Friday, January 25, 2013

[G] lastminute.com finds that traditional conversion tracking significantly undervalues non-brand search

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Analytics Blog: lastminute.com finds that traditional conversion tracking significantly undervalues non-brand search

The following post originally appeared on the Inside AdWords Blog.

Understanding the true impact of advertising

Advertisers have a fundamental need to understand the effectiveness of their advertising. Unfortunately, determining the true impact of advertising on consumer behavior is deceptively difficult. This difficulty in measurement is especially applicable to advertising on non-brand (i.e. generic) search terms, where ROI may be driven indirectly over multiple interactions that include downstream brand search activities. Advertising effectiveness is often estimated using standard tracking processes that rely upon ‘Last Click’ attribution. However, ‘Last Click’ based tracking can significantly underestimate the true value of non-brand search advertising. This fact was recently demonstrated by lastminute.com, a leading travel brand, using a randomized experiment - the most rigorous method of measurement.


Experimental Approach

lastminute.com recently conducted an online geo-experiment to measure the effectiveness of their non-brand search advertising on Google AdWords.  The study included offline and online conversions.  The analysis used a mathematical model to account for seasonality and city-level differences in sales.  Cities were randomly assigned to either a test or a control group. The test group received non-brand search advertising during the 12 week test period, while the control group did not receive such advertising during the same period. The benefit of this approach is that it allows statements to be made regarding the causal relationship between non-brand search advertising and the volume of conversions - the real impact of the marketing spend.

Download the full lastminute.com case study

Findings

The results of the experiment indicate that the overall effectiveness of the non-brand search advertising is 43% greater1 than the estimate generated by lastminute.com’s standard online tracking system.

The true impact of the non-brand search advertising is significantly larger than the ‘Last Click’ estimate because it accounts for
  • upper funnel changes in user behavior that are not visible to a ‘Last Click’ tracking system, and
  • the impact of non-brand search on sales from online and offline channels.
This improved understanding of the true value of non-brand search advertising has given lastminute.com the opportunity to revise their marketing strategy and make better budgeting decisions.


How can you benefit?

As proven by this study, ‘Last Click’ measurement can significantly understate the true effectiveness of search advertising. Advertisers should look to assess the performance of non-brand terms using additional metrics beyond ‘Last Click’ conversions. For example, advertisers should review the new first click conversions and assist metrics available in AdWords and Google Analytics. Ideally, advertisers will design and carry out experiments of their own to understand how non-brand search works to drive sales.

Read more about AdWords Search Funnels
Read more about Google Analytics Multi-Channel Funnels

Anish Acharya, Industry Analyst, Google
Stefan F. Schnabl, Product Manager, Google
Gabriel Hughes, Head of Attribution, Google
Jon Vaver, Senior Quantitative Analyst, Google

1 This result has a 95% Bayesian confidence interval of [1.17, 1.66].
URL: http://analytics.blogspot.com/2013/01/lastminutecom-finds-that-traditional.html

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