact of TV copy conducted by comScore's ARS Group has shown that the creative is four times more important in determining sales outcomes than the media spend. That's one of the reasons U.S. marketers spend about $300 million each year researching their TV copy to make sure it's communicating in the desired manner before it's actually used. That dwarfs the pittance that's currently invested in the pre-researching of online creative.

It's no wonder the Internet doesn't get the nod more often for branding campaigns. No longer can we slap a few alternative banners together, run them in a real-world campaign and measure click rates to gauge the branding impact. The click has been shown to be irrelevant in that regard. No, we need to do our homework before the online campaign runs and make sure we have a persuasive branding message. And, as the use of rich media and video increases, we can expect online commercial production costs to increase markedly, making the need for online creative pre-testing even more important.

The importance of creative was vividly brought home to me more than 30 years ago when, as a young researcher, I was analyzing a TV weight test for a leading beverage company. The company wanted to measure what would happen if it increased TV spending behind one of its major brands by a factor of four.

We used the AdTel split cable ad testing system to deliver the higher weight level to one group of panelists, while keeping the weight steady among a balanced control group. We then compared the brand buying behavior of panelists exposed to the higher TV weight with the behavior of the control group of panelists exposed to the normal weight level. To my surprise, after six months and later after a year of testing, we could see no increase in buying of the advertised brand among those panelists exposed to the heavy weight level.

How could that be, I wondered? Four times the normal TV weight level meant that the company was spending huge amounts of ad money behind the brand - well north of $100 million in today's dollars.

The answer came when we looked at the results of copy tests of the particular TV commercials being used. The research showed that the TV ads were doing a particularly poor job of persuasively communicating a value that would succeed in attracting new buyers or even creating a compelling reason for existing brand buyers to buy more. I'll never forget what the client's wise research manager said to me: "Gian, you need to remember that four times zero is still zero!"

So, as we embrace the future of digital advertising amidst an abundance of targeting data, I hope it doesn't blind us to the need to also make sure that we have our message and communication optimized. Because, without a persuasive branding message, all the targeting precision in the world won't increase sales. Mathematical laws aren't about to change on our behalf: four times zero will always be zero.

Last week at the annual ARF Re:Think conference in New York, Hernan Lopez, President of .Fox Networks, and I presented an analysis of four ad campaigns run on the .Fox Network in the U.K that were evaluated using the comScore AdEffx™ platform. One of the campaigns used only video ads, one used a combination of video and display, while two campaigns featured display ads only. The four campaigns delivered a total of 300 million impressions. We used the comScore panel of about 80,000 U.K. Internet users to understand how display ads and video ads increased visitation to the advertised brands’ Web sites and how they increased search queries that used trademark terms or related generic terms. For each campaign, our analytical approach compared the behavior of panelists who were exposed to at least one ad with the behavior of a balanced “control” group of panelists who were not exposed to the ad campaign.

Despite a minimal number of clicks on the ads, we found that each of the campaigns successfully lifted site visitation and search queries, revealing both the latent branding impact of online ads as well as the inability of clicks to accurately reflect campaign effectiveness:

For the one campaign that used both video and display, we were able to directly compare the relative effectiveness of the two formats, which showed that, while both video and display successfully lifted site visitation and search, video was more effective:

We were also interested in understanding the way in which response to frequency of exposure differed between display and video ads. To do this, we compared the behavioral response across groups of panelists who were exposed to varying numbers of video and display ad impressions. Below are the results when we examined the lift in site visitation:

What’s very interesting is that the lift in site visitation following exposure to display ads climbs steadily with increased number of exposures, while the lift following the video ad exposure occurs relatively quickly (within 1 to 5 exposures) but then increases only slightly with additional exposures beyond 10 or more.

This frequency response pattern is illustrated even more vividly when looking at the lift in search queries:

We can see that the lift in search queries following exposure to a video ad occurs strongly within the first five exposures but does not increase with additional exposures. In contrast, the impact of display ads continues to climb markedly with exposures beyond the first five.

What are we to make of these results? One implication is that display ads are easier for consumers to miss than video ads. As a result, more frequency is needed to gain consumers’ attention and engagement with display ads than with video. Hence, the steadily growing behavioral response with additional exposures of display ads.

If this supposition is correct, then there is a potentially positive implication for advertisers and publishers. Since cookie deletion renders an ad server incapable of distinguishing between a true unexposed browser and a browser that has already received an ad but has had its cookies deleted, ad servers will repeatedly deliver ads to already-exposed browsers. As a result, many display ad campaigns actually end up delivering a higher-than-planned frequency (i.e. a higher-than-planned number of display ad exposures per browser). While the conventional wisdom says that such over-delivery results in wasted impressions, the results of our study suggest they may not be wasted at all since it appears that a high number of repeated exposures are needed to gain consumers’ attention and engagement and to elicit the desired change in behavior.

I do want to stress that the conclusions I’ve drawn here are obviously based on a limited number of U.K. studies and as such may not be broadly representative of all display ad campaigns running in the U.S. or the U.K. Nonetheless, they do suggest a potentially valuable avenue for future research, namely identifying the sales lift obtained from varying ad frequency levels. To that end, we would welcome hearing from advertisers, publishers, ad networks and agencies that would like to participate in a broad study of U.S. online ad campaigns aimed at measuring sales response (both online and offline) as a function of frequency of ad exposure.

Looking forward to hearing from you.

comScore’s analysis of holiday shopping trends during the 2009 season was, in some ways, reassuring, with online sales during the November – December period growing 4% over a disastrous 2008 period. However, a closer examination reveals that for smaller retailers it was another bitterly disappointing shopping season:

As you can see, while the largest 25 retailers (including the likes of Amazon, Sears, Best Buy and Walmart) grew their sales by 11%, the remaining retailers saw their sales drop by 7%. That’s not say that each of the retailers outside of the top 25 saw their sales decline but, taken as a group, it’s clear that many smaller retailers struggled this past year. In these economically difficult times, I suspect that many smaller retailers are simply not able to compete with the aggressive promotions and price discounting being implemented by their larger brethren. There’s an old marketing axiom which says that companies who are able to continue to invest in marketing during recessionary times actually emerge from the recession in a stronger competitive condition. That certainly seems to hold true today for the larger online retailers.

The sad plight of smaller businesses is revealed in stark reality in a report from the National Federation of Small Businesses. In December 2009, they conducted a survey of their members in which they explored sales and profit trends and expected hiring plans. Here are some of the key results. They are very disturbing.

• When asked if their sales had increased or decreased during the Oct – Dec period compared to the prior three months, a net 25% of small businesses said sales had declined. I think this is a staggering finding when one considers that this means that many small businesses are saying that their sales in the peak holiday shopping period were actually lower than in the prior three months.
• Widespread price cutting contributed to the reports of lower nominal sales
• Lack of sales was the single most important problem faced by small businesses, being cited by 35% of respondents
• When asked if their profits had increased or decreased during the Oct – Dec period compared to the prior three months, a net 43% of small businesses said that their profits had declined. Again, very disturbing results.
  • Only 12% of owners reported higher earnings in most recent three months
  • 54% reported lower earnings with 65% citing weaker sales as the cause
  • Low sales volume was the number one reason cited for lack of earnings by 35% of respondents
• Historically, small businesses have been the source of new job creation in the U.S., accounting for two thirds of all new jobs created. But today, the “job generating machine” remains in reverse. Jobs are being lost and new hiring is very weak.
  
  • When asked if they were planning to create new jobs, a seasonally adjusted net 2% of owners reported they didn’t plan to create new jobs over the next three months. Nonetheless, this is an improvement of one percentage point over the November number.
  • However, while the trend for increased employment is going in the right direction, there is no indication that job growth from small businesses will not be strong enough to dramatically reduce the unemployment rate. This is a particularly thorny issue because without this engine running at full throttle we will really struggle getting the unemployment level back down to reasonable levels.

So, what’s a small retailer to do in this ultra-competitive environment? Well, staying close to one’s customers is probably more important than ever. I think that using social networking to build communities of customers and then reaching out to them with relevant and frequent communications holds a lot of promise, especially for smaller retailers. They should be able to execute better than their larger competitors. For one thing, they don’t have to deal with the internal organizational bureaucracy and delays that can hinder many larger companies when deciding how CRM / social networking programs should be executed. And, the use of social networking offers significant opportunities to reduce marketing costs, which will help smaller retailers overcome the challenge of their larger competitors’ greater financial resources.

Happy New Year, everyone!

Yesterday, Fred Wilson posted some extremely interesting observations that relate to the problem of using clicks on referral links to measure attribution and assign credit to affiliates for referrals.

