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Sunday, October 21, 2007

Google Gets Undue Credit for Ad Conversions :CORRECTED-AQuantive exec leads Microsoft charge into Web ads

Google undeservedly receives credit for many clicks on the online ads it delivers via its search engine, but Microsoft wants to put a stop to that.Google Inc. has gotten undeservedly all the credit for many clicks on the online ads it delivers via its search engine, but Microsoft Corp. wants to put a stop to that.

So said Brian McAndrews, senior vice president of Microsoft's Advertiser Publisher Solutions Group during a panel discussion at the Web 2.0 Summit in San Francisco Thursday.

Currently, systems for tracking ad conversions and analyzing online marketing campaigns focus on the last ad a user viewed or clicked on, he said. This gives all credit to that last publisher and not to others the user may have been at before and influenced the user to seek more information about the advertiser, McAndrews said.

In particular, this situation has unfairly benefitted Google because many times someone will see a display ad on a site and go to Google, search for the vendor's name, and then click on the vendor's text ad served by Google, he said.

But Microsoft is developing a technology called "conversion attribution" that will track the trail of ads seen by a user, so that advertisers get a more complete understanding of how effective their marketing campaigns, he said.

Along the way, advertisers will get a more balanced view of the value of their ads across a wider trail of Web sites and via a variety of ad formats, not just the last ad displayed by the last publisher, which is often Google, he said.

"We'll introduce conversion attribution to give [more publishers] credit and it will devalue search [advertising]," McAndrews said.

Search advertising is the largest online ad format, accounting for about 40 percent of total ad spend. Google has built its empire on these pay-per-click ads, which the company matches to the content of queries on its search engine and to the content of third-party Web sites on its ad network.

While search has been the main driver of the blistering growth of online advertising in the past five years, that won't be the case in the coming five years, McAndrews said.

In addition to the "conversion attribution" technology, the shift away from search ads will be fueled by the increased spending in online ads from large companies which prefer display and rich media advertising designed to boost their brands, and for which pay-per-click text ads are less effective, he said.

Google didn't have any representatives participating in the panel. The company didn't immediately respond to a request for comment.

Microsoft didn't immediately respond to a request for clarification on the availability of the "conversion attribution" technology.

McAndrews, who came to Microsoft recently via its US$6 billion of aQuantive Inc., of which he was the CEO, shared the stage with other ad executives in a panel titled "Edge: The Advertising Model" moderated by conference chair John Battelle.

CORRECTED-AQuantive exec leads Microsoft charge into Web ads

SAN FRANCISCO, Oct 19 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research) said its $6 billion acquisition of aQuantive will fill out its Internet advertising technology and make it as competitive as Google Inc (GOOG.O: Quote, Profile, Research) in that market.

The August purchase of the digital advertising firm positions Microsoft as one of the few companies with the money and technology know-how to be a major force in an industry expected to grow to $80 billion by 2010, said Brian McAndrews, former aQuantive CEO who is leading Microsoft's advertising efforts.

"Our goal is to have a significant amount of the revenue in the industry going through our technology, our platform," said McAndrews, who spoke to Reuters this week on the sidelines of the Web 2.0 Summit in San Francisco. "All parts of our business will be bigger and more profitable."

AQuantive's Atlas technology allows advertisers and publishers to buy and sell digital advertisements.

Microsoft still needs to be able to sell "contextual" advertising to target specific visitors of a Web site, but McAndrews expects that it can introduce that capability next year, providing a full suite of advertising tools.

McAndrews is at the vortex of Microsoft's major push into Web advertising technology. Threatened by Google, the company is working to build a major business to be a pillar of earnings alongside its main Windows and Office software. Microsoft made its biggest-ever acquisition when it bought aQuantive and handed the keys to its advertising business to McAndrews. The executive ranked No. 11 in Business 2.0 magazine's "50 Who Matter Now," ahead of even his Microsoft bosses, who include CEO Steve Ballmer and Chairman Bill Gates.

'1 + 1 = 3'

McAndrews, who is senior vice president at Microsoft's advertiser and publisher services group, said the benefits of the acquisition would increase over time.

"Absolutely, one plus one equals three, but not on day one," he said. "I would say something like one plus one equals two and a quarter."

Microsoft's acquisition of aQuantive is part of a $10 billion consolidation spree in the online advertising market, centered mostly around deep-pocketed players. Google agreed to pay $3.1 billion for DoubleClick, while Yahoo Inc (YHOO.O: Quote, Profile, Research) snatched up the rest of Right Media for $680 million.

"There just aren't going to be very many companies that can invest the kind of money it's going to take to build these platforms and have the technology expertise," said McAndrews.

For now, AQuantive's Avenue A/Razorfish interactive ad agency will remain in Microsoft. Wall Street analysts had earlier speculated the lower-margin unit, which accounts for nearly 60 percent of aQuantive's revenue, may be sold

McAndrews explained that Avenue A had also been a key link between its advertiser clients and the part of aQuantive that specializes in ad-serving and tracking technologies. AQuantive has also profited from its technology ties with traditional ad agencies.

"Agencies are a critical part of the ecosystem," McAndrews said. "They aren't going away, they shouldn't go away and, frankly, if there is a technology company trying to disintermediate them, then I think that's a mistake."

Google has sought to extend its auction-based technology for efficiently selling Web search advertising to traditional media, from television to radio and print. While the company said it did not plan to replicate the ad agency model, many in the industry fear it might eventually offer a wider range of advertising services, including creating campaigns.

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