The note starts with a really good overview of the purchase funnel as it pertains to display and search (using a very relevant analogy to the yellow pages).   The funnel diagram shows how display and search can impact the funnel.  In the diagram, Display is shown to drive the entire funnel from Awareness to Intent to Purchase while Search only drives Consideration and Intent.   I’d suggest that Search can and does influence “Favorability”.  Once a consumer is aware of the need, she will search for generic, higher-level terms, and search can show ads that will drive brand favorability.  For example, I might search for “BlueRay DVD player” and could then see a search ad for LG and view LG DVD players favorably.  Additionally, while it isn’t clear if they mean this in the diagram, display is proven to drive repeat purchase (via retargeting).  Search is unable to directly drive repeat purchase.

As to the results of Eyeblaster’s study, it was found that:

“Overall, for customers who used both search and display, 72% of conversions arrived as a direct result of the displaychannel. Only 23% of the conversions were a direct result of the search channel. 5% were the result of display ads that were followed by a search.”

Eyeblaster caveats that the share of display vs search is “the result of  budget allocation decisions made by the advertisers.”   It’s probably safe to assume that Eyeblaster clients lean a bit more towards display than search, particularly those using CC4S.  The extremely low number of “search after display” conversions differs pretty dramatically from prior studies I’ve seen, which I believe has to be due to the types of campaigns being used in the study.

The report then digs into the share of display and search conversions by vertical. This is great data and you can see a wide variety in share by industry vertical.  Entertainment, CPG, Financial and Careers lean far more towards display while B2B, Travel and Retail skew towards search.  I’m actually surprised to see careers sitting more towards the display side, since jobs seems like a much more search-driven category, but the data tells a different story.

What would be really interesting here, given Eyeblaster’s leadership position in driving display engagement, is to get a sense of the breakout of display conversions by attribution type.  How are these display conversions being attributed?  It would be great to break these conversions out into post-view, post-click and even post-engagement.  I’m petitioning for a follow-up Research Note.

The key takeaway here is that display is an extremely important part of any marketing plan and can drive conversions on its own.  We in display intuitively know that and evangelize it every day, but it’s great to see a study from an industry leader showing some numbers to back it up.  Next step is to dig even further into these numbers and really nail the point home.

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The videos are on Youtube here – http://www.youtube.com/searchstories

John Battelle first talked about this in his SearchBlog.

Most relevant here is that Battelle saw Google doing roadblocks on nytimes.com.  He states:

“It’s truly a brand campaign: Google is not selling anything here other than its own brand – that ephemeral sensibility that resides between its customers’ ears.”

Now we know that every campaign, even a “brand” campaign, has a goal.  So what’s the goal here?  How would the dominant search engine with 65% market share in the US measure and evaluate success?

Since I haven’t seen screenshots of the display ads, I can’t evaluate if there is a chance the display ads could drive view-based activity (vs. focusing solely on driving clicks).  But the primary video on the youtube site , called “Parisian Love”, has nearly 700K video plays in two months.  I am no expert on how many video plays is impressive, but that seems like a pretty good number.  Side note – these videos are pretty cool – I’m immersed in the space and I find them compelling yet I could see my mom or sister also finding them interesing and informative – nice job!

It’s interesting to think of the way Google could have used data to drive results in this campaign.  First, assuming the goal is to increase search share, and in an interesting case of reverse retargeting, they could have simply cookied their own searchers and either excluded people who either never or rarely searched on Google.  They could also have cookied people who didn’t search in an optimal manner (these videos do a good job of demonstrating the lifecycle of searching for things and coming to solution) or those who didn’t seem to find what they needed.  Finally, while they could never do this because they “do no evil”, they could have cookied people who have the Google toolbar but searched on Bing.

Regardless of how they are measuring success – this campaign is the ultimate example of using display to drive search.  If the master of search is using display to drive search, who are you to argue? Thanks Google.