Affiliate Marketing Undervalues The Link

Fred’s conclusion is that using clicks fails to give affiliates full credit for the value of their referrals. As you can imagine, Fred’s post resonated with me because of comScore’s extensive research into online advertising effectiveness. We have come to the same conclusion as Fred. I responded to Fred with a comment that I hope you’ll find valuable.

Fred, you're correct that past comScore research has shown that search and display ads cause latent buying and offline buying that are not reflected in the click:

• http://www.comscore.com/Press_Events/Press_Releases/2006/03/Online_Impact_of_Offline_Buying
• http://www.comscore.com/Press_Events/Press_Releases/2008/11/Value_of_Online_Advertising

Essentially, it all comes back to the fact that the click does not reflect the "view thru" impact of ads (i.e. the impact of ads that are not clicked) -- and that even clicks don't accurately measure all the latent buying that occurs (because of cookie deletion).

Interestingly, this is not at all surprising to anyone who has had experience measuring the effectiveness of advertising in traditional media. Because there are no clicks to measure or cookies to track in TV, print or radio advertising, researchers use consumer panels and analytical designs that compare the behavior of people exposed to an ad campaign with the behavior of a balanced control group of people who were not exposed. The buying difference between the groups (after adjusting for any pre-campaign differences that might have existed -- and which are very small if the control group is carefully selected) can be attributed to the effects of the ad campaign. The same reliable analytical design is used in cinical trials by pharmaceutical companies to measure the efficacy of new drugs.

At comScore, we use our panel and the test vs. control group approach also on behalf of many of our publisher and advertiser clients to measure the effectiveness of online search and display ad campaigns in lifting sales -- both online and offline. We have also used it to measure the holisitc impact of referral programs. It really is the only way to accurately measure the complete impact of online ads and referral links in lifting sales of the advertised brand.

Here's a link to an example of the encouraging results we get when we use the approach to compare the effectiveness of online ad campaigns with TV advertising. It compares online and traditional advertising on an apples to apples basis:
http://www.comscore.com/Press_Events/Press_Releases/2009/8/comScore_dunnhumbyUSA_Research_Shows_Online_Advertising_on_Par_with_TV_Advertising_in_Growing_Retail_Sales_of_Consumer_Packaged_Goods_Brands

Your comments are welcome.

One of the fascinating things that’s become clear this holiday shopping season is that many retailers launched their marketing programs earlier this year, with a strong emphasis on price discounts and other financial incentives such as free shipping. I think retailers entered the season knowing that consumers were cash strapped and so offered a wide array of attractive promotions well ahead of Cyber Monday - and even Black Friday - in an effort to get consumers to open their wallets and spend earlier in the season.

Data from our friends at ShopLocal also show that the level of promotional incentives offered online was much higher in 2009 than in 2008. In fact, Thanksgiving Day is the only day in November in which the offer count was higher in 2008 than 2009 – which is kind of moot considering that the stores weren’t open on Thanksgiving!

To a large extent, it appears that retailers succeeded in generating sales lifts earlier in the season, as you can see in the table below, which shows the growth rates versus the prior year for online sales on Black Friday and Cyber Monday, as measured by comScore’s data:

Last year, strong online growth didn’t occur until Cyber Monday. This year, however, with promotions and discounts being offered earlier through aggressive programs that featured heavy use of e-mail and social networking programs, we saw online sales jump significantly on Black Friday, typically a day when the offline holiday buying season begins. I suspect that many of the larger multi-channel retailers concluded that there was no reason – in today’s day and age when many consumers would rather shop online from home rather than fight the crowds in retail stores – to not leverage Black Friday as an online shopping day. This activity appears to have pulled some of the growth one might have expected on Cyber Monday over to Black Friday instead.

Another interesting observation from comScore’s data is that, as in prior years, over 50% of all sales on Cyber Monday in 2009 occurred from work computers. While, at first blush, it might be tempting to think that, with broadband connections now prevalent at home, consumers would shop online from home, the evidence is clear that many consumers still prefer to shop online at work. In fact, this why we have always seen a jump of 50% or more in online buying from Black Friday (a work holiday for most) to Cyber Monday (when most consumers return to work). Privacy is an important driver of that behavior, since one can shop and buy gifts at work without concern that a family member might be looking over one’s shoulder. In addition, most workers have some time to themselves during a typical workday (e.g. lunch breaks) when they can shop online without fear of retribution from their employer.

One final note. It’s important to recognize the impact that social network marketing programs are likely having this year since a marked change appears to have occurred in the marketing efforts of many retailers with the inclusion of social networks in their marketing efforts – presumably to take advantage of their cost effectiveness and extensive reach on consumer behavior. In a recent comScore survey, fully 28% of consumers said that social media has had some influence over their holiday purchase decisions already this season. Consider that Twitter had 19 million site visitors in October of this year, up 12-fold vs. year ago. In that same period of time, Facebook’s visitor base has more than doubled, rising from 45 million monthly visitors in October 2008 of 2008 to 97 million today. That’s an incremental 52 million people using the service in only one year! With this kind of reach, it’s clear that social networking can play a prominent role in any retailer’s communication programs.

This past Saturday, I was invited back to speak at this year’s annual conference of the Collegiate Entrepreneurs’ Association (CEO) in Chicago’s McCormick Place. CEO was founded in 1997 by Dr. Gerry Hills, then an entrepreneurial professor at the University of Illinois at Chicago, who had worked tirelessly since 1983 to establish the organization. CEO’s vision is to be the premier global entrepreneurship network which will serve 30,000 students, through 400 chapters and affiliated student organizations at colleges and universities. Today, 150 universities and colleges from across the country are members of CEO.

This year, there were 1,500 students attending the conference, about the same number as last year. That was an encouraging reflection, in and of itself, of the appeal of being an entrepreneur. I suspect, however, that the interest among undergrads in being an entrepreneur is also stimulated by the bleak conditions in the job market. So, while in my talk I communicated some of the lessons I have learned along the way in building successful businesses at Management Science Associates, IRI and now comScore, I also made sure I stressed the importance of entrepreneurs and small businesses in creating jobs. I would go as far as to say that small businesses represent the engine of job creation. And, in fact, today small businesses are more important than ever as the U.S. struggles with a high and rising unemployment level. John Mauldin, my favorite economist, pointed out in one of his recent newsletters the magnitude of the challenge we are facing:

“The first element is Rising Unemployment. There has never been a sustained inflationary period without wage inflation. Wages are basically flat and falling. With 9.8% unemployment, 7% underemployed (temporary), and another 3-4% off the radar screen because they are so discouraged they are not even looking for jobs, and thus are not counted as unemployed (who made up these rules?), it is hard to see how wage inflation is in our near future. Think about this. Only a few years ago, less than 1 in 16 Americans was unemployed or underemployed. Today it is 1 in 5. That is a staggering, overwhelming statistic. Mind-numbing.”

Based on these ugly statistics, it’s readily apparent how important the role of entrepreneurship has become today in creating new jobs and helping get our economy back on track.

So, last Saturday, I took the opportunity to wish the members of CEO who are next year’s new graduates every success as they pursue their dream of creating their own businesses, because it’s clear that the realization of their entrepreneurial dreams could represent the cornerstone of an economic recovery.

Last Thursday, I spent a very interesting afternoon at the Wharton Business School as a member of the Global Advisory Board for the “The Future of Advertising Project” (FOA). It was a fun afternoon chatting with the likes of Rishad Tobaccowala (CEO of Denuo), Joe Plummer (former chief knowledge officer at McCann Worldgroup), Penry Price (VP global agency and industry relations at Google) and the other board members.

The FOA initiative was started by Professor Jerry Wind within Wharton’s SEI Center for Advanced Studies in Management with the mission: “to lead the reinvention of the scope, practice and value of advertising”. The FOA kicked off last December with a two-day conference at Wharton where dozens of researchers presented papers to be considered “Empirical Generalizations in Advertising”. I presented comScore’s “Whither the Click?”, which I had co-authored with Empi Morn of comScore. I’m delighted to say that our paper was subsequently chosen to be one of 21 “watertight laws for intelligent advertising decisions” featured in the June 2009 issue of the Journal of Advertising Research.

The FOA project is focused on the many business challenges of the new advertising reality:

• Highly empowered consumers
  
• Greater imperative to engage and entrust audiences
  
• Continuously expanding technological advances
  
• New insights on message creation and impact
  
• Ever-expanding and cannibalizing media models
  
• Overly US-centric mindset
  
• Plethora of opinion-based assertions
  
• Increased pressure for results accountability
  
• Old organizational models don’t reflect new realities
  
• Compounded by the global financial crisis and recession
  

The FOA project has been structured with a distinctive approach that encompasses the following elements:

1. Wharton-led team: independent, trusted, fact-based, relevant, collaborative, actionable, global
   
2. Propose a new mental model: Portfolio Orchestration Model
   
3. Test, enrich and refine with real world Innovative Case Studies, Experiments, and Empirical Generalizations
   
4. Create an engaged community of industry and academic Global Thought Leaders to contribute, comment and reflect on the various experiments and co-create insight content
   
5. Empower Marketers via a Multi-Platform Portfolio: YouTube channel, book, eBook, videos, podcasts, online, social media, conferences, consultation, courses.
   
