Engagement Mapping Tp Display Ads+Search

Thought Paper > Engagement Mapping

Engagement Mapping
A new measurement standard is emerging for advertisers

Engagement Mapping counts every customer touch point (not just
the last) and enables advertisers to be more e ective, more creative,
and more relevant with their digital marketing

Table of Contents

> Marketers Know They’re Not Calculating Digital Advertising ROI Correctly 2
> The “Last Ad” Model vs. Conventional Wisdom 2
> The “Last Ad” Model Miscalculates ROI 3
> New Research Underscores the Need for a New Conversion Model 5
Understanding the interaction between channels is critical 5
Overlap drives higher conversion rates 6
Branded search skews results from search advertising 7
> Technology Driven Marketing 8
> With Engagement Mapping, You Can Get There from Here 9
Weighting factors 10
> Practical Application of Engagement Mapping 10
An easy transition 12
Stay on course, but go a lot further 13
> About Microsoft, Atlas and the Atlas Institute 13

01

© 2008 Microsoft. All rights reserved. Microsoft Advertiser and Publisher Solutions


Marketers Know They’re Not Calculating Digital Advertising ROI Correctly.
Until Now, Their Hands Have Been Tied.

Marketers don’t need to change the way they think. They need digital marketing
technology and measures to conform to their standard marketing tenets. The outdated
model for measuring return on investment from digital advertising falls short… but a
new model is gaining momentum.

Digital marketing continues to incur an enormous amount of growth. The quickening
proliferation of new digital channels, compelling web sites and countless new opportu-
nities makes it difficult for marketers to keep pace, and even more challenging for them
to reach and engage their audience. Moreover, the increasing percentage of people
accessing the internet over high-speed connections has profoundly changed the
consumption patterns of media. Large brands and direct response marketers are
constantly seeking the right mix of channels, sites and interesting creative to engage
their audience as effectively as possible. Yet when a digital advertising campaign is
successful, they can only credit one of the many touch points their audience experi-
enced. Typically, between 93% and 95% of audience engagements with online advertis-
ing receive no credit at all when advertisers review the ROI on their campaigns. While
the universe has been getting bigger, marketers have been forced to view it through a
very limited lens. And the limited view constrains marketers’ vision, creativity and
success.

The reason for this misalignment is that the industry has been using a method of ROI
measurement that only attributes credit for advertising effectiveness to the last ad
clicked or viewed prior to a customer conversion. The “last ad” standard forces market-
ers to pay attention to a small set of data, and ignore key information required to
properly calculate the return on investment for each site and channel. In addition, it
goes against conventional marketing wisdom, and therefore stands in the way of
adoption, creativity and the innovative evolution of digital advertising by marketers who
are seeking better results.

The “last ad” model forces marketers to place greater
importance on the aspects of their advertising that support
the model, rather than the aspects that support their
advertising success.

The “Last Ad” Model vs. Conventional Wisdom
The current “last ad” model attributes 100% of the credit for a conversion to the
last ad seen or clicked. This is the current standard the industry has relied on to
justify their digital media spend. The problem with this approach is that it ignores
the contributions of any previous ads that led the customer down the road to that
conversion.

02



Contradicting the “last ad” perspective is the notion that most marketers believe in
the basic tenet that individuals respond to marketing messages differently depend-
ing on their awareness of, interest in, or intent to buy a particular brand or product.
To date, the industry’s online ROI measurement models, including click-through
rates and the “last ad” standard have been significantly out of alignment with these
basic marketing fundamentals.

Additionally, a critical marketing concept, the sales funnel, is completely disre-
garded by the “last ad” model. The idea is simple: different marketing messages
play different roles for consumers. Some marketing messages drive awareness,
others close the deal. In the offline world, broadcast media have typically been at
the top of the funnel while other channels, such as direct mail, have been used to
induce a purchase. In the last ten years, online media have moved from strictly a
direct response medium to a multifaceted channel with the potential to reach
consumers across every point in their journey. The “last ad” model is exceptional at
measuring ROI if your only goal is to measure the bottommost touch point in the
sales funnel. In this regard, our current conversion attribution standard is sadly
out-of-touch with the reality of online marketing today.

