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Yahoo helps customers measure ad effectiveness

Search giant teams with analytics firm to let advertisers compare the effectiveness of ad spending online and off.

Yahoo on Friday launched a service that will let companies advertising on its sites see how well their online ads are faring--and compare those numbers with their radio, television and print advertising campaigns.

Yahoo is partnering with Wilton, Conn.-based Marketing Management Analytics (MMA) to provide the new service. A Yahoo spokeswoman said a fee will be charged for the service, but declined to reveal the cost beyond saying the service would be "competitively priced."

Unlike offerings from Microsoft and Google that allow advertisers to see how well their online campaigns are going, Yahoo's service will let customers compare the effectiveness of online ads side-by-side with the effectiveness of their ad spending offline as well, said John Nardone, chief client officer at MMA, a unit of London-based Aegis Group.

The new service is based on econometric analysis that uses statistics to create a mathematical model of marketing situations. Thrown into the mix, ideally, are several years worth of data points for all the factors that are likely to influence sales of a brand or product--including different types of ads and seasonality of items and competition--that can be used to create a predictive model of sales, Nardone said.

Being able to do an apples-to-apples comparison of ad-spending effectiveness across the various media channels will allow companies to better determine how much money they want to spend in each, he said. This is particularly important as Internet advertising has become the fastest-growing segment of the market.

"As we are looking into 2006 we are seeing many of our clients planning to make very substantial increases in online ad spending," Nardone said. "The demand for more insight into Internet advertising is there."

Online display and search ad spending is projected to grow at an annual rate of 10 percent over the next five years, according to a study released Thursday by JupiterResearch. The research firm also predicts that the U.S. online advertising market will grow 28 percent this year to $11.9 billion in 2005 and rise to $13.6 billion in 2006 and $15.1 billion in 2007.

A study released last month by trade group Interactive Advertising Bureau and PricewaterhouseCoopers found that Internet ad sales reached an all-time high of $3.1 billion in September and predicted they would exceed $12 billion for the year, up from $9.6 billion in 2004.