6. Recognize Marketer / Agency / Research / Media innovation and excellence with FOA Portfolio Awards
   

As part of the FOA, a Wharton/Google YouTube marketing channel Fast. Forward. was launched with support from Google during the recent Advertising Week. It is a first-of-its-kind online destination for marketing and advertising that provides actionable insights for more informed decision-making. It takes the form of short 1-3 minute videos featuring thoughts from around the industry and academic worlds and is also intended to be an interactive platform for audience engagement.

In the words of Prof. Jerry Wind: “The idea is that the site will become the place for credible, objective information on marketing and advertising that’s current and most compelling.”

I hope you will take a look at the site. I think you’ll find it well worth your time.

Last week, I spent some enjoyable time chatting with Jennifer Lindsay on Blogtalkradio. We covered a range of topics, including the history of comScore, a review of our new panel-centric hybrid Media Metrix 360 product and the challenges / opportunities facing the Internet industry.

I hope you enjoy the interview.

It’s been a busy time. Last week on Tuesday morning I landed at O’Hare at 6:00 am following a week in Brazil meeting with clients and speaking at Digital Age 2.0 - a terrific conference in Sao Paulo organized by Now!Digital Business. Thanks to United Airlines being on-time and immigration at O’Hare being deserted, I was then able to get to Navy Pier in time for my panel at ad:tech Chicago late on Tuesday morning.

Here are some observations on Brazil and ad:tech.

Visiting Brazil is always special and so it was for me on this trip. The conference gave me the opportunity to meet some of comScore’s Brazilian clients, either at the conference or in a more private setting. The conference attracted about 800 attendees, which is testament to Brazil’s vibrant and growing Internet economy and to the country’s ability to navigate around the world’s economic meltdown.

It’s fascinating to look at comScore data and realize that Brazil is by far the largest Internet user community in Latin America and now the ninth largest Internet user community in the world, growing at an astounding rate of 54% last year - which also makes Brazil one of the fastest growing Internet populations. In fact, if one includes Internet access from public machines, such as Internet cafes, Brazil’s Internet user population of 58 million people age 15 or older would likely eclipse the top three western European countries – Germany, France and the U.K. – in number of users.

Brazil is also the #1 country in Latin America with a significant e-commerce market that has grown by about 20% this year. And, the Brazilian online ad market (search plus display) represents about 8% of all media spending in Brazil (the same rate as the U.S.) but has experienced growth of more than 20% this year while the U.S. has only grown in the low single digits.

Brazilians are very heavy Internet users, leading the region in terms of total time spent online at about 27 hours per visitor in a month, and outpacing the worldwide average of 22 hours by almost 20%! Brazil’s elevated levels of Internet usage can be traced in part to the popularity of social networking, with 84% of all Brazilian Internet users visiting a social networking site in a month.

Overall, Google Sites is the #1 property in Brazil, followed by Microsoft, UOL, Terra and Globo. Google’s success is driven by the popularity of its Orkut social networking site, which attracts a staggering 74% of all Internet users in a month and dominates the market by a wide margin, and its commanding lead in the search market with 90% of all searches conducted.

Turning to ad:tech, I have to say I was pleased to see that the attendance was almost the same as last year, which is saying something in today’s challenging economic environment. I hope it also says something about the attractiveness of Chicago as a city in which to hold a major industry event.

The focus of my panel was: “Defining the New Media Currency - How to Bring Traditional Media Metrics Online - Or Should We?” Interestingly, there seemed to be general agreement among us that the online ad industry needs to use some of the same key metrics that traditional media have employed successfully for decades: copy effectiveness, reach and frequency. Or, to put it in simpler terms: what we say, to how many people and how often. This should also include a measure of the ability of any given media plan to increase sales of the advertised product, whether the purchase took place online or in a retail store. This approach seemed to be generally accepted by the panel as being necessary if we’re to move more branding ad dollars online.

Agreement among us was shattered, however, when one of the panelists mentioned the importance of “targeting with transparency.” Use of the word “transparency” provoked a reaction on my part because this particular individual’s company had just been identified in a study by UC at Berkeley, which was covered in the recent Wired article “You Deleted Your Cookies? Think Again,” as using Flash cookies to regenerate cookies that a user had deleted from their browser – without informing the user. The violation is fairly egregious under even normal circumstances, but as the Wired article explains, these are not normal times: “The study also comes as Congress and federal regulators are looking at ways of reining in the online tracking and advertising industry, whose attempts at self-regulation have conspicuously failed to make the industry transparent about when, how and why it collects data about internet users.”

It seems to me our industry risks running into a real credibility problem if we’re telling the federal government that we can self-regulate ourselves while some companies are blatantly violating the most basic of privacy practices. It’s akin to throwing a lamb chop in front of a pack of howling wolves. We’re just asking for trouble. And trouble could take the form of laws or regulations that require consumers to give opt-in consent before cookies (even anonymous ones) can be placed on their computers. That’s not good news and it could affect negatively many members of the industry. For example, it would impact marketers’ ability to accurately and anonymously tailor their communications to consumers based on individual consumer interests, making such communications less relevant to the consumer, and more costly for the marketer. Meanwhile, consumers would be bearing the burden of continuously having to opt-in to receive the cookies perhaps multiple times on each web page that they view in order for ordinary events to occur – such as a site “remembering” a registered user and his/her preferences. Such an outcome would defeat the value that consumers derive from cookies which are intended to make the consumer experience more convenient and relevant to the consumer’s interest. As a result, I chose to highlight the issue at ad:tech – and I’m doing so again here – in the hope that this will help bring about a strict and voluntary adherence to privacy requirements by all industry participants.

Last week, I had the pleasure of speaking at the “Breakfast of Leaders”, a monthly CEO business forum, in Ashburn, Virginia. Terry Moraska, the forum’s founder, had invited me to speak to the forum and also graciously arranged for me to spend the night before my talk at the Glennfiditch House (cool name), a completely renovated sixteen-room antebellum home in beautiful Leesburg which historically hosted Generals "Stonewall" Jackson and Robert E. Lee. In addition, James Dickey lived there while writing his manuscript Deliverance. Originally called "Harrison Hall" after its builder and first owner, Henry T. Harrison, the house served as a headquarters for the Confederate Army and as a temporary hospital during the Civil War.

It was ironic that I would spend a little time in such a magnificent building that has withstood the test of time - and which looks as it did back in 1840 when it was first constructed - because the subject of my talk at the Breakfast of Leaders forum was “change.” Specifically, the need for all businesses to change if they are to survive.

The thrust of my talk was that the rate of change in technology poses serious threats to many established businesses, while simultaneously presenting attractive opportunities to entrepreneurs. How each handles the challenge often determines the success or failure of the enterprise. Drawing on my personal experience, I presented some guidelines for how the challenge of change can best be handled.

I’ve spent much of my career building businesses that leveraged changes in technology -- first at IRI and now at comScore - and I consider myself something of a student of the art and science of business change. Fortunately for me, most of my experience with change has been positive. I have been the innovator and the “other guy” to the incumbent. But, this has also allowed me to see the damage that change in market conditions can do to an existing business if not handled correctly - or ignored even.

In 1982, I remember reading “In Search of Excellence: Lessons from America’s Best-Run Companies”. Written by two McKinsey consultants, Tom Peters and Robert Waterman, it is one of the top selling and most widely read business books ever, selling 3 million copies in its first four years, and reigned as the most widely held library book in the United States from 1989 to 2006. The book explores the art and science of management used by leading 1980s companies with records of long-term profitability and continuing innovation. But, what I found particularly fascinating about “In Search of Excellence” came from examining the performance in subsequent years of companies that Peters and Waterman identified as excellent in 1982. For some, it’s not a pretty picture. Digital Equipment, Atari and Wang are just three of the companies that were rated as excellent in 1982 but which subsequently (and quickly) fell on hard times.

How could this have happened? Well, in an interview in 2001, author Tom Peters provided the answer. He confessed that: “In hindsight, there were whole categories of business changes that were headed directly at us that we completely whiffed on.” Tom identified these changes to include:

• Customers have more choices. They’re interested in the newest, best, fastest, and cheapest. And there are more competitors.
• The rate of change in information technology
• The advent of globalization
• The importance of speed

I believe these factors still represent the most pressing challenges for incumbent companies and some of the most attractive ways in which entrepreneurs can successfully enter a market. Change is a constant today. And to paraphrase Will Rogers: “Even if you’re on a fast track, you’ll get run over if you just sit there.”