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This acquisition will also drive some other changes in the market:

• Accelerated Dynamic Creative adoption – while they may be upset they weren’t bought by Google, the other dynamic creative providers should be very happy.  First, while Google is huge, it doesn’t own display, not even close (not yet, anyway). So the rest of the display world is there for the taking.  Second, Google/Teracent will push marketers to think this way – which will accrue to Tumri and Dapper.  Finally, many more marketers of all sizes will now be exposed to dynamic creative – which will generate experience, case-studies, etc.  The only negative is that Google has this annoying habit of giving things away for free – which can sometimes be hard to compete with.   But Omniture seemed to handle it just fine.
• Publisher Acceptance of Dynamic Creative – currently, due to file size restrictions, most dynamic creative is either flat out rejected or simply can’t scale on the exchanges.  This is either done because systems for approving creative haven’t recognized this new type or because the sellers want to keep the use of advanced technologies for their direct sales force (answer is likely a little of both).  Assuming Google makes Teracent the default dynamic creative provider in the Doubleclick Ad Exchange, then this will definitely force some changes in the market.  Yahoo, particularly, will need to respond (I wonder if Tumri has been invited to visit Sunnyvale tomorrow?).  At a minimum, it should become easier to get dynamic creative approved and scaled on the exchanges.   (Side note – rejecting creative simply due to file size without regard to the technology involved has to be the most poorly thought out tactic of publishers today.  Here’s a perfect example of where a display ad can pay more, and it’s being rejected. But that’s for another day)
• Search to Display transition – In my post on the launch of the Doubleclick AdX2.0 and how Search and Display marketers would finally go head to head, I brought out how hard it would be for experienced search marketers to get up the learning curve in display. One reason is the creative – from creation to trafficking.  Teracent solves a lot, if not all, of these problems.  Ironically, the thinking behind how Teracent handles display ads is probably easier for an experienced search marketer to understand than your average display marketer.  Teracent breaks down creatives into components – it’s no longer an art, it’s a science.  That’s exactly how search marketers think.  Qualitative judgement goes out the window.   I may need to reevaluate my decision in the Search vs. Display battle (or it’s at least a lot closer).
• More Acquisitions – I know 50+ companies that have some foot in the display “exchange” space.  This excludes all networks and publishers, simply companies adding technology and smarts to the management of display marketing on the exchanges.  Teracent is the first of those companies to be acquired (second if you count Acerno by Akamai last year).  Google gave notice in the recent earnings call that they would be interested in companies that “have figured out better ways of sorting and working on display ads.”  So it probably has more of these on the horizon and acquisitions are always copied so expect others to follow.   The only damper here is that, of the usual acquisition suspects, Yahoo and AOL are focused on other stuff.  So expect a Microsoft announcement in the next few months with Adobe being a dark horse acquirer in the space.
• Everyone’s a DSP – We at MediaMath invented the DSP model back in 2007, but nowadays everyone is a DSP, or is claiming to be one.  While Teracent is known for its dynamic creative product, buried within its technology is the ability to buy media dynamically.  They just focus more on the creative while others focus on media and/or data.  So Google just bought a DSP, and I guarantee they know it.

In summary, this is exciting. The behemoth of search has (again) deemed display important, has said dynamic creative is critical, and has bought one of the leaders in the space.  Pretty cool stuff.  Convergence continues.

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The product is called Campaign Insights.  It sounds pretty slick.  Basically, they are taking information on the ads consumers have seen and matching it up, somehow,  with searches consumers with the Google Toolbar make.  Now unless it’s magic, which is entirely possible, there has to be some sort of common key to enable Google to match the ad to the search – so I guess that means the toolbar is recording the ads we’re seeing (or the ad is recording a toolbar ID of some sort).  Doesn’t scare me but I wonder what the privacy hounds are thinking about this.

Regardless of how it’s done, receiving this data easily and in a timely fashion should accelerate investment in display advertising.  Numerous studies show display impacts search.  But display attribution to consumer search during a campaign is pretty ad hoc.  Analysts pore over keyword traffic in analytics reports to try to see if an increase occurred when a display campaign is launched or changed.  Despite hard work by smart people – the results of this type of analysis are rarely conclusive in either direction.  Dynamic Logic brand studies are done to show lift in awareness, but they are useless for optimization because the results come weeks after the campaign. Plus they are expensive, difficult to execute, publishers hate them, and I have to believe that people who fill out DL studies are a unique lot.

