Google’s bread and butter is paid search but that doesn’t mean that it doesn’t have big ambitions for its display advertising business. After all, it spent $3.1bn in 2007 buying display advertising giant DoubleClick.

Google’s challenge in taking display to greater heights is simple: show advertisers the money (read: ROI). The ease with which paid search ROI can be tracked is a big part of paid search’s success. When it comes to display ads, however, that ROI is hard to pin down, because, well, ‘nobody clicks on display ads‘.

About a year ago, Google started beta testing a new tool called Campaign Insights. Its purpose: help advertisers find the ROI in display advertising. According to AdAge, the tool has been tested with advertisers such as PayPal and Simplexity. And today, Google is expanding the beta to larger advertisers in the UK and US as it moves toward an eventual launch of the tool for all of its advertisers.

AdAge explains how it works:

With Campaign Insights, Google takes data from the advertiser’s server logs to determine who was shown an ad and when. Then compares that to web searches and site visits culled from data from the millions of Google toolbars on computer desktops. Those results are compared to a comparable group that didn’t see the ad.

Then Google measures the difference between the number of brand searches and site visits between the two groups. To filter out the impact of other media or influences, such as a TV campaign, Google compares the data to the two groups’ behavior before the campaign began. The incremental difference is attributable to the display-ad campaign.

It’s an interesting approach, one that AdAge notes is similar in nature to what Microsoft has been doing. Google’s advantage: the millions of upon millions of computers that have the Google toolbar installed and Google’s access to DoubleClick’s cookie, which is used just about everywhere a Google ad is displayed.

Of course, some will point out that Google toolbar users aren’t necessarily a great sample but I think it’s pretty obvious that there’s never going to be a ‘perfect‘ way to measure brand life from digital marketing campaigns. But if Google can show advertisers that their display ads have an impact on search ads, Google might be able to convince advertisers to pour more dollars into display. As AdAge correctly notes, paid search “tends to get the majority of credit for web activities because it is most likely to
be the last action before a site visit or sale
“, but savvy advertisers know that the last click is hardly the only thing that counts.

Photo credit: Yodel Anecdotal via Flickr.