Connecting online ads to offline purchases is difficult at best.  Comscore published a white paper in 2008 on the dramatic underestimation of display advertising ROI, primarily the result of the fact that any assessment of less tangible brand marketing is qualitative and after the fact.

Online has been held to higher standards than traditional, because everything is measured, and probably because we still need to prove the value of online for branding.  In the past few years we’ve made great strides to prove the efficacy of digital advertising on the consumer funnel.  According to the panelists, we’ve reached a threshold and there are now good technologies that can help us measure.  However, the truth is it’s still difficult to connect the dots between online ads and offline purchases. 

The mix on this panel was interesting: one marketer (Andy Markowitz of Kraft), two agencies (Carl Fremont of Digitas and Richard Guest of Tribal DDB) and two technology companies (Dan Beltramo of Vizu and Andy Atherton of brand.net which claim to provide tools to help read the tea leaves). 

I’ll confess that I usually put more weight on what a marketer says.  Kraft has been engaged in online for a long time, and they have lots of measurements from soft to hard ROI metrics.  According to Andy Markowitz, the only constant has been this: there’s only tolerance for what sells more product: the old saw of “the proof is in the pudding”.

Online brand campaigns and offline-style extrapolated measurements lead to suspicion and mistrust, as well as fears of inaccurate sampling which make brand marketing an easy budget-cutting target.  Most marketers think about online brand campaigns as a murky immeasurable necessity.  Can we use new technology to close the gap and measure online brand advertising ROI?  Can we directly attribute sales lift or brand lift to the online campaign?

The problem is that the online content environment is very fragmented.  Efficient tools have been developed to run direct response campaigns online but there are no (or few) efficient tools to run branding campaigns online.  There are platforms out there but they are complicated and not well developed.  The challenge is to “operationalize” the efficiency of things like multivariate testing, that is to make the analysis routine and embedded in the process.

The numbers are somewhat misleading since the direct response portion is driven by search and not necessarily display advertising.  There are still a lot of marketers who are not convinced of the efficacy of brand advertising online, and some technologies are being developed.  But the bottom line is, it’s still very qualitative.

Consumers don’t understand the difference between “direct response” and “brand”.  The data suggests that on average the offline sales lift vs. online spending is 140%.  The good news is that with digital, we are starting to have the ability to read the effects in real time, even with the tools we have now.  This means you can see your campaign results in days or weeks instead of months, and adjust accordingly.

The key to doing this right is what panelist Carl Fremont of Digitas calls “closed loop marketing”.  It’s all got to be integrated, the old-fashioned well-structured marketing mix, something I’ve been preaching for more than 10 years…  Maybe I can finally stop feeling like a modern-day Cassandra.

Panelists in this session from Digg, Google, AOL, Technorati, and Associated Content address the challenges of monetizing niche properties, applying Chris Anderson’s much-talked-about theory to the blogosphere.

Bobby Figueroa fielded most of the questions, as I’m sure many of the search product and ad reps from Google have been doing at this conference. He spoke mostly about quality, reassuring the audience that ultimately, ads should be information, and hopefully relevant information. You may be tempted to run, say, tooth whitening ads on your site because they far outperform any other kind of ad. In the long run, it’s much better to have high quality ads on your site to maintain viewership.

Figueroa also emphasized the importance of advertising tools (platforms, measurement) for publishers. In order to reap the most benefits (i.e., revenue) from your inventory, you’ve got to get your systems to “talk to each other” and minimize the amount of disconnect. To lower the barrier to entry in the display ad market — which many advertisers shun because they don’t have the budget to create customized creative — Google began offering a display ad builder. More than 80% of its users are brand new to the market.

Jennifer McLean from Technorati then sharing some blogger data. The average blogger is a hobbyist, not a professional — no surprise there. Though 28% of bloggers make money from their property, a very small percentage of those support themselves with that income. The average income from blogs that do generate revenue is about $1500.

For those that invest more time and money into their blog (more than $10k annually), the ad revenues sharply increase. A part-time blogger can make between $20k and $120k a year, and though banner ad fatigue is affecting the industry, CPMs are still consistently fairly high, she said. New, effective “conversational” ads, with live feeds, for instance, will push them even higher.

Patrick Keane of Associated Content agreed: with better targeting and new technologies, they are having more success with inventory. Maybe it’s the economy bouncing back, but it could also be a true sign of the long tail paying out for small publishers. Advertisers are starting to feel more comfortable with authentic, user-created content, and they are demonstrating that those sites can be valuable, too. For example, who’s to say that Paul Krugman is any better than a budget-conscious mom in Iowa to talk about the economy? If people find value in something — specifically because of its usefulness — then that’s all that matters.

From Ro Choy of RockYou…
Build Fan pages — it’s by far the most cost efficient way to amplify your reach across Facebook’s user base. Also consider CPC ads on Facebook: there’s no better place than social media for performance marketing. At one point, Facebook might even be Google’s biggest competitor.

Greg March, Wieden+Kennedy…
The most important thing to do before (and during) a social media campaign is to clearly communicate its role in the big plan to senior management and to clients. You know what you’re going to achieve, but they don’t always know how to draw that straight line between the campaign and the big picture objectives, or business goals.

