Comments for Microsoft: ROI Measurement is Broken; We'll Fix It

Microsoft: ROI Measurement is Broken; We'll Fix It

2008-02-25T17:56:59Z

Microsoft today announced the release of a new ROI measurement tool called "engagement mapping." Rather than measure ROI based on the last ad a user clicks, Microsoft's new tool attempts to take into account all the interactions with a company's marketing message and brand that may have lead up to a purchase or other user action.

]]> According to a press release, Microsoft's new engagement mapping tool assigns and measures value "on a real-time basis and takes into account the impact that recency, frequency, size and ad format (such as rich media and video) have on a consumer’s online path to action."

"The 'last ad clicked' is an outdated and flawed approach because it essentially ignores all prior interactions the consumer has with a marketer's message," said Brian McAndrews, senior vice president of the advertiser and publisher solutions unit at Microsoft. "Our Engagement Mapping approach conveys how each ad exposure -- whether display, rich media or search, seen multiple times on multiple sites and across many channels -- influenced an eventual purchase."

McAndrews was formerly the chief executive at aQuantive, an online advertising firm Microsoft acquired last year for $6 billion. Microsoft will unveil the new program today at the Interactive Advertising Bureau conference and it will be available in beta on March 1.

What It Means

This is all part of the continuing shake up in the online ad industry. New web technologies and advertising formats have forced the online ad industry to seek innovative new ways to measure web traffic and audience engagement. For example, last July, one of the web's leading audience measurement firms, Nielsen//NetRatings, announced that it was canning the page view in favor of a 'time spent on page' metric. Compete (a RWW sponsor) has a metric called 'engagement', which measures things like Daily Attention and Average Stay.

Microsoft's engagement mapping tool is a continuation of the evolution we're seeing in online audience measurement techniques. All of these changes have a profound effect on publishers, and generally have a positive effect for small publishers -- those who don't generate a lot of page views, but serve a specific niche and may deliver higher ROI. Better ROI measurement tools can help that type of publisher maximize their ad earnings.

On the flip side, they help advertisers better place ads to bring a higher return on investment. Rather than throwing page views at an advertising campaign, new measurement tools are helping publishers to better pick the best places and methods to advertise.

The Future

This type of engagement mapping tool will become really powerful when it can measure not only ad views that lead to a purchase, but also any other type of online or social interaction. This is probably the end game that Facebook is aiming at with Beacon. Imagine the value advertisers could derive from a tool that looks at how your online activity leads up to a purchase. I.e., did you see a friend talk about the product on a Facebook wall post? Did you read a blogged review? Did you see the product talked about in a YouTube video? Did you look at any ads when all that was happening?

There are already companies starting toward that goal right now -- Nielsen BuzzMetrics, Andiamo!, and Scout Labs come to mind -- but none of them thus far offer a really complete picture of how social interactions lead individuals to purchase (or not) a product or service. Once those puzzle pieces fit together, and consumer concerns over things like privacy are sorted, the online advertising industry will really start to mature. Rather than buying ads based on volume, advertisers will be able to very closely design and target ads to specific consumers -- which means we'll see very relevant advertising. That's all-at-once creepy and exciting.

What do you think? Is Microsoft's new engagement mapping tool a step in the right direction for ROI measurement? Do you agree with our guess at the future? Let us know in the comments.

Comment from Scott on 2008-02-25

2008-02-25T19:31:59Z

Is this engagement tracking only for pre-click experiences, or is there an API to let companies integrate post-click behavior tracking within their own sites as well?

Comment from Jayant Kadambi on 2008-02-25

2008-02-26T00:23:30Z

It’s good to see the big companies recognize the importance of a new approach to online advertising. All of the traditional rules have changed. The niche publishers you mention are growing in numbers. Audiences are vocal about the ad formats they’ll tolerate – and those they won’t. It all just shows that the status quo no longer works.

Companies like YuMe (my company) and others who are working to meet the new demands of this space, are helping both advertisers and publishers to realize a stronger ROI by targeting the ads to relevant audiences and offering the real-time metrics to optimize the campaign’s performance.

We’ll also be anxiously awaiting more details on Microsoft’s beta product. In the meantime, we’ll keep plugging away to help the growing number of advertisers and publishers who need solutions today.

Comment from Vibhu Norby on 2008-02-25

2008-02-26T03:40:12Z

It strikes me that this model is a much better metric for measuring ROI for social sites where influence matters... like Digg and Facebook...which, OH MY GOD - have ad deals with Microsoft!(Along with a third which is rumored to be in the works with MySpace.)

Microsoft is smarter than Google thinks. While Google sees a user's search as the indicator of willingness to buy, Microsoft is looking a step before the search: Who and what brought that user to make the search in the first place?

And you better believe this is related to Yahoo! and their email service. Imagine: User receive email from friend about getting together for lunch at local restaurant. When friend leaves his email behind to "Google" the location of that local restaurant, who should really get the cut of the sale? Google, or the e-mail provider? Both. Right now it's just Google.

Comment from Robin Seidner on 2008-02-26

2008-02-26T18:51:31Z

Interesting thoughts on this. I am glad that Microsoft is at least attempting to change the conversation, as social media adds a whole different wrinkle to measurement. This is one area that we're hard at work to bring together at Collective Intellect. To us, the missing piece is bringing all digital metrics together - ad, online and social media.