The challenge is how to best handle change. While I’m always wary of giving generalizable prescriptions for success (I’ve found out the hard way that the best course of action is often situation-specific), there is one rule of thumb that seems to apply well to how best to handle change: speed is of the essence. Nimble entrepreneurs who are fleet of foot can often be successful against larger, well-established competitors. In turn, to successfully defend their businesses, incumbents need to react fast to entrepreneurial threats. I can remember Howard Tullman, one of Chicago’s most successful entrepreneurs, outlining the importance of speed in change management:

• Get more done with fewer resources in less time
  Almost by definition, new entrepreneurial entrants have fewer resources than incumbents, and that often translates into more flexibility and less bureaucracy. And that, in turn, translates into speed. The challenge for a large incumbent company is often how to duplicate this behavior.
• Time lost in not making a decision can never be recovered
  Thousands of years ago, the poet Virgil said: “Tempus fugit”, meaning “irreplaceable time flees”. For the incumbent, never being able to recover lost time means the new entrant may well have had sufficient time to achieve its most critical -- and deadly – advantage: market acceptance.
• Sooner is better. Right now is best
  A sense of urgency pervades successful new market entrants, for they well understand the inherent advantages of speed.

There you have it. Sage advice from Howard Tullman on how to manage change.

I appeared on CNBC Squawk Box this morning discussing trends in consumer spending. In the comScore e-commerce data we are essentially measuring disposable income spending and the trends provide a lot of insight into the strength of the consumer economy. As you can tell from my comments, I believe consumer spending has bottomed out and is now “going sideways” The million dollar question is: when will consumer spending start to grow again?

If you would like to learn more, please consider attending comScore’s upcoming “State of the U.S. Online Retail Economy” webinar.

This post was originally published at paidContent.org on July 30, 2009.

It’s high time our industry provide large branding advertisers with metrics that prove that the web offers just as much—if not more—ROI as traditional media. That’s the best way to convince them that it’s OK to shift large portions of their ad spending to the internet.

Consider the following. In a recent blog post, Young-Bean Song from The Atlas Institute (part of Microsoft Advertising) pointed out that if we separate advertising into its two main forms—direct response and branding—and look at the percentage of all measured media that online represents, we see that online direct-response advertising dollars have flowed strongly onto the internet, capturing 30% of all measured direct-response ad dollars) while branding is performing poorly, with only 5% of measured media branding dollars going on online.

Why has the internet failed to attract branding dollars? I lay responsibility squarely at the door of the “click.” Used since the early days of online advertising as an indicator of the effectiveness of an ad, the click originated simply because it could be measured. But not everything that can be measured matters.

In fact, the use of clicks on display ads as a meaningful metric sets the internet up for failure as a branding medium. Doubleclick reports that click rates on display ads today have fallen to approximately 0.1%, an unfortunate reality that has created serious doubts about the value of online advertising in the minds of advertisers that have experimented with the internet as a branding medium. It’s now clear that a publisher would have to be insane to continue using click metrics to try to persuade branding advertisers to turn to the internet.

If the industry can move beyond the click, the future of online branding advertising is bright. By using appropriate metrics, the ability of online display advertising—whether in the form of static display ads, rich media or video—to build brands can be shown to rival or even exceed the effectiveness of traditional media. In a white paper “Whither the Click” (published in the June issue of the Journal of Advertising Research), we summarized the hundreds of studies we’ve conducted using the comScore panel and comparing the behavior of panelists exposed to brand display ads with the behavior of those who did not see the ads. Even in the face of negligible click rates, time and again we observed statistically significant lifts among the ad-exposed consumers in the number of visits to the advertised brand’s web site, the number of trademark search queries, and the sales of the advertised brand, both online and offline.

While these metrics are vital for understanding the true effectiveness of online advertising, reach and frequency (R/F) metrics are also important tools for media planning and analysis. Traditional brand advertisers have been using such metrics for decades, and these metrics should also be central to online media planning and analysis. Let me be clear. I’m not arguing that R/F metrics can indicate whether a particular media plan has worked—that can only be determined by measuring the success of the plan in building brand sales, taking into account the particular creative that was used. But R/F considerations – how many people were reached with ads and how many times—are vital when deciding how to structure a plan and critical when one is trying to understand, based on the sales results, why a plan worked or didn’t.

One problem is that measuring an ad campaign’s reach and frequency on the Internet is not as simple as it is for traditional media because there are so many different locations from where an ad can be delivered on an individual web site. For that reason, R/F needs to be measured at the ad-placement level, not at the site level. To that end, this week comScore today announced an offering with Microsoft Advertising to provide R/F planning and analysis tools at the ad-placement level based on Atlas ad server data and comScore panel data. We believe this is a much more precise approach because it shows the reach of the ad campaign that can actually be achieved, the true potential frequency, and the specific demos of that audience. Campaigns planned at a total site level can overstate reach, understate frequency and may not deliver the desired demographic.

Perhaps Ted McConnell, Director of Digital Marketing Innovation at Procter & Gamble, put it best at a recent conference when he said: “Call me old-fashioned, but P&G thinks it’s rather important to know what we say, to how many people and how often.”

When traditional media thinks about branding advertising, it focuses on creative, reach and frequency. These are time-tested factors. It’s time for online display advertising to go back to the future.

I’ve been involved in measuring advertising effectiveness for much of my 40 year market research career, most often using behavioral metrics such as sales to gauge advertising’s ROI. During this time, I’ve become a big believer in the importance of reach and frequency (R/F) metrics. To me, they’re crucial in assembling a compelling media plan and then figuring out why some plans worked while others failed. They gain even more importance when putting together a multi-media plan and one is trying to gauge the degree to which adding additional media will represent gains in frequency or reach or both.

So, I’ve long been puzzled as to why the online advertising community hasn’t used R/F more often in its media planning and analysis. Perhaps it’s related to the industry’s long-held obsession with ad impressions and clicks as the metrics of choice in digital media planning. Why worry about R/F when you can use the click as a measure of advertising effectiveness? Well, that idea is fast going out the window as the realization sinks in that with click rates on display ads dropping to levels of 0.1%, the click can’t be viewed as a measure of anything to do with ad effectiveness. Slowly but surely, I believe that the industry is realizing the value of R/F and is beginning to view digital media plans through more of a traditional media lens. And, some of the best minds in the industry are making compelling arguments in that regard. Two recent articles stand out in my mind.

The first is a blog post authored by Young Bean Song, the well-respected media guru from Atlas. In this insightful post, Song argued that “trying to build a brand marketing campaign without traditional target reach and Gross Rating Points (GRP) estimates is like trying to diet without the concept of calories.”

The second was an article authored by Geoff Ramsey, CEO of eMarketer, who admitted, “Until recently, I sided with the anti-GRP arguments and dismissed those campaigning for GRP measurements on the Web as naive, thinking: ‘They just don’t get it, do they?’ But I’ve changed my mind, and now support the adoption of GRPs to integrate digital within the media budgets of big brands.”

Yes, I readily admit that I apparently had some influence on Geoff’s conversion, but I have to tell you that he’s not an easy man to persuade. So, if Geoff is now a believer in R/F, I think it’s a telling moment for the industry.

I do want to mention one aspect about R/F that I think may have led to confusion within the digital community. It’s not that I’m arguing that R/F represent metrics indicating whether or not a plan has worked. That can only be determined by measuring the success of the media plan (and the particular creative that was used) in building brand sales. But, I strongly believe that R/F considerations are vital when deciding how to structure a plan and critical when one is trying to learn from the sales results of a plan why it worked or didn’t. Again, one has to consider the creative that was used, but it seems to me it’s impossible to do any serious retrospective analysis without taking into account how many people were reached and how many times. Simple, but vital.

Ted McConnell, Director of Digital Marketing Innovation at Procter &Gamble, put it well at a recent conference when he said: “Call me old fashioned, but P&G thinks it’s rather important to know what we say, to how many people and how often.”

Couldn’t have said it better myself.

Last week, I spoke at the fifth annual Internet Retailer Conference & Exhibition in Boston. In spite of the continued uncertainty of the economy and the retail market, the conference, which ended Thursday, attracted more than 5,000 attendees and 368 exhibitors. Attendance was down only slightly from the 5,200 total attendees at last year’s conference. Exhibiting companies were up 43 from the 325 that exhibited at IRCE 2008 in Chicago.