Also, don’t expect conversions. For all intensive purposes, catching people at the point of intent (i.e., searching for a product/service or information about it) is better place to close the deal. Social media will increase the number of fans and spread your message, but won’t make instant sales.

Chris Cunningham, appsavvy…
Totally agreeing with March: Social media is a conversation, and people don’t want to be interrupted from it to buy something. Because of this, the old metrics simply don’t work. Use new “key performance indicators” (KPIs) to find out the effectiveness of your social campaign. For example, track fans or video views, not clickthroughs or conversions.

Also, don’t standardize social media. The IAB apparently told appsavvy to “run with” their current development and not to try to fit new technology into any kind of bucket. An audience member adds, That’s great. We shot ourselves in the foot 10 years ago by standardizing ad units. Let’s not strangle innovation with doing that again.

David Spark here, reporting for ad:tech at ad:tech NY 2009 and here’s my second and last show report for the conference. Watch this video for a full summary of my findings from today and make sure you watch my show report from yesterday. Thanks again to everyone who participated in interviews. And thanks to you for watching.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

I spoke with Josh Crandall, President, Co-founder of Netpop Research. I asked him what his sense of the buzz on the floor, and he said that he’s seeing a new sense of respect for the consumer. He mentioned the company Upsell which engages with consumers with instant messaging when they visit the site. I must say I saw Upsell a couple of years ago and that instant messaging was fully robotic and a tad annoying. Josh says that it’s changed now. It does start out robotic, but when there’s a response they route the discussion to an actual person.

This theme of respect for the consumer also falls in line with my discussion with Pete Blackshaw of Nielsen who talked about the symbiotic relationship between paid and earned media.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

I just chatted with James Citron, CEO of Mogreet who showed me a demo of their SMS to video messaging application with my video. In fact, they used 20 seconds of my video for the demo. To see it in action, text “SPARK” to 21534 and you’ll see a 20 second tease of my show report from yesterday. 

David Spark here, reporting for ad:tech at ad:tech NY 2009.

I chatted with Ted Murphy, CEO of Izea, the company that makes the paid blogging service, Social Spark. Wonder why I was so interested in them? I had met Murphy before and followed up with him, not just because he’s got two new services, Sponsored Tweets, and sponsored guest blog posts, Sponzai. The idea for Sponzai is your company can write a blog post and another blogger can put the entire blog on their site as a sponsored guest post.

I was more interested in talking with Murphy about his experience working with the FTC on their blogging guidelines. While they’ve always required disclosure for Social Spark, Murphy said what he was most surprised about regarding the FTC’s ruling was that they were really going after celebrities who for years had been hiding their affiliations as to who was sponsoring them.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

I spoke with Pete Blackshaw, EVP of strategic services at Nielsen about the sometimes uneasy relationship between paid (advertising) and earned (blogging and articles) media. I asked how paid advertisers can work better with earned media and Blackshaw said that advertisers need to understand the role that earned media plays with paid media. It can reinforce the message, take it to the next level, change it, or tear it down.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

After a session entitled “Place-Based Digital and Video Ad Networks-The Time Has Come” I spoke with the three panelists, Gareth Ellen, EVP, Director of Digital for Ogilvy Action, Limore Shur, Founder and Chief Creative for Eyeball, and Patrick Moorhead, Director of Emerging Media for Razorfish.

The insights that came out was the need to facilitate the media buying experience, not to worry whether this experience was so new or so different, and to take hold of an experience that’s close to the consumer.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

Looking to advertise to the Hispanic market, reaching all of Central and South America? Make sure you understand the cultural sensitivities of every community. I spoke with Carlos R. Cobian, Global Sales and Marketing Director for Wireless Idea who told me that this becomes quite an issue for his business which is mobile marketing to Hispanics. For example, Cobian said, a word that might mean “cupcake” in one culture may mean a sexual organ in another. You don’t want to make that mistake, cupcake.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

I’ve been analyzing the social media monitoring space for a while, and I was impressed with the interface Sysomos was showing off. While there are many tools out there that will tell you what people are saying about you, Sysomos has a buzz graph that shows some of the hot terms that keep coming up and especially show you how certain terms correlate more strongly than other terms. For example, in the demo, Aubrey Podolsky, Manager of Client Relations for Sysomos, showed how the word “Amazon” correlated very highly with the word “e-book.” Watch the demo to see how it works.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

The FTC is requiring bloggers to disclose when they’re receiving money for a company or product endorsement. I spoke with Thomas A. Cohn, an attorney with Venable which is working with clients very closely on this matter. Cohn explained that what the FTC said is they expect an advertiser to make sure that if a blogger is being compensated or given a free item to talk about the company, then they need to make sure the blogger does disclose the relationship. If the blogger doesn’t, it’s the advertisers job to keep following up to make sure that they do. The implications of what will happen to an advertiser if a blogger doesn’t disclose? Well, we’ll all have to wait and see. Because that’s not clear…yet.

David Spark here, reporting for ad:tech at ad:tech NY 2009.

The best way to target your audience is to simply ask them what they want. Pangea Media does exactly that with fun quizzes. I spoke with Seth Lieberman, CEO of Pangea Media, who talks about how quizzes provide a better level of engagement.