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Not since Google plumped for pay-per-click sponsored listings in 2000 has ‘The Big G’ made a decision as strategically significant as its recent commitment to path-to-conversion reporting in the guise of ‘Multi-Channel Funnels'.

The story goes that it wasn’t until the last minute that Sergey and Larry decided against carrying banner advertising in the hunt for revenue and chose instead the PPC bidding model pioneered by GoTo (which became Overture). Had it stuck to its guns, the digital marketing industry would be a very different place now.

But, Multi-Channel Funnels is, in my view, as fundamental a step as the launch of AdWords because going beyond last-click reporting and attribution seriously undermines that very model.

There is no question that attributing digital sales to only the last click in the purchase journey has served to overestimate the contribution of paid search. When we have finally made a decision to buy online, the large majority of us conduct a search to seek out the business from which we plan to buy.

By that stage in our journey, we’re not interested in whether the result is paid for or delivered by Google’s brilliant algorithm, we just want to get there. Paid search thus accounts for a large number of last clicks and a disproportionate amount of credit and marketing spend.

Outside its search engine and AdWords, I would make Google Analytics the company’s biggest success. It is an incredible tool to be able to use for free and delivers the kind of insight to smaller site owners that used only to be available to large e-commerce players.

Its launch was also brilliantly conceived; it said ‘if we can show advertisers just how effective is paid search, they’ll do more’. But, by adding path-to-conversion insight to the reporting of this brilliant tool, Google will achieve precisely the opposite. After all, once our clients have path-to-conversion insight in front of them, their first decision is almost always to reduce paid search spend in favour of things like SEO and display.

So, why would Google launch (in limited pilot) reporting that shows the other things customers do on their way to buying?

Firstly, Multi-Channel Funnels will enable Google to claim some ownership of the demand for beyond last-click thinking and, perhaps more significantly, drive some of its development in its favour.

Until now the entire debate has occurred with Google sat ominously on the sidelines. As soon as it became clear that attribution models other than last click were likely to take hold (about this time last year), Google had to enter the fray.

By providing its own version of path-to-conversion insight Google can better lock in its AdWords and Analytics account holders to its own system and control the transition to a much greater extent.

Second, although PPC is by far Google’s biggest earner – let’s say 90% (I’m guessing) of all the ad revenues it generates – it does control enough of the display landscape (and SEO ecosystem) to have an interest in giving people a fuller view of how other channels contribute to a sale.

DoubleClick and YouTube (as well as natural search) are both likely to benefit from that view, particularly if it is Google’s version. While those revenues are not likely to replace, at least in the short-term, the money-printer that is AdWords, it can take solace in probable display revenue growth.

Most of all Google Analytics had to remain relevant as advertisers move to systems that enable complete path-to-conversion reporting. Attribution has become the single largest topic of conversation among digital marketers in the last couple of months.

The trade press have picked up on its significance and the message is filtering through. Last click is by no means dead, but this is certainly the beginning of the end. The issue is now about what will replace it and, understanding this, Google must have a stake.

Still, adding ‘assists’ to Google Analytics must have been a significant undertaking and suggests that Google shares our view that last-click attribution is losing its relevance.

It will certainly help spread the message that there is a better way to track marketing spend and it will be fascinating to see, not only how quickly others follow, but also how Google seeks to evolve to be just as successful in a post last-click world.

Paul Cook

Published 5 May, 2011 by Paul Cook

Paul Cook, the founder of RedEye and TagMan, is a contributor to Econsultancy.  

28 more posts from this author

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Charles Burrows

Sums up the last year's progress in attribution thinking nicely.

over 5 years ago

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ML

Interesting. If set up correctly by the user, wouldn't this new reporting show that yahoo display advertising or facebook advertising is driving lot of the demand to google search? If so, wouldn't this increase the value for yahoo and facebook display advertising?

I get DoubleClick is out there but based on the numbers that came out yesterday for display, it looks like facebook and yahoo are the #1 and #2 display advertisers and Google is a far away #5.

over 5 years ago

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Anon

Surely this can only be to Google's benefit. Instead of throwing money at what are typically cheap last click terms (more often than not brand related) this will potentially show the value of generic lead generating terms which are typically more expensive...

over 5 years ago

Paul North

Paul North, Head of Content and Strategy at Mediarun

Woah, woah, woah. I really think this idea that paid search is over-valued has been totally misunderstood. The Tag Man report you link to was excellent but it didn't differentiate between brand and non-brand keywords.

When a company bids on its own name in Adwords (as many do), that's when they get all the last click conversions. And often those brand conversions will dominate the stats. That's not Adwords being overvalued. That's simply brand keywords skewing the stats.

Multi-click attribution will show up brand keywords as being over-valued but will show generic keywords as being just as valuable as their organic counterparts (more or less).