I was the second speaker, following Patrick Byrne, chairman and CEO of Overstock.com, who kicked off the main conference with a Keynote Address that emphasized the growing competitiveness of the e-retailing market and the need, in these challenging economic times, to stay one step ahead of the competition. Patrick also gave a disturbing review of the perils of being a public company when short sellers take aim at you.

In my talk, I focused on the trends in e-commerce spending as measured by comScore data. Shown below is what we’ve been seeing in 2009. Not a pretty picture. I had hoped that we had reached the bottom but I have to admit being disappointed by the decline in May. We’re hypothesizing that an increase in gas prices coupled with growing unemployment are the causes of the softness in the month.

Now, the question that everyone is asking is “When will we see growth resume?” To help get a fix on that, I examined consumer spending patterns by income and age and found some very interesting – but also disturbing – trends in the patterns of consumer behavior:

I believe that e-commerce spending is a good surrogate for consumers’ disposable income spending since it doesn’t include the necessities such as food and energy (which are not bought online). It’s clear from the comScore data that the older mid-to-upper income households (who have significant purchasing power) have significantly curtailed their online spending – if not reduced it. I have to believe that the destruction of wealth these households experienced in Q4 last year, coupled with their high debt levels and the fact that they have “few degrees of freedom” left, are the factors driving them to save and try to regain the wealth they need to pay for their kids’ college costs, retirement, etc.

Since overall consumer spending accounts for about 70% of the GDP, the lack of spending by this important consumer segment could possibly continue to be a drag on the GDP and the economy for some time going forward. We can but hope that this will not turn out to be the case.

comScore’s paper “Whither the Click”, which reveals the significant positive impact of display ads even when there’s no click, is being published in this month's issue of the Journal of Advertising Research.

The results have also been cited in a very interesting article authored by Hernan Lopez, president of .Fox Networks and chief operating officer of Fox International Channels, which has just been published in the global issue of Advertising Age: http://adage.com/digital/article?article_id=137246

I think Hernan has written an important piece and I wanted to share it with you here.

During my keynote at the Search Insider Summit in Captiva last week, I presented some data on trends in search activity that I thought might be of interest to readers of this blog.

I first showed that the number of search queries continues to grow strongly, up 68% over the past two years:

However, if one looks at the number of paid clicks, the growth rate is a lower 18%, which raises the question: why have paid clicks grown 3x slower than the total number of queries?

The reason appears to be that the ad coverage (i.e. the percent of search results pages with a paid ad) has dropped from 64% to 51% of searches.

This, in turn, raises the question: why would ad coverage decline? The first hypothesis – that the search engines have been working hard to improve the searcher experience and reduce the importance of less relevant advertisers – has been widely cited, and I believe is the main driver. To help confirm this hypothesis we looked into the rate at which searchers clicked on paid ads and found that the rate hasn't changed.

But, I also find a second hypothesis to be particularly intriguing. An analysis of comScore data shows that search queries are actually getting longer and that as searchers become more experienced they are using more words per search query. And this apparently reduces the likelihood that an advertiser has bid to have his/her ad included in the results page from these longer queries, due to paid search advertising strategies that limit ad coverage, such as Exact Match, Negative Match, and bid management software campaign optimization.

Fascinating.

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.”

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.

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?

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.”

I had the pleasure of giving the opening keynote at the OMMA Global-Hollywood Conference in Los Angeles on Monday. I thought my presentation was well received and detailed comScore research showing that display advertising can generate increases in site visitation, trademark search, and both offline and online sales - even in the presence of minimal clicks.

In the video below, I discuss with Daisy Whitney NewTeeVee the challenges with using the click as a metric as well as the growing use of video advertising.

I’ve often wondered if and when the Internet would become a major distribution medium for cents-off coupons issued by CPG manufacturers. Sure, I realize that there are concerns about the possibility of fraud if hackers figured out some way to print millions of coupons and some unscrupulous retailer tried to submit them for redemption. But, since the gang-clipping of coupons from newspapers appears to have been stymied, I figured that it was just a matter of time before manufacturers got to the point where they felt comfortable using the Internet. Today, I’m wondering if we’ve reached that point.

To begin, here are some interesting – even remarkable -- statistics about coupons. PROMO magazine reported that CPG manufacturers distributed 302 billion coupons in 2007, up 6% and representing a whopping 16 billion more coupons relative to 2006. The face value of the coupons was $387 Billion, a big increase of 16% over the $337 Billion in 2006 and representing a 9% increase in face value. Free-standing inserts in newspapers continued to lead the ways in which marketers distribute coupons (88%), followed by handouts (5%), direct mail (2%), magazines (2%), newspapers (1%), in/on-pack (1%) and the Internet (0.4%), according to NCH Marketing.

According to CMS, a promotions logistics company, the boost in value and sheer number of coupons available helped improve redemption in 2007. Consumers turned in $2.8 billion of the total $387 billion in available coupon value. That added up to 2.6 billion coupons redeemed in 2007, the first time since 1992 that redemption volume did not decline.

Economic pressures and consumer-friendly tactics combined to guarantee continued consumer and manufacturer engagement with cents-off offers in 2007. In fact, comparing coupon response to key economic indicators over time has shown a strong link between the economy and coupon redemption. Most notably, as unemployment and prices rise, coupon redemption increases. So, with today’s challenging economic conditions, I don’t think we should be surprised if coupon redemption increases again this year and next.

So, what’s been happening to the use of coupons online? Well, it certainly appears that surfing for coupons is growing in popularity. comScore’s data show that 27 million people visited coupon sites in October, up 33% from a year earlier (that’s 18% of the 148 million Americans who use any coupons in a year). The number of searches conducted using coupon terms also increased by 100% from January to September of this year. On a global basis, we saw a 42% increase in the number of pages viewed at coupon sites, so it’s certainly not just a U.S. trend.

It’s also very interesting to look at the income segments where the growth is occurring:

Coupon Sites: Average Monthly Unique Visitor Growth Q3 2008 Vs. Yr Ago

At first blush, it might seem counter-intuitive to see the strongest growth occurring in the mid-to-upper income households. But, this might reflect the reality that offline coupon redeemers tend to be better educated and have higher household income than non-redeemers. Several reasons have been put forward to explain this phenomenon, including the fact that the distribution vehicles used by coupon marketers tend to reach higher rather than lower income households and more expensive brands tend to run more coupon promotions. Whatever the real reason, I think it’s encouraging for marketers to see such high online growth rates in the mid-to-upper income households where substantial purchasing power resides.

So, what does the future hold? I believe we’re likely to see an explosion in the use of electronic coupons by CPG manufacturers. There are a number of reasons why I think this will happen. First, I believe that the rapid growth in consumers’ willingness to use the Internet to obtain coupons, coupled with a continued decline in print newspaper readership, will force manufacturers and retailers to reconsider their distribution strategies that today are so dependent on the use of newspaper FSIs. By distributing coupons online, retailers can reach a large audience and realize large savings relative to the cost of newspaper distribution. Second, retailers are increasingly looking at the opportunity to link online coupons to the use of their loyalty cards in a seamless and efficient manner. To get these electronic discounts, shoppers simply have to type in their loyalty-card ID numbers on a store Web site (or other site) and click to load the coupons to their card account. The discounts are subtracted at the retail store after those items are scanned at checkout and the consumers have shown their loyalty card.

Now, that’s a simple and cost effective solution that provides benefits to the manufacturer, the retailer and the consumer.

On Thursday November 14, I delivered a keynote presentation at the Jordan Edmiston Group’s 2008 Growth Conference in New York.

Pictured from left to right: Gian Fulgoni, Chairman, comScore; Wilma Jordan, Founder & CEO, JEGI; Michael Chen, President & CEO, GE Commercial Finance, MCE; Scott Peters, Managing Director, JEGI

This by-invitation event is one of the few conferences bringing together senior-level private equity and venture capital investors with CEOs of top global and emerging media, information, marketing services and technology companies.

JEGI is an independent investment banking company for media, information, marketing and related technology. We worked with JEGI in comScore’s recent acquisition of M:Metrics.

Speakers from the media world included Gordon Crovitz, former Publisher, Wall Street Journal; Martin Nisenholtz, SVP, Digital Operations, New York Times; Mike Galgon, Chief Advertising Strategist, Microsoft; Jonathan Hsu, CEO, 24/7 Real Media; George Kliavkoff, Chief Digital Officer, NBC Universal; Dave Morgan, former Chairman & CEO, Tacoda and current Chairman, Tennis Company; Rob Norman, Global CEO, GroupM Interaction (WPP).

There were some fascinating discussions regarding the global economic crisis and its impact on the media industry.