The “Last Ad” Model
Miscalculates ROI
by attributing credit
to only the last click
before a conversion.
The model works as if
the consumer doesn’t
see or click any other
ads along the way.

The “Last Ad” Model Miscalculates ROI
The “last ad” model is based on only a single engagement, so it forces marketers to
place greater importance on the aspects of their advertising that support the model,
rather than the aspects that support their advertising success.

Since the “last ad” model has forced marketers to attribute 100% of the credit to only
the last click, marketers have logically allocated their marketing dollars entirely to media
that sit at the bottom of the conversion funnel: search engines, sites and networks that
are the last stop on the conversion path.

03



To illustrate the faulty logic of the model, imagine that you’re standing in the grocery
store knowing precisely what you want to buy. You’ve seen the product ads on TV, the
full page ad in a magazine, and a full color mailer that actually made you hungry just
looking at the pictures. You’ve even clipped a coupon and brought it with you to the
supermarket. When you ask the grocery clerk where to find the specific item, he smiles,
points and says, “Aisle five.” Off you go to aisle five, find the item, pay, and leave the
store.

If you applied the “last ad” model to this scenario, the grocery clerk would get 100% of
the credit for your purchase (no wonder he’s smiling). As a result, marketers would invest
heavily in grocery clerks, and they’d pull their advertising dollars from the marketing
channels that actually piqued your interest or moved you through the funnel toward the
purchase. Of course, everybody likes grocery clerks, but marketers need to invest in the
most effective ways to get customers into the store and map each milestone along the
way.
Site A Site B Site C Site D Site E

This is the way that
it really looks for an
advertiser as people
spend more time
online.
People interact with
many channels. They see
video online, interact
with rich media, view
and click on display and
search ads, etc

Right now marketers are optimizing their media buys based on the very last step in
the process. But the “last ad” model is flawed. It ignores some very important
questions:
1. How can marketers accurately reach their audience and plan campaigns
if they are unable to calculate the return on investment on each of the
touch points upstream of the conversion?
2. What other factors beyond exposure (such as frequency and interaction)
may lead to a conversion?
3. What is the interaction between different media? How much, for
instance, do search and display advertising interact?
4. Different ads, messages and media are employed at different points in
the conversion funnel. Which touchpoints make the greatest impact
along the way? Which make the smallest?

04



The “last ad” model is opaque. With an inflexible, black-box model, marketers
can’t make sound marketing decisions. Imagine a world where you could see
exactly which advertising experiences contributed to a conversion, and which were
less effective. To experience that world, you have to be able to see what you’ve
been missing.

New Research Underscores the Need for a New Conversion Model
Recent research proves that marketers benefit by understanding and considering
additional factors in their ROI calculations. Evaluating the positive effects of the
synergy between multiple channels and duplicated reach can lead to a greater ROI.
Research also shows that marketers benefit by reconsidering their reliance on
search and the concept of the “last ad.”

Understanding the interaction between channels is critical
With the last ad model, not only is credit given to a single ad, but also a single channel.
While the audience is viewing display ads, clicking on search ads and viewing web video
ads, marketers can never attribute credit to more than one of those things.

The reality is that multiple channels actually work together to increase conversions.
Consider the impact of two popular channels, search and display. Search produces great
CPAs. It can be a very effective channel if you look at conversion rates and cost per
conversion. It can also be a highly-qualified channel, reaching most consumers at the
last step of the conversion funnel. Someone who searches on your terms and clicks is
prequalifying themselves as somebody who's interested in what you sell. In the
presence of such high prequalification, does it even make sense to incorporate display
advertising in your campaign? If you've got this universe of search clickers that are
largely self-identifying, is there any benefit to also supplementing that experience with
display impressions from the same advertiser?