This tool should give the display marketer the ability to analyze and make quick decisions to impact the campaign now.  Suddenly a marketer may be able to justify much higher CPMs in a display buy because they can directly attribute that spend to increased searches.

Google’s continued push into Display is pretty impressive.  Display is not like search in that it cannot be dominated based purely on consumer habit.  Seriously, I’ve tried to use Bing and it’s hard to get out of the habit of going to Google.com to search.  So to rule Display, Google is providing marketers with all the tools necessary to make buying display advertising as simple, easy and effective as buying search.  The Doubleclick Exchange is one piece, Campaign Insights is another. More is down the pike.

If I were Dynamic Logic, I’d be a little worried right now.   DL’s primary value is to help advertisers prove value in display advertising investment and Campaign Insights seems to make that much easier and cheaper.  Hmm, yeah, I’ll take Campaign Insights plus a Vizu study both providing me real-time results over a DL study that I’ll get a month after the campaign.  Not much of a decision there.

I’m hoping to get a demo of Campaign Insights in the next few weeks – shout if you can give me one.

Finally, while my daughter is a dinosaur for halloween, I am going to dress up as what Google knows about us. Boo!!

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But what’s most exciting about this launch is that it is really the first time we have seen search marketers and display marketers go head-to-head with all of their respective tools available.   This is the Shaolin Monk vs. the Ninja in Mortal Kombat.  It’s Gorilla Monsoon vs. Muhammad Ali.  Different weapons, different skills, who knows what’s going to happen.

Some may say, “well, search marketers have been running display in the content network for years.”  Yes, they have, but not with the tools traditional display marketers use (eg, targeting data, view-based attribution).   So let’s get it on!

Search Marketer Tools:

Keywords – SEM’s have become pretty adept at managing the content network using sets of keywords.  This is the primary targeting tool SEM’s use in the content network and it leverages the extensive learning from search campaigns.  However, the tools at their disposal still do not give them the control they need to really optimize.  How the lists of keywords are applied to pages to identify context remains a black box.  Within Ad Groups it is impossible to determine which keywords are performing well and which are not, which makes optimization a bit of a guessing game (to put it lightly).   Use of keywords will offer no real advantage in most categories where display marketers will bring some of the tools I’ll describe below.  Yet, search marketers should maintain an advantage in categories where context is key and where data is not valuable or not available.  For example, health is likely the last category that will be tackled by the audience data experts (if it ever is), so the only way to target people interested in specific conditions (eg, diabetes) will be keyword driven targeting.  Advantage: Search (at least for a little while)

Placement Targeting - Placement targeting allows the marketer to pick specific sites on which they want their ads to show.  This gives the marketer more direct control of where their ads run.  However, this is a tool with which display marketers are very familiar and they should be able to quickly put that experience to use ramping up on the exchange.  Most exchange buyers are salivating at the transparency AdX promises.  Advantage: Even

Text Ads – This is an interesting one, and my conclusion is likely a bit controversial.  The success of Google has driven many marketers to believe that Text ads are superior to Display ads.  I don’t subscribe to that theory.  Google has dominated due to targeting and a unique and dominant position at the end of the purchase funnel.  Text Ads are uniquely suited to being presented results for search queries – but there is no reason to believe they are well designed for eliciting response when presented to a browsing user.  Display allows you to tell a story in more than 3 lines while allowing you to do things which attract the attention of the consumer.  We do not see TV commercials that are just 3 lines of text, nor do we see billboards or magazine ads (besides classifieds).  Where display fails is that it’s hard to do and it cannot sit at the end of the funnel.

This belief in text ads has actually spread to the display side where I’ve actually seen marketers create display banners that look like text ads – with 3 text listings hard-coded into a display unit.  The only advantage of this is it allows the use of view-based attribution and audience data (which I’ll describe below) but it ignores the true advantages of text ads – which are the ability to quickly and easily optimize the text creative and to target based on keywords.  While I’m sure that many on the search side will howl when I say this, I have to say that for Ad Format… Advantage: Display

Display Marketer Tools:

