Avenue A Claims Empirical Breakthrough In Correlating Online Ads To Offline Sales

One of the areas in which Web marketers have fallen woefully short over the last few years has been in identifying the correlation between online sales pitches and offline sales. While many companies have tried to gauge this, most have relied on after-the-fact surveys or panel data, which aren't exactly renowned for their reliability or accuracy.

Interactive agency Avenue A, however, believes it has taken a big step toward solving this problem. Dubbed ChannelScope, the company's new technology-based service utilizes time-tested metrics (conversion rate, cost per sale, and gross margin ROI) to measure the offline sales impact of online ad campaigns. "It took us around three years, but the numbers work," says Avenue A president Clark Kokich. "[Clients] had mostly been making a guess about the impact of online [ads]. Now they have facts."

Although Kokich defers when asked exactly how the technology has been configured ("it's an extraordinarily complicated analytics capability"), the basic idea is that ChannelScope links an anonymous ID from a marketer's database to an anonymous cookie ID from ad-serving data. As for privacy concerns, at no time during the process does any of the Web-surfing behavior in Avenue A's database reside with information in client databases. "If it weren't for the privacy issues, doing this would have been easy," Kokich explains. "Making the anonymous connection between the data - that was the hard part." To this end, Avenue A cleared ChannelScope with its clients ("they have very picky lawyers") and went out of its way to ensure that the service complies with the Network Advertising Initiative's guidelines for privacy and online profiling.

While one might expect Avenue A to be critical of previous efforts to link online ads with offline sales, Kokich is surprisingly favorable when it comes to ChannelScope's predecessors. "Some of the things they are doing, like linking ad impact to brand impact, are valuable," he notes. "But for our clients, it all comes back to 'can you show me a direct link between online advertising and offline sales?' They want more than 'we're reasonably sure that this impression led to this result.' They want proof."

Avenue A is understandably hesitant to reveal details about the beta testing of ChannelScope with two of its clients, but the firm is willing to share some of what it has learned. Specifically, Kokich says that early tests confirmed his belief that online ad campaigns generate more offline than online sales: 99 percent of those who see an online ad and visit a given site do not make a purchase. He notes the value of these visits, however, in converting interested consumers into customers.

Kokich also says that the handful of Avenue A clients who are in the process of rolling out ChannelScope are using it to optimize their media buys. "What we've discovered is that the online advertising that drives the highest online ROI might not drive the highest overall ROI, so clients are adjusting where they spend their money in some cases," he explains. "They'd been essentially making a guess about the impact of online, and now they have facts." When asked how this might influence future spending decisions, Kokich replies, "This could give them the confidence to spend more money and do it in a way that's more effective."

Only about 80 percent of Avenue A's clients will be able to adopt ChannelScope, as using it requires a direct relationship with customers (e.g., having names, addresses, and other information tucked away in a database). Nonetheless, rolling out the new service is the company's top priority for 2004. The stakes, Kokich believes, are beginning to grow higher for online marketers. "Advertising budgets for online have moved from the one or two percent curiosity stage and are starting to become real numbers," he says. "Clients are really scrutinizing what they're getting for their money, so anything we can do to tell them is essential."

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