January 5, 2010

The Click and Affiliate Marketing

Gian M. Fulgoni Gian M. Fulgoni
Chairman Emeritus

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.

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