In my presentation, I discussed how the Internet is faring in these tough economic times and focused on three issues that are of vital concern to online marketers:

1. E-commerce Trends
2. The State of the Online Ad Market
3. The Rise of the Long Tail

You can request a copy of my presentation by visiting our Presentation Gallery.

Also, click here http://link.brightcove.com/services/player/bcpid2651885001 to see some interesting interviews with some of the speakers at the conference.

Last Saturday morning (at 8:30 am!), I delivered a keynote presentation at the annual meeting of the Collegiate Entrepreneurs’ Association (CEO) in Chicago’s McCormick Place.

CEO was founded in 1997 by Dr. Gerry Hills, an entrepreneurial professor at the University of Illinois at Chicago, who had worked tirelessly since 1983 to establish the organization. CEO’s vision is to be the premier global entrepreneurship network which will serve 30,000 students, through 400 chapters and affiliated student organizations at colleges and universities. Today, 150 universities and colleges from across the country are members of CEO. Congratulations, Gerry, on a remarkable accomplishment!

There were about 1,400 students attending this year’s conference, representing universities and colleges nationwide. The energy level was stimulating, and it was terrific to see so many young people excited about the idea of starting their own businesses. Many had done so already.

I shared some of my own entrepreneurial experiences, and liberally referenced quotes I like regarding the life and actions of an entrepreneur. I thought you’d enjoy seeing some of them.

“Pioneers get arrows in their backs. They also blaze trails that have a way of turning into highways for countless travelers to follow.”
Jason Fry, Wall Street Journal

"The innovator has for his enemies those who did well under the old conditions.”
Albert Einstein

“Don’t be afraid to innovate; be different: Following the herd is a sure way to mediocrity.”
David Ogilvy, Co-Founder, Ogilvy & Mather Ad Agency

When asked which customer had given him the idea for the Model T automobile, Henry Ford answered:
“If I had listened to my customers, I would have built a very, very fast horse.”

“Whatever is not nailed down is mine. Whatever I can pry loose is not nailed down.”
Colis P. Huntington, Builder of the Transcontinental Railroad

“When there’s a ton of water, a lot of things float and look like boats. When there’s a ton of money, a lot of things float and look like companies.”
David Roux, Silver Lake Partners

“The meek may inherit the earth, but they’ll never increase market share.”
William McGowan, Chairman, MCI

“Good managers challenge their people. Poor ones comfort them.”

“Time lost in not making a decision can never be recovered. Sooner is better. Right now is best.”
Howard Tullman, Chicago Entrepreneur

“Never give in, Never, Never, Never.”
Winston Churchill

Impact of Online Display Advertising Absent the Click
Part I: Its Impact on Site Visitation

Last month, the IAB invited me to present a summary of comScore's Q2 2008 e-commerce trends as part of an IAB webinar where the IAB released their Q2 online ad spending data.

The IAB data were assembled and presented by Price Waterhouse Coopers (PWC) and were most interesting. Overall, the data were reassuring, with a growth in online ad spending of 13% versus year ago. Search continued to grow strongly (+24% vs. YA) while display ads (i.e. banners) grew by 8%. Consistent with the PWC data, CMR also reported an 8% increase for display ads. Let’s hope we see more of the same in Q3 and Q4!

At about the same time, Nielsen released its own estimate of display ad spending for the first half of 2008 and reported a 6% decline. I was intrigued as to why the Nielsen number differed so widely from the PWC and CMR estimates and spent a little time digging into the numbers. It turns out that Nielsen reports online ad spending for CPM-based display ads, while the PWC and CMR numbers include both CPM and “pay-for-performance” display ads (i.e. CPM, CPC and CPA deals).

So, in interpreting the data, it would appear that advertisers are shifting large amounts of their display ad spending from CPM to CPC / CPA deals. With today’s tough economy, I don’t think this is surprising – since it’s natural for advertisers to demand more performance. But, I think there’s more to the story. In a study comScore completed earlier this year with Starcom and Tacoda, we measured click rates across all online display campaigns in a month and found them to average less than 0.1%. Does this mean that display ads aren’t having any impact? I don’t think so. I think the issue is that a click no longer reflects the effectiveness of a display ad. Just as we wouldn’t expect that print ads, TV ads and radio ads should generate immediate consumer response, why would we expect it to be so with online display ads?

We've conducted extensive research at comScore that confirms the impact of display ads. Using our behavioral panel, our analysis compared the behavior of consumers who were exposed to display ad campaigns with a control group who were not exposed. The control group was carefully selected to be demographically and behaviorally balanced with respect to the exposed group. Below, I’ve shown the average impact of 139 display ad campaigns in terms of their ability to drive visitation to the advertisers’ sites:

The impact of the display ad campaigns is clear, with substantial lift in site visitation occurring in the first week of exposure to the campaign (+65%) and continuing through the fourth week following initial exposure (cume +46%).

So, with these types of positive results, are we to conclude that advertisers who pay on the basis of CPC arrangements are making a mistake? I think the answer is “yes and no.” “Yes,” because it’s clear that a singular focus on display clicks is misleading and does not reflect the actual impact of the ad campaign. "No," because smart advertisers understand the benefit of running display campaigns and that paying based on the number of clicks realized is economically very attractive. They get the “view through” impact of the ads but only pay for the small number of clicks that are generated. That’s a great deal for the advertiser -- but a poor one for the publisher. I think it behooves publishers to consistently measure “view through” impacts and to use the results to charge a fair price for the holistic performance of display campaigns that are run on their properties.

In my next blog posting I’ll reveal further evidence of the effectiveness of display advertising by focusing on its impact on consumers’ search queries.

Internet veterans will recall Webvan, the failed online attempt to offer home delivery of groceries. Before folding in July 2001, Webvan burned through about $1 billion in capital.

I was reminded of Webvan recently as I was reviewing Department of Commerce data for online and offline sales:

I was struck by the rapid de-acceleration in the growth of online sales since the beginning of the year, while retail sales have continued to grow at the same rate. After a little analysis, I realized what was happening. It all begins with the dramatic rise in the price of oil this year and the resulting increases in the price of gasoline and food:

These products are bought offline – which helps explain the continued growth in retail spending, but now driven by inflation. However, the price increases in food and gas have squeezed consumers’ discretionary spending and it is this discretionary spending that is vital to e-commerce. As consumers’ discretionary spending power has dropped, so has the growth in e-commerce sales.

If only Webvan were still with us to help convert some of the offline retail grocery sales into online retail growth. Obviously, the remaining web grocers have an opportunity in light of the increased gas prices. I have been cheered by stories about Peapod holding the line on delivery charges in order to build business from gas-price-stricken consumers. What better way to emphasize the convenience, time saving, and gas saving from shopping online!

Last week, I gave a keynote address at the 4th Annual ShopLocal Summit. ShopLocal.com is a multi-channel marketplace that houses online and offline retailer promo information. With an increasing number of retailers turning to ShopLocal.com, it has become increasingly important for retailers to not only understand the online marketplace but also how online marketing can help increase offline sales.

During my presentation, I shared some results from recent comScore studies that gauged the impact of online advertising on in-store sales. Using the comScore panel, offline sales impact can be measured by linking panelists’ exposure to online ads with their in-store buying (through the use of retailers’ loyalty card data). Lift is computed by comparing the offline buying of consumers who had been exposed to an online ad campaign with the buying of those who had not been exposed to the campaign.

We’ve seen some very interesting findings that I’d like to take a moment to discuss:

#1. Search advertising provides higher sales lift than display advertising, but when combined, the synergy provides the highest lift…

When comparing the offline sales impact among consumers exposed to ‘search advertising only’ with the impact among consumers exposed to ‘display advertising only’, search holds a clear advantage, with an 82-point lift in offline sales compared to a lower 18 percent increase among consumers exposed only to display advertising. This is because the people who get exposed to a search ad are much more likely to be “in the market” for the brand/category being advertised and as a result, a search ad will drive more offline buying than a display ad. But, what’s especially important to notice here is that exposure to both search and display ads provides the highest lift (119-points over the control), which is even greater than the sum of the two tactics alone.

#2. While search advertising results in a higher sales lift than display advertising among the people exposed to the ads, the number of people reached by display advertising is typically markedly higher than the number of people reached by search advertising …

When we look specifically at the total number of consumers exposed to ‘search advertising only’ versus ‘display advertising only’, we see that display ads typically provide the greatest reach by a long shot. Search advertising – which generates an impressive sales lift – typically reaches a much smaller percentage of consumers.

Key Takeaway: So what do these findings tell us?

Based on the research we’ve conducted at comScore, it’s clear that the use of online advertising is a terrific way to grow retail sales. But, what’s also apparent is that media planners need to consider both sales lift and reach when designing online search and display ad campaigns that are intended to drive offline sales. While search advertising generates a much greater sales lift among the consumers it reaches, the far broader reach of display advertising can more than compensate for display ads’ lower sales impact. Smart media planners will carefully mix their use of both types of online advertising so as to optimize the return from their investment in online marketing.