Therefore, Google will benefit immensely from increased Adwords budgets.

over 5 years ago

Paul North

Paul North, Head of Content and Strategy at Mediarun

Actually, re-reading the TagMan report, I see it did separate brand and generic keywords. I'm choosing to blame the fact I hadn't had enough coffee this morning. I apologise, Paul.

Nevertheless, I see over and over again, a great return from well-managed generic keyword campaigns in Adwords. Knowing more about the assist data in Search Funnels has resulted in increased budgets and "saved" keywords from bid decreases or being paused. Multi-click attribution will surely deliver more credit to paid keywords that otherwise look like they don't contribute revenue at the moment.

over 5 years ago

Paul Cook

Paul Cook, Director at NCC Web Performance

Hi all,

Great points (I love the much smarter debate that goes on on Econsultancy!).

ML - yes, path-to-conversion reporting should show the value of all display. If Facebook, Yahoo or anyone else's display ads are driving the bulk of the value then that's what they'll - if it's done properly - show.

The thing on display is that, from what we know so far, you won't be able to track anything other than clicks using Multi-Channel Funnels since the only way to track non-Google traffic is by amending your click-through links, which means you'll miss all display views anyway!

But, I guess the point is that Google does have large stakes in the display market, and will presumably be putting even more focus on making these work harder, and gaining more.

On paid search - absolutely. You'll see in the comments to the 'paid search over-valued' post that we believe, of course, paid search is a brilliant tool. What path-to-conversion insight does is shows you exactly how different groups of terms (and indeed specific terms) act in the path.

But, the fact is - because of the last-click model - paid search as a channel as a whole does gain disproportionate credit (and therefore spend). Using ALL your channels smarter, including paid search, is the eventual output of good path-to-conversion reporting and analysis.

over 5 years ago

Paul Cook

Paul Cook, Director at NCC Web Performance

Hi all,

An addendum on paid search. I've just had sight of a case study we're working on that will show exactly what you guys are talking about when it comes to generic terms.

This client - now that it has complete path-to-conversion insight - has increased its natural search spend by six times AND increased paid search budget on generic terms that play a role higher up the conversion path. So there you are!

Will of course let you know as soon as its available for public consumption.

over 5 years ago

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Greg Jarboe

I agree that this is a significant development, but I don't think it will hurt AdWords even as it helps DoubleClick and YouTube. If you discover that there are several points of contact that influence a buying decision, then you naturally try to appear at each of those points. And Google is there -- ready to collect a nice commission -- at each key phase of the sales funnel.

over 5 years ago

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DCCTV

For working in the SEO field many of us already have a bad reputation before we even open our mouth. So, maybe we should be investment marketers – we could then be as well liked as our banker friends!

over 5 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

Great article Paul. I agree that the path to conversion stuff from GA is a big deal. I'm also looking forward to the call analytics stuff coming to the UK (see http://www.kaushik.net/avinash/2011/02/mobile-analytics-tracking-click-to-call-mobile-ad-campaigns.html).

My understanding of Google's 'agenda' is that it is quite simple: the more online grows, the more they benefit. Therefore, if they (Google) provide tools/evidence that online generally is a sensible place to spend marketing money/do business, then they will benefit. Not just them of course but if the overall digital pie grows then Google will do well out of that.

Generally if online can be more accountable and marketers can understand how it works, how it drives value to 'offline' and vice versa, then spend and resources will continue to migrate online.

over 5 years ago

Nick Craig

Nick Craig, Managing Director at Mackerel Media

I'll second Ashley's comment on Google's overall agenda - I think we are all long enough in the tooth to know or at the very least suspect that Google doesn't tend to do much that harms its bottom line.

My other guess here us that in making the importance of natural search much clearer, brands will invest more heavily in optimisation, making keywords more competitive and raising the cost for paid advertisers who decide not to compete in the natural space for whatever reason.

We have an interesting situation with a PPC client who has somewhat limited natural search visibility and as a result paid search is the predominant introducer to the company. Their products are fairly high-value and are the kind of things that people will mull over, research and debate with their other halves, read about at work, look at in the evening then order whilst they're at work. The issue here is that a purchase is split over multiple days over multiple access points and is therefore tricky to track; the upshot of this it would appear is that PPC is actually vastly under-represented in reporting terms.

over 5 years ago

Paul Cook

Paul Cook, Director at NCC Web Performance

@Ashley and Nick. I think, yes, we've got to what must have been the nub of the debate at Google: path-to-conversion hurts brand PPC but helps display/SEO/generic PPC in the short-term. And it helps online as a whole in the short, medium AND long-term.

The momentum behind multi-touch attribution is, in my view, what forced the issue.

over 5 years ago

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