Targeting Data – Targeting data includes remarketing data (eg, target someone who has been to your website). behavioral data (consumer has shown they are in-market for travel by searching for hotels) and demographic data (consumer has reported that they are a 34 year old male).  Display marketers have become highly skilled at using this data in making display campaigns achieve their goals.  Many display campaigns require remarketing as a core component to achieve the advertiser’s goal (just for kicks, ask your network salesperson if he’ll run your DR campaign without placing a remarketing pixel, go ahead, I dare you).   Both Brand and DR campaigns benefit greatly from the use of in-market behavioral data (as just one example) to assure that they are addressing the right audience and hitting the goal.  The only advantage I see for search is that many of the larger SEM’s can bring search keyword remarketing data to the table.  Currently, the search-based data available comes from 2^nd tier search engines or is from other proprietary but imperfect means.  SEMs will have the data from clickers on their search campaigns for the very advertisers they will be bringing to the content network – which is incredibly powerful.  Despite that, I believe the learning curve for applying cookie data to display is still great enough to make it Advantage: Display

View-based Attribution – this is perhaps the most effective tool in the display marketer’s belt and could be deadly when going head-to-head with search marketers.  SEM’s have been making the content network work for them without any ability to measure the impact of just seeing, but not clicking on, the ads (which we know is extremely powerful).  They have had to rely on clicks, which on websites are simply rare events.  It’s as if they played a whole football game and nobody told them about the forward pass.  Google did allow 3^rd party ad servers on the content network last year, but due to the trafficking nightmare, I can’t imagine many, if any, set up separate ad tags for every keyword, placement or even ad group to enable true view-based optimization.  Many display campaigns with even a short post-view window will see the overwhelming majority of attributed conversions come from the post-view attribution.  It’s important to point out that this is absolutely valid and the impact can be tested and proven.  Imagine if marketers evaluated magazine ads or billboards only based on consumers who called the advertiser the moment they saw the ad.  Where Search may have an advantage is that they have learned to make campaigns work relying solely on the click, whereas display has shown that clickers may actually be bad.  So there will be a period of normalization here where both sides learn a bit from the other.  Even assuming SEM’s are twice as good at making clicks occur and work, the enormous amount of conversions display marketers can demonstrate post-view enables a much higher CPM bid and should allow smart display marketers to win a great deal of inventory (it could actually be unfair).  Advantage: Display

Real Time Bidding – this has been a bit overdone, but being allowed to bring your own algorithm, data and intelligence directly to bear at the decision point is incredibly valuable.  Perhaps more amazing is the ability to see all the impressions that you do not win or just do not want.  That drives a lot of learning.  Advantage: Display

Display Ads – The inverse of the “Text Ads” piece above.  Display is hard – it requires ad trafficking and serving – which are hard things to do and still require a lot of bodies.  Even now it’s hard to find people who can do this well.  Sure, there are technologies out there that attempt to make this easier (eg, AdReady, Google’s Adbuilder) but these solutions tend to focus on the creative building piece and not the trafficking and measurement piece.   Simply due to experience, the Advantage has to go to Display, though I won’t count it here since I already gave Display the advantage above under Text.

Conclusion

As a display guy, I have to admit I’m a bit biased, but I think the display marketer has the upper-hand in this fight.  Display marketers will be in a much better position to absorb and use the search tools (particularly placement).  Displays’ tools are, and this is a broad generalization, completely new to the search marketer.  The workflow process around managing display advertising should not be underestimated as a barrier to SEMs entering display (eg, my mother could launch a search ad in about an hour whereas I have been in display for 7 years and could not launch a 3pas display ad by myself if given a week).  Hiring an experienced display ad ops team is hard and expensive and takes awhile.

But the search guys are smart and fast.  The larger SEMs took the digital agencies’ business and served it to them for lunch when search was originally ramping up.  Many of them think they can do it again.  Display has to move quickly, get in, take control, scale up, seize the offensive and go all Rex Ryan on search within AdX.  This means quickly launching and scaling RTB integrations, utilizing all the tools available, continually developing new tools ahead of the curve, and absorbing all the capabilities Google is going to give to the search marketers to help them keep up. For example, a display marketer using RTB may not need keyword targeting, but she sure as hell better understand how to use it and how it is developing.

This is going to be fun.

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That said, like the financial markets, if the Rubicon 20 is the Dow then we’ll still need an S&P500 to account for the broader market.  Perhaps Pubmatic’s pricing report can fill that void.