Multiple channels are 22%
a good thing. Lift Over
Multiple touch points can Search Alone
Conversions

move customers your way.
How can you measure,
plan, optimize and justify
a multichannel media
plan that reaches
audiences across their
many channels, when
you only give credit to
the last ad your
customer clicked before
they converted?
Display Search Search &
Click Click Display

05



According to Atlas Institute research, the answer, overwhelmingly, is yes. When market-
ers supplement search with display impressions, they get a significant lift in conversions.
Unfortunately, most advertisers that run both search and display are unaware of this,
because there hasn’t been a way to measure it. A recent Atlas Institute study demon-
strated that users exposed to both search and display ads convert at a higher rate: an
average of 22 percent better than search alone and 400 percent better than display
only. The lift of search over display is well-known and well accounted for by the “last ad”
model since the searches in this study came after the display impressions. Those
preceding impressions, however, are completely disregarded under current conversion
reporting. Using this information today in post-campaign reporting required time-
consuming custom analytics. If you’re measuring your search and display campaigns
separately, you are missing the complete picture and undervaluing your display impres-
sions. The ability to track all of your media in one central place and all of your engage-
ments with a single model allows advertisers to measure cross-channel impact, and
1
reveals important information about the user’s conversion experience.

Overlap drives higher conversion rates
Another recent study by the Atlas Institute revealed that about a third of the reach
of an average campaign is overlap, meaning a third of the people you reach on a
campaign are going to see your ads on two or more sites (This statistic varies from
advertiser to advertiser - generally, the bigger the advertiser, the greater the
overlap). Those overlapped users disproportionately represent your converters, the
consumers that actually buy from you, register with you, and become your sales
2
leads.

o f Cross-Site Du
lity pli
ea c
The Reality of Site B
R

at
e

io

Cross-Site Duplication Site A
Th

n

Overlap can drive
conversions. Two-thirds of
converters view ads across
multiple sites. But the “last Site C
ad” model only allows
advertisers to attribute
credit to one of them.

Site E Site D

1 Strong, Esco (2006). “The Combined Impact of Search and Display Advertising – Why Advertisers Should
Measure Across Channels.” The Atlas Institute.
2
Fowler, Jed (2007) “Overlap’s Impact on Reach, Frequency and Conversions.” The Atlas Institute.
06


Engagement Mapping Tp Display Ads+Search


Taking these two dimensions into account, the research revealed that the majority of
sponsored search clicks are navigational. In fact, the study showed that 71 percent of
sponsored search clicks can be attributed to navigation. This tells you that almost three
quarters of your sponsored search buy is not bringing in new prospects—it’s simply
delivering people who are already actively looking for your URL. The Atlas Institute took
cost into account as well, and discovered that across many advertisers, navigational
clicks actually accounted for over half the cost of their sponsored search buttons.
Imagine a user who clicks on the term “basketball shoes” today, does some research,
and decides to by a pair of Nikes. The next day that user returns to the search engine,
searches on “Nike basketball shoes” and then makes a purchase. Which keywords
deserve the lion’s share of credit for the conversion? Under the last ad model, 100
percent will go to the branded search term.

Technology Driven Marketing
Given all these factors and research, it’s fair to wonder why the industry still uses the
“last ad” model. The reason is that, until now, digital marketing technologies have
enabled only a limited set of capabilities and measures of digital media.

Though imperfect, early digital advertising metrics like click-through rates were
accepted by marketers who needed a logical measure as they felt their way through the
burgeoning medium. And that model ultimately became a standard because it was what
we had. And that was a good start.

A few years later, Atlas introduced the “Action Tag,” a new technology that enabled
marketers to accurately track conversions by identifying consumers who clicked on an
ad and then visited the advertiser’s site and converted. At last, marketers could see
which ads resulted in the actual conversion. In the late 1990s, the online channel was
very different. There was little overlap between sites, and most people consumed little
media online. There really was only one marketing vehicle (display advertising), and
“search” was a utility, not a channel.

Today, advertisers agree that both models fall short because neither approach meets
marketers’ basic requirement of defining and measuring programs that align with their
marketing objectives and programs. Marketers need to be able to calculate the ROI of
every brand exposure and interaction the audience experiences on each media owner’s
site (not just the last one). This new measurement is known as “Engagement ROI.”

Advanced digital advertising technologies now make it possible to comprehensively
calculate Engagement ROI.

08



With Engagement Mapping, You Can Get There from Here
The new model is called Engagement Mapping. It’s based on three simple premises:

1. Marketers need to attribute credit to multiple sites and engagements, not just
the last one.
2. Marketers need to have the flexibility to be able to weigh the importance of
influential factors such as ad size, frequency and rich media interactions in their
ROI calculations.
3. Marketers need to be able to easily adopt and transition to the new model
from the old.

