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.