As I suggested in a prior post, Rubicon also saw prices increase a great deal in Q2.  Download the report here .

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This linear model confines display to the awareness section of the marketing funnel. Yet innovative solutions are allowing display to impact consumers throughout the funnel. Let’s break apart how display is addressing consumers throughout the funnel, because there is some really exciting stuff going on.

Consideration

Remarketing is one of the most powerful tools in a display marketer’s arsenal. At its most basic level, being able to message consumers after they have been to your website is incredibly valuable. The hundreds of catalogs my wife receives every month are the offline version of remarketing. Bloomingdale’s is assuming that because she bought something in the past, she is more likely to do it again. Thus she’s worth the added expense of printing and mailing a catalog to her even though, especially if I beat her home, the catalog often ends up in the recycle bin unopened.

But remarketing is getting even more precise and nuanced. Search marketers are segmenting users by the specific keywords they clicked on and messaging them with messages that directly address that keyword.  Choicestream is enabling ecommerce retailers to message consumers based on the product or product category that they looked at. Online marketers are tailoring remarketing messages based on customer characteristics (eg, customer vs. prospect), where they dropped out of the purchase process and other segmentation parameters.

Remarketing is just one use of cookie data. The decoupling of data and media is enabling advertisers to use data to address consumers who are in the consideration process but may not have been to the marketers site.  Exelate and BlueKai enable marketers to address consumers who are currently in the consideration phase for specific product categories.

Data is just one piece of the puzzle. New technologies are allowing consumers to experience the consideration process within the display ad itself.  Linkstorm is a great example of this.  Linkstorm’s technology “enhances any banner ad with navigational menu overlays that display on mouse roll over” which “allows users to instantly access a multitude of advertiser information from one ad unit.”  Among many other uses, Linkstorm allows consumers to explore an e-tailer’s entire product catalog from within the ad itself, enabling at least part of the consideration process can actually be done within the ad itself.

But every consumer deals with the consideration process differently.  Some are like me and like to browse the store alone and figure it out for themselves.  Linkstorm is ideal for that type – let the consumer find what they want.  But some people like the personal service of a sales rep.  Display addresses the consideration process for these people through chat enabled directly within the ad unit. Eyeblaster’s TalkBack and TrafficMarketplace’s Livemarkets (and probably many others) allow the consumer to chat with the advertiser within the ad itself.

Purchase

Search has taken over the “Purchase” segment of the marketing funnel, and rightly so. When consumers are ready to buy online, they invariably go to Google and search.  But display is developing some pretty nifty closing capabilities as well.

Spongecell has developed very flexible technology that enables many capabilities right in the ad itself.  Specifically relevant to purchase, it allows consumers to browse offers , print coupons and even register or sign up for something – all within the display ad itself.

Consumers buy things offline as well and display ads can help enable that. Eyeblaster and Spongecell, among others, allow maps to be embedded within the ad so the consumer can quickly find out where to get the product. I recently saw a demo of Spongecell’s mapping technology and one feature just blew me away. A campaign for GM dealerships actually allowed me to locate dealers within the ad and also sensed where my PC was located and centered the map on my location. Surely, Spongecell cannot be blamed for GM’s troubles.

If you’re buying offline but don’t have a pen or paper on you to write down where to go, many advertisers allow you to input your cell phone # so they can text you the offer, location or other information.

Finally, the ultimate in closing the marketing funnel, and something search cannot do, enable purchasing within the ad itself.  Tailgate has developed technology that does just this – enable the consumer to make a credit card purchase directly within the ad unit itself. Pretty amazing stuff

That basically closes the basic marketing funnel – Awareness > Consideration > Purchase. But there’s one more step that marketers love – the holy grail, so to speak.  Customer referral or Tell-a-friend.  Display can also help here.

Spongecell, there they are again, allows the consumer to share an ad with friends. Ads in Spongecell’s gallery demonstrate the ability to share an ad on Myspace, Facebook, twitter, email, or even to send an invite via gmail or outlook.

I think it’s now pretty obvious display can do a lot more than just build awareness and drive users to search. By using the technologies and capabilities I’ve described above, online display can be a cross-funnel workhorse that can help any smart marketer meet their advertisers’ goals.