I’m interested in hearing your thoughts on the above and getting a discussion going online…Please let me know what you think about these findings via the comments link below.

Back in November of last year, I wrote a blog post suggesting that the use of the “same store sales” metric as a barometer of retail health could lead to erroneous conclusions regarding the performance of individual retailers or the retail economy in general. My rationale was that many retailers don’t include online sales in such a measure and e-commerce has grown to the point where it represents a material contribution to the growth of many retailers’ businesses.

So, I was particularly pleased when I recently read in the Wall Street Journal and International Herald Tribune that my “recommendations” were being taken to heart by Moody’s, who will now be including online sales as an important factor in their credit ratings. I think this is precisely the correct thing to do. E-commerce has come of age.

Last Friday, Jim Cramer invited me to be on his show - Mad Money on CNBC - to discuss how some financial analysts misinterpreted comScore's paid click data and used our U.S. data to incorrectly draw conclusions about Google's world-wide performance. As we've shown previously on this blog, the paid click data that comScore published were for the U.S. only, not worldwide, and have a high (0.94) correlation with Google's U.S. revenues.

Click here to view the interview.

Last week, I gave the opening keynote presentation at OMMA Hollywood titled "Warp Speed: Online Media, Marketing and Advertising by the Numbers." In this presentation, I addressed the state of Internet advertising and the need for metrics other than “clicks” when measuring the ROI of online display advertising that is focused on brand-building objectives as opposed to direct response. In the presentation, I also discuss the benefits of using search as a branding tool.

I would be happy to share the presentation with you. If you are interested, please request a copy at www.comscore.com/request/OMMA.asp

This last Monday, I delivered the opening keynote at OMMA Hollywood, a presentation titled "Warp Speed: Online Media, Marketing and Advertising by the Numbers." Joe Mandese of MediaPost caught up with me shortly after the presentation. Click here to check out the interview: we discuss the offline and latent impacts of online ad campaigns and how to prove their ROI.

I think it was H. L. Mencken or Albert Einstein (a quick search showed me that they are both cited as authors) who said: “For every complex problem, there is one simple – but wrong – solution.”

I was reminded of this quote when I read a blog posting on the Adify site where the discussion focused on how to measure the effectiveness of online display advertising.

For me, the quote sums up the challenge. While it’s alluring to believe that there is one simple, easily-obtainable metric that will accurately and reliably predict advertising success, I believe this is a siren’s song. And, I suspect that most experienced researchers who have spent decades searching unsuccessfully for advertising’s Simple Holy Grail have also come to the conclusion that, while there certainly are simple metrics that can give you some insight, they’re far, far from foolproof as a measure of advertising’s impact on sales. And sales, I would argue, is the one undeniably relevant metric for evaluating ad effectiveness. Unfortunately, however, measuring advertising’s sales impact is something that’s often difficult to do – especially since it’s often vital to measure advertising’s cumulative impact on sales across time and channels and to cleanly separate this from the impact of everything else that’s going on in a brand’s marketing mix.

This brings me to the validity of the click as a measure of advertising effectiveness. For many years, the click was used as a supposedly accurate measure of the effectiveness of display advertising. Now, I would be the first to agree that – for some direct response ad campaigns – the click remains a relevant metric. However, when it comes to measuring the impact of brand building advertising, the idea that consumers’ immediate response via a click is hard proof of the effectiveness of display advertising is just plain wrong. Perhaps, in the early days of online advertising when click through rates were running at levels of 5% or so, it was easy to believe otherwise. But, as click rates have dropped to a fraction of one percent it has become clear that some other metric is urgently needed. To believe otherwise today would be to acknowledge that display advertising has no impact at all. Perish that thought!

comScore’s objective in conducting the click study with Tacoda and Starcom was to prove – once and for all – the limitations of the click as a relevant metric to use to measure display advertising effectiveness. I believe this is a critical step in the evolution of online advertising because if our industry is to continue its torrid growth, we have to look beyond direct response advertising dollars. We have to convince the brand-building advertisers that they should move more of their ad dollars from traditional media to the Internet. Rest assured, we’re not going to be able to do that using clicks as the metric of choice. Instead, we have to be able to show that display advertising increases brand sales over time and across both online and offline sales channels. I think that Einstein would agree.

For good reason, concerns about privacy and data security have become an increasingly visible issue for the marketing industry in recent years – perhaps most notably in the online sector. The unprecedented access to data provides innumerable benefits to both consumers and businesses alike. It also demands a great deal of responsibility regarding how that information is gathered, protected and used. In this context, I think it’s critical to draw specific attention to the discipline of market research, its use of data and the many benefits it provides to corporations, academia, and the overall economy.

For generations, market research professionals have conducted invaluable studies of consumer attitudes and behavior for both the public and private sectors. Surveys and behavioral tracking studies provide the information necessary to ensure sound economic and social policies in the public sector. Information on consumer behavior and preferences helps the private sector develop new and improved products, identify new health care needs, improve the ergonomics of the products we use, spend their marketing dollars more efficiently and create countless products and services that improve the quality of life for everyone. Without market research, corporations would be operating “in the dark”, inefficiencies and error rates would increase, more new products would fail and the resulting increased marketing costs would have to be borne by the consumer. That’s not a pretty picture.

The Internet is a good example of an industry that is critically dependent on credible third party research that provides anonymous information on issues such as e-commerce trends, Web site visitation statistics and audience demographics, search activity, online advertising effectiveness and insight into countless other online behavior patterns. As with traditional media, advertisers demand such independent information in order to confidently invest in advertising-supported Web sites, which depend on advertiser support to offer free services to consumers.

However, the growth of the Internet as a powerful new medium also introduces the need to define specific practices of privacy protection and data security, to create an environment in which market research can continue to play its vital role. At comScore, we adhere to strict tenets that the market research industry has fundamentally observed for decades. As such, we:

• Provide research participants with clear notice of software functionality and data collection practices;
• Obtain consent from participants prior to installation of any data collection software or collection of any behavioral data;
• Collect and use data exclusively for market research purposes, and not for purposes of marketing or advertising products and services to our research participants;
• Neither divulge, nor sell, personally identifiable information (PII) in any fashion to our clients;
• Strictly safeguard the personally identifiable information, privacy and anonymity of panelists through technological means and established security practices;
• Provide an easy method through which participants can cancel participation; and
• Participate in review and certification of our practices by recognized and objective third party authorities

I believe that the relationship between a research participant and all reputable market research companies that adhere to these practices is important, and should be preserved. Market research tracking software (we have dubbed it “researchware”) needs to be differentiated from “adware,” “spyware,” and “malware” and should not be treated in the same way as these intrusive and potentially harmful applications. We must not let the purveyors of spyware – the rotten apples – give market researchers a bad name.

There is clear precedent for such differentiation in the U.S. Federal Trade Commission’s creation of the Do Not Call (DNC) Registry and the Telemarketing Sales Rule (TSR). Following a comprehensive review process, the FTC clearly differentiated survey research from telemarketing calls, thereby excluding market research from TSR and DNC prohibitions.

comScore will continue to safeguard the future of online market research as a crucial source of information and insights for industry, government and academia. I urge other market research and marketing firms, universities, industry and consumer associations – and the media – to join us in supporting the researchware initiative, thereby ensuring the continuation of legitimate forms of research that benefit society and the global economy.

I was recently interviewed by Surinder Siama of ResearchTalk Podcasts about current trends in Internet market research, and thought I’d share the video with you below. Much of our discussion focuses on a recent study that comScore conducted with P&G, Yahoo! and SEMPO that explored the potential for the CPG industry to invest in, and benefit from, search advertising. We also discuss the role of the click in online advertising, the measurement of the offline impact of online advertising as well as the benefits of advertising on social networking sites. I hope you find the discussion interesting.

Recently spotted: comScore data in Times Square from our first e-commerce report of the holiday season.

As promised in an earlier blog post, I want to share with you an analysis of the display advertising delivered on MySpace and Facebook that I recently presented at the Forrester Consumer Forum. The data are based on comScore’s Ad Metrix service, which captures and classifies the ads seen by the comScore panelists. We think this is a more accurate approach to measuring the number and types of ads delivered on sites than the spidering approach favored by other research companies because spiders miss much of the targeted ads that sites deliver today.

What the comScore data reveal is that MySpace is far more developed as an advertising platform than Facebook – along a variety of dimensions. For example, in September MySpace attracted 68.4 million unique visitors, 2.2 times the 30.6 million that visited Facebook. But, MySpace visitors also consumed 1.4 times more pages per visitor and MySpace delivered 2.2 times more ads on each page viewed (with each ad being about twice the size of the ads run on Facebook). Cumulatively, this translates into MySpace delivering 6.6 times more display ad views than Facebook.