Engagement Mapping is made possible by back-end technology that analyzes
many factors behind the scenes, so marketers don’t have to worry about the
technological aspects managing the terabytes of data today’s campaigns generate.
In the new model, key influential factors can roll up into a very straightforward
site-by-site analysis to succinctly summarize Engagement ROI. Factors that can be
taken into account include Frequency, Ad Size, Recency, Ad Format, Interaction,
and Order. Considering these experiential factors will enable advertisers to learn
from previous campaigns, and fine-tune their media strategy while their campaigns
are still in progress. Marketers can manage their digital media investments by
channel, placement, site, media type, etc.

It is easy to lose sight of the forest for the trees. At its heart, Engagement Mapping
is a simple concept, throwing light on the entire conversion funnel. Engagement
Mapping is about two things: reach and the quality of that reach. The role of a
third-party ad servicer is to deliver advertising across accountable media and
measure to whom the advertisements are delivered. This is the reach component. It
is up to advertisers and agencies to decide, for their business, how the quality of
that reach will be assessed.

09



Factors that impact Weighting factors
Engagement ROI The Engagement Mapping model is supported by a new level of measurement flexibil-
ity. Your application of the model can be easily customized to the factors you deem
Frequency
How many times did your
important for measuring your specific campaign. Each of those different factors can be
customers see an ad across weighted differently in your Engagement ROI calculation. All types of events may
multiple sites and channels?
receive different weights, with, for example, passive events like viewing a text link or a
Ad Size display ad receiving a relatively low weight. Active events, like clicks and rich media
Which ads are more impactful interactions, that convey a level of interest, can be assigned higher weights. If you aren’t
when you factor in their size?
Should a bigger ad get more
sure how much weight you should assign to a factor, you can start by simply choosing a
credit than a small text link? default setting that reflects your marketing objectives.

Recency
How much should impact diminish
as engagements move further Advanced
away in time from the action? Was Last Ad Model
it the first exposure that caught the Passive Events
audience’s attention? Text link
Display
Media type Flash and Java
Is a rich media ad more effective Rich Media
than a skyscraper banner ad? How
Video
should video be weighted versus
display?
Active Events
Clicks
Interaction
How much time is a user spending
interacting with a rich media ad, or RM Interactions
visiting your website before seeing
a banner ad and clicking on it?
Engagement Mapping is a flexible attribution model that enables advertisers
Order of engagement to include many factors in their Engagement ROI calculations.
What if you determined that order
matters, such that the first ad gets
most of the credit or the last ad
gets less, or vice-a-versa?
Practical Application of Engagement Mapping: Single Site Example
Engagement Mapping isn’t just conceptual. It’s a model that you can begin to apply
practically today. When the model is applied, each exposure and interaction can be
attributed a portion of the credit for a conversion.

Here is a hypothetical example of how Engagement Mapping attributes credit differ-
ently. Let’s say you have a site right now that gets 1000 conversions under the “last ad”
model. When frequency is figured into the calculations using the new model, it actually
boosts the attribution number up to more than twice as many conversions. So your
number of conversions credited to the specific site has jumped up to 2000. But it turns
out a lot of these impressions that are frequent are not very large. By factoring in ad size
the number of conversions attributed to the specific site is revised downward to 1400.

10



Continuing down this path, the Engagement Mapping model also accounts for inter-
Engagement Mapping action, creative type, reach, recency and order and the model ends up attributing 1600
is a transparent model
that enables advertisers of your conversions to this one site. When you use Engagement Mapping to evaluate
to determine and view the sites that produced the greatest return on your media investment, this one site looks
how each factor very different than it did when you used the “last ad” model.
impacts their ROI
calculation. Here is an 2,000 11% 6%

illustration of how 100%
1,600
0%
those factors can
4% conversions

1,500
enable the attribution
of credit for conversions -14%
1,000
to be more relevant and 1,000
conversions
-30%

comprehensive in the
new model.
Interactions
Frequency

500

Creative

Recency
Ad Size
Last Ad

E-Map
Reach

Order
0

Today, advanced technology that powers digital advertising behind the scenes makes it
possible to apply the Engagement Mapping model to your campaigns with very little
effort.

