The New Tools from Google and Yahoo!

(Searchline) Google and Yahoo! Have moved to offer search advertisers sophisticated analytics tools that they hope will encourage firms to pour more budget dollars into their paid-placement campaigns.

The tools may prove particularly useful to small and midsize marketers that traditionally haven’t been big customers of third-party Web analytics solutions. But at least in Google’s case, there’s some wariness that marketers using its hosted metrics may wind up giving the Mogul of Mountain View too detailed a look at the search-ad portion of their businesses.

In mid-December, Yahoo! partnered with a market measurement firm that will let buyers see just how those Internet ads stack up in terms of return on investment. Yahoo!’s sales team will offer ad buyers a dedicated measurement platform from Marketing Management Analytics by monthly subscription for a price undisclosed at deadline. Yahoo!’s version of the service will integrate MMA’s ad measurement model with its own data about ad impressions in display ads on the portal and clickthroughs to its search ads.

The service will roll up advertisers’ total offline spending to produce a focused ROI comparison of offline promotions to online marketing on Yahoo! Search Marketing. This should give the advertisers a better angle on the most productive allocations for their marketing budgets, as well as help them define the optimum mix of offline and online marketing campaigns.

If they want, Yahoo! ad buyers also will be able to load data from other online sites, search engines and e-mail marketing campaigns into the hosted MMA service to get a broader view of all their Internet marketing programs.

“We’ve created a specific analytic product for Yahoo! clients who are interested in understanding better how their online ads are performing, how much money to move into or out of online, and the interactions between online and offline spending for all the various marketing levers” says Ed See, chief operating officer of Wilton CT-based MMA.

Formerly, the relatively small piece that Internet advertising claimed in most advertisers’ ad budgets prevented easy ROI comparison to offline spending, according to See. “The online component has been so low that it’s almost a rounding error in the overall marketing budget,” he says. But a proprietary econometric model lets MMA examine the variables that can affect marketing efforts in both spheres—for example, interest rates or even changing weather—and produce recommendations on the probable return in each.

“People are rushing headlong into spending [on online advertising], but they still have questions,” about how much to spend, whether they’re overspending on online ads and what return they’re getting, See says. “We’re partnering with Yahoo! to give them a very quick read on their online spending at an attractive price point.” Advertisers who want more insight can then sign on with MMA for a detailed modeling of their total ad budget and performance.

And In This Corner

Meanwhile, Google has enhanced the analytics capabilities available to marketers on its AdWords pay-per-click network, using tools it acquired with the purchase of Urchin Software last March.

Like Yahoo!’s ROI tool, Google Analytics integrates with AdWords, but it also can monitor ad and Web-page performance on other advertising networks, including those from Yahoo! and MSN Search, the company claimed. The software uses a small JavaScript file to tag keyword destination URLs and imports keyword costs. As a result, advertisers should be able to track user clickthroughs from ad to landing page, or within Web sites, and their return on investment for those keyword terms.

Besides measuring the performance of paid search ads, Google Analytics—a free service—is able to monitor banner and display ads, e-mail newsletters, referral links and organic search. The aim seems to be to give marketers more robust tools for measuring their ad performance, in the hope they will pour more of their dollars into what works for them: namely online ads, where Google is a pre-eminent vendor.

Google’s offering should shake up a couple of different markets, including the Web analytics industry. Companies such as Omniture, Coremetrics and WebTrends earn part of their revenue from hosting Web metrics or selling packaged software for tracking online performance. The fact that it’s free probably will put some pricing pressure on these firms’ products; the day Google announced its move, the share price of analytics provider WebSideStory dropped 12% on the Nasdaq.

If Google’s offer catches on, it could lead these companies to cut prices for their own hosted services or to shift emphasis from their measurement platforms to their consulting and professional services—higher levels of strategic support that Google does not offer (yet) and that hold more appeal for big-ticket Web metrics customers.

Web publishers most will likely appreciate the new free service and apply it liberally. But Bryan Weiner, CEO of SEM firm 360i, points out that some online advertisers—particularly the large ones whose budgets will cover an independent Web measurement service—may steer clear of Google Analytics from a wish to keep Google in the dark about how their ad programs are performing.

“For large advertisers, it’s allowing Google to get much further into their kitchen” he says. “There’s some concern about having the same company you buy advertising from track the performance not only of their ads but of everybody else’s.”

The new tool may not be a benefit to small search marketers either, if they use it to track ad performance across other formats or on other providers’ networks, Weiner adds. If you don’t monitor ad performance across all channels, you’re taking a guesswork approach to search marketing, he says. But if you watch all those networks using Google Analytics, “You’re allowing a company from which you buy a lot of advertising to have insight into how effective the ads you’re buying from them are in absolute terms,” he continues.

“More importantly, you’re giving them insight into how their ads work relative to all other forms of advertising,” he adds. “That may not be such a good idea in the long term.”

For the record, Google says it will report campaign data only to users of its analytics tools and won’t use that information to give the Google AdWords network any kind of competitive edge.