Clearly, these data point to the huge upside that exists for Facebook to increase its advertising business relative to MySpace by continuing to build its user base (Facebook unique visitors in September were up 129% versus year ago while MySpace increased by a slower 23%) and by increasing the number of ads they’re delivering per page viewed. Of course, it can be expected that, as the number of ads delivered on Facebook increases, astute marketers will also begin paying more attention to changes in the “share of advertising views” that they’re getting within their particular product category and target audience to see if their “share of voice” is declining.

Let me begin this posting by saying I hope that those in the U.S. had a terrific Thanksgiving holiday. It’s a very special time of year and we have much to be thankful for.

Thanksgiving also marks the beginning of the busiest time of the year for the Marketing Communications group here at comScore, because it’s the kickoff to the media’s intense focus on trends in consumer spending. This scrutiny is understandable, because roughly two thirds of the U.S. GNP is generated by consumer spending. And, since the months of November and December together account for a disproportionately high percentage (20%) of each year’s total spending, there is, understandably, a sharp focus on holiday season spending patterns.

This is the seventh year that comScore has published online spending statistics and each year there is more interest from the media in our numbers. This year, the 2007 holiday shopping season is shaping up to be a particularly important one. And, an especially intriguing one if you’re a researcher like me. Everyone, it seems, is asking the same, fundamental question. Is the economy being crimped by a decline in consumer spending that can be traced to several problems, including the sub-prime meltdown, the decline in home values, higher gasoline prices, and a weak stock market?

To address this issue, a variety of shopping statistics will be discussed and evaluated in the coming weeks, most notably the percent increase versus year ago in retail sales and “same store” sales. While these are undoubtedly important measures, I think they no longer provide the complete view of consumer spending that they once did. The reason is the growing importance of online sales. To understand this, consider that if one excludes food, gas and autos, online sales will represent about 7.5% of consumers’ total spending this holiday season. So, if online holiday sales grow at a rate of 20% (comScore’s forecast), this means that the increase in online spending will represent about 1.5% of consumer spending.

To be sure, it’s likely that a substantial portion of this online growth represents spending that is being pulled from retail. But, the fact remains that traditional metrics which focus only on retail spending and don’t include online buying will understate the strength in consumer spending. We need to be sure to add the e-commerce growth numbers to the retail growth data to get an accurate picture of what consumers are doing. With economists projecting a growth of only 4% in consumer spending, the inclusion of 1.5 points of spending coming from e-commerce could make the difference between a so-so holiday shopping season and a strong one. E-commerce has definitely come of age.

Recently, I spoke at the Forrester Consumer Forum here in Chicago, titled “Winning in a World Transformed by Social Technologies.” I’d like to share with you some of the findings from my presentation, which focused on consumer trends in social networking.

I personally find the worldwide expansion of social networking sites fascinating. For example, it’s commonly thought that with the success of sites like MySpace and Facebook, the U.S. is the hub of social networking activity. However, Asia is not only the fastest-growing region for social networking, it is also the largest:

By contrast, fewer Latin Americans visit social networking sites, but are much more engaged:

Each region has a different leader as measured by total time spent. Friendster, for example, was once a pioneer in the U.S. but now attracts a relatively small U.S. audience (North Americans spent 4.4 million hours on Friendster in August 2007 - seventh overall in North America - versus MySpace’s leading 223.1 million hours). However, people in Asia spend more time on Friendster than any other social networking site.

If you are a global marketer, there’s a great opportunity to capitalize on the rapid adoption of social networking sites outside of the U.S. But you’re going to have to ‘get local’ and understand which sites will maximize your reach in a particular region.

Related: The receptivity to advertising on UGC Sites.

Next: How MySpace Monetizes More Than Facebook.

Josh Chasin, our Chief Research Officer, has taken the leap as a columnist, contributing the Online Metrics Insider column for MediaPost Publications. In his first post, he provides a review, at breakneck speed, of the state-of-the-metrics industry. Josh helps put most of the key issues in our industry into neat perspective. I highly recommend you give the blog a read.

Josh’s main thesis is that: “one of the consequences of being the most measurable medium is that the Internet ends up as the medium with the most measures. We tend to experience this as paradox - the Internet is inherently measurable, yet measures are abundant and widely divergent. When you think about it, though, this is not paradoxical at all. Measurability begets measures. We have to stop letting this abundance of metrics keep us from doing the business we need to do.”

Among the issues Josh addresses are…

• What are the key differences between the approaches of comScore, NetRatings, Alexa, Hitwise, Quantcast, and Compete?
• What is the essence of the audience measurement versus web analytics dispute?
• Why is there so much variation in web analytics results?
• Will the MRC audits and accreditation ameliorate the differences in the metrics reported by different sources?
• Do we need to standardize the standards?

Read Josh’s post to get his view on these and other pressing issues in the measurement of online behavior.

With comScore’s IPO successfully completed and our company now well established as the leading supplier of digital marketing intelligence to more than 700 clients, I occasionally find myself thinking nostalgically back to August 1999, when Magid Abraham and I founded comScore.

Magid and I had previously worked together for some ten years at Information Resources (IRI), the innovative provider of market research scanner data, and we had seen first hand how technological dislocations can create challenges for the incumbents in any industry, while simultaneously creating exciting opportunities for new entrants that are innovative and fleet of foot.

In mid-1999, the Internet bubble was in a full expansion mode. The challenge we faced was how to best take advantage of this in starting a new market research company. At the time, many emerging Internet companies were based on advertising business models, and as a result there was a vibrant market for data on the size and demographic characteristics of site audiences. There were two research companies (Media Metrix and NetRatings) already supplying site audience ratings – and both had already gone public. There was so much demand for their data, that I recall at one point the combined market value of the two companies approached $2 Billion – even though their combined revenues didn’t exceed $30 million annually.

So, where, we asked ourselves, was the business opportunity for a new research company?

We found the answer in the offline world. A quick back of the envelope calculation showed us that offline companies were spending five times as much money measuring consumers’ buying behavior as they spent on TV, radio, print and outdoor ratings data combined. However, on the Internet neither Media Metrix nor NetRatings were measuring e-commerce. So, that’s what we set out to accomplish. Believing that this type of data would soon become vital to Internet marketers – and likely help shape the future of the Internet – we decided that comScore’s mission would be to measure the digital world in every sense of the word – and we set about building the proprietary data collection technology and recruiting the massive samples of panelists that were needed to make our vision a reality.

Our confidence in the importance and value of accurate data on consumers’ buying behavior was grounded in our offline experience at IRI, where we had seen first hand the value that companies attached to insights into consumers buying activities and the impact that such data could have on marketers’ spending patterns.

IRI pioneered the use of retail UPC scanning data. Before scanners, marketers had to rely on so-called “store audit data” to understand the trends in how consumers bought their products. These data were obtained through a field force of auditors who visited a sample of stores to count in-store inventories and collect the invoices showing what was ordered by each store. From these data, store sales could be computed. The problem was that the amount of manual work involved meant that sales data points could only be produced every two months and the data simply didn’t have the granularity to show the impact of the price reductions and promotions that were running on a week-to-week basis. As a result, in the absence of insights into weekly sales trends, CPG marketers had tended to invest in longer-term marketing strategies such as TV advertising rather than trade or consumer promotions. When weekly scanning data became available, marketers were quite astonished to see that sales of their products could increase up to ten times or more their normal level in the weeks when retail price reductions and promotions were running.

The shift to trade promotion spending was on!

As weekly scanning data replaced the now-obsolete bi-monthly audit data, IRI used the scanner data to build mathematical models that measured the ROI from trade promotion spending, helping guide CPG marketers as to the efficiency and effectiveness of their trade marketing dollars.

Armed with the results of the IRI research, CPG marketers were able to more confidently increase their reliance on trade promotion and, by the time scanning had rolled out into all the CPG distribution channels, $40 billion of incremental money was being spent by CPG manufacturers on trade promotions every year:

Having seen first hand the huge impact of information on how the CPG industry allocated its marketing dollars helped us at comScore envision the types of new measurement databases that were going to be needed in the digital marketing world and the role that comScore could play in providing them.

So, here we are today – some eight years after comScore’s founding – providing Internet marketers with the data they need to better understand consumers’ online behavior in all of its many manifestations, along with the tools necessary to determine how they can best deploy their corporate assets so as to maximize ROI. And, one of the most important things we are doing in that regard is helping our clients clearly understand the incremental return they can expect if they shift marketing dollars from traditional media to the Internet.