Engagement Mapping will allow you to calculate your Engagement
ROI from every site you purchase, whether through passive
exposures, active interactions, or both.
By being able to weigh the importance of various factors, you can put a greater focus on
those that matter more if you’re a direct-response marketer (such as clicks and recency).
If you’re a brand marketer, you may want to be able to read things differently and give
more credit to more passive engagements (such as video views and ad size), even if
there’s no interaction. Or, your objective may lie somewhere in between. Flexibility in
the way you measure each factor lies at the heart of the new model.

If you use Microsoft’s Atlas advertising platform, transitioning from the old model to the
new requires only two things:
1. A decision on your part to measure Engagement ROI differently and more
accurately
2. A simple selection of your basic objective (direct response, brand marketer, or
both).
Stay on course. Go a lot further.
Great marketing comes from a healthy combination of both right and left brain thinking.
Digital advertising has a tendency to be constrained creatively because the “last ad”
analytics make advertisers believe that the best results come from channels and sites
that limit creative options. Imagine how much more creative you can be, how much
more attention your ads can garner, how much more effective your media plan can be
when you can measure and justify the incorporation of a greater variety of formats, sites
and channels. Engagement Mapping gets you there. And you can go there today.

11



An easy transition
Whether you’re seeking more conversions or improved brand experiences, you can start
getting a better read and return on your media investments immediately. Begin by
taking a closer look at the impact of key campaign elements that are upstream of the
“last ad.” Atlas can help with a number of tools and analyses that are designed to do
just that.

Atlas Consultation: Your Atlas representative can be a helpful resource when you decide
that it’s time to look further into Engagement Mapping. Atlas team members can
provide immediate expertise, connect you with analytics specialists and put tools in your
hands that make it easy to understand how to apply the model to your business.

Atlas Engagement Visualizer: The Engagement Visualizer is a software tool that enables
you to plug in a few key values and then visualize how your results would be reflected
more completely if you applied the Engagement Mapping model.

Side by Side Comparison: If you’d rather be cautious about the way you measure your
ROI, you can continue using the “last ad” model and apply the new model at the same
time. You can begin to see the side by side comparison of the results calculated through
the two different models.

The Atlas Media Console: In the Atlas Advertising Suite, the Engagement Mapping
capability will appear as a check box. You can simply click to turn on the capability and
select a default model for either direct response, brand marketer or both. The software
will automatically calculate Engagement ROI by applying the new model.

Customize: Once you begin using the model and seeing the results, you can begin to
adjust the weight of the various factors based on the level of importance you place on
each factor.

By selecting one of the three objectives, the settings within the Atlas Media Console will
default to reflect specific weights for each of the factors. As you get more familiar with
the new model and how each factor affects your results, you can begin to test your
well-exercised intuition. For example, most marketers that employ rich media do so
because intuitively they know that it’s a strong way for the audience to experience their
product or brand. The new model gives advertisers the ability to make specific adjust-
ments, and set the dials to reflect the impact of the factors they believe have the
greatest impact on their Engagement ROI.

12



About Microsoft Atlas and the Atlas Institute

Atlas, a subsidiary of Microsoft, is a leading provider of digital media technologies for
advertisers, agencies and publishers. Atlas solutions for agencies and advertisers enable
the unified management of digital marketing campaigns across display banners, rich
media, search, video, and Web sites. Atlas solutions for publishers maximize advertising
revenue across all available and developing digital media platforms. With industry-
leading tools, uniquely insightful research, and close collaboration, Atlas helps advertis-
ers, agencies and publishers achieve dramatic, measurable results.

The Atlas Institute is the research and education arm of Atlas, The Institute publishes
Digital Marketing Insights, a series of publications by Atlas senior marketing analysts
and digital marketing experts that help advertising clients improve their digital market-
ing effectiveness. Many of these findings are also made available to the digital market-
ing industry at large.

To view a full listing of the Atlas Institute’s Digital Marketing Insights, please visit
www.AtlasSolutions.com/insights.

Atlas serves its clients from offices in Seattle, San Francisco, New York, Denver, Raleigh
and London, Hamburg, Milan, Tokyo and Sydney.

If you would like to learn more about Engagement Mapping,
please drop us a note. We’d be happy to help.
emap@microsoft.com

13


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