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Google

This deal is a short term blessing for Google. While Microsoft and Yahoo focus on integrating, Google can double down and invest in innovation in display, search, and the convergence of the two. While people don’t normally think of Google and Display together, they have been investing heavily in search for years, even before the Doubleclick acquisition.

The timing of these distractions could not be better as just this month Google is expected to launch version 2.0 of the DoubleClick AdExchange. This launch comes at a time when the exchanges of the other big players are not exactly knocking the ball out of the park. Yahoo’s Right Media Exchange is starting to feel a bit stale with little new development over the last year, transparency remaining a problem, and no real gameplan for real time bidding. Microsoft’s AdECN remains dormant pending an expected Q4 relaunch with nothing particularly unique to offer besides access to MSN inventory (and even that may not be unique). Add to this the distractions of integrating the search deal and the door appears wide open for Google to take a giant step forward in the non-premium display market.

As for Display/Search convergence specifically, Google should be able to capitalize on it’s commanding share in search to invest heavily in making display and search work together. A recent whitepaper by Google is likely just one of the first of many efforts to push the market into thinking this way. But it’s more than just thinking, it’s the tools and capabilities. With AdX2 bringing experience display advertisers to GCN, the traditional search advertisers that have dominated GCN to date will need to utilize and master the tools and techniques that make display work. As just one example,search advertisers on GCN are used to evaluating performance based solely on click-based conversions. For traditional display advertisers, view based conversions are almost always the driving force in making display hit ROI goals. As Google continues to integrate Doubleclick into Google’s stacks, it would seem like a pretty obvious step to incorporate view-based conversions into Google’s Adwords conversion tracking (I’d be shocked if there wasn’t a Google engineering team working on just this right now). This tool alone will encourage search advertisers to reevaluate how display and search interact.

SEMs

Anything that impacts the big 3 in search impacts Search Engine Marketing firms. Commentary from experienced SEM’s I know as well as reports I’ve read indicate SEMs think the deal is good for them and will spur innovation in search both by Microsoft and Google. I think it could do even more than just spur search innovation. SEM’s are already starting to enter display and, as I mentioned above, they will need to master new tools and techniques to compete in Google’s content network against experienced display buyers. While this will be challenging, and some will fail, it will drive a new wave of innovation within the SEM industry resulting in leading SEM firms becoming masters of both display and search. This will blur the lines between SEMs and traditional digital agencies and will not just redistribute but also grow the pie as greater performance drives allocation of more spend to digital as a whole.

Advertisers

Focusing specifically on display and search convergence, this deal should really benefit advertisers of all sizes, and I believe this will be driven primarily by a maniacally driven Google.  Over the last year, Google has had a number of public failures (TV advertising, radio advertising) and needs a win outside of search or risk being labeled a one-trick pony (albeit a very good trick).  The complementary nature of search and display, the window of opportunity provided by distracted competitors, and the existence of all the tools necessary to put it together, will drive Google to invest heavily in making search and display work together and assure a leadership position in both for Google.  This all has to benefit advertisers.  Many advertisers have either never thought of buying display or just didn’t have the tools to manage it effectively.  Innovations by Google (here’s one) and its competitors will enable advertisers of all sizes to try display and to successfully make it work.

Overall, I think the Yahoo-Microsoft deal will benefit all these players in the market.  In my prior post, I said that the deal will benefit convergence as a whole and would benefit Yahoo more than Microsoft.  Do I think it’s good for everyone? Not exactly. Over the next 12 months, this deal benefits Google more than either Yahoo or Microsoft.  In the long term, it’s too early to pick one winner, but the innovation and increased competition brought about by a larger #2 search platform and all three leading internet companies focused on making search and display work together can only benefit display/search convergence.

Finally, you may notice I didn’t mention ad networks – critical players in display.  I doubt the deal will impact networks much, if at all.  Ad networks don’t do much directly with search, and the impact on display will relate more to the competive balance between the big three.  That said, I do believe the launch of AdX2 and continued innovation in the exchange world are major strategic threats to ad networks as a whole.  How they need to react to it is best left for another day.

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