Overture: A Conflict of Interest?

One of the most controversial announcements at the upcoming Search Engine Strategies (SES) conference in San Jose will come from Overture. The company will promote the rollout of the latest version of Keylime Software’s LimeCommerce, together with a reseller plan developed for search engine optimizers (SEOs) and agencies. The tool allows tracking of all search marketing (including on Google — more on that later). My sources tell me Overture is actively recruiting resellers, hoping to boost the number announced at SES. Twenty are said to be on board right now.

There are many great independent third-party media tracking and analytics companies, plus those that combine return on investment (ROI) measurement with campaign management. With Yahoo’s impending acquisition of Overture, Yahoo will find itself in a new business. I’m not talking paid placement search engine marketing (SEM). It’s done that, directly and indirectly, for years. I’m talking about media tracking and analytics. To assess Yahoo’s involvement in campaign analytics, let’s step back and review the history of online media.

In the beginning, the market evolved fairly quickly to the current third-party ad-serving standard. Sure, for a couple of years banner buys were served, counted, and reconciled by publishers and networks. Publishers served impressions and counted clicks. Agencies and marketers paid their invoices.

Soon after interactive agencies got into the picture and bought media from multiple sources, it became clear a central tracking and management system was needed to serve, count, and reconcile online campaigns. Third-party ad-serving was born. Independent ad-serving and analytics companies counted impressions and clicks. Most of these firms evolved to measure, count, and report post-click behavior, enabling online media ROI analysis.

Why is this relevant? History can repeat itself. Third-party ad-serving companies evolved from publisher and/or agency tools. DoubleClick was in the banner network business. It needed a sophisticated ad-server and tracking system to facilitate media execution for clients. One reason DoubleClick sold its banner network was to impartially focus on serving, tracking analytics, and analyzing.

Atlas DMT evolved from the opposite side of the fence. Atlas was developed by Avenue A’s media technology department. It split off to become independent. Bluestreak developed its ad-serving systems with an initial focus on email and rich media, evolving into landing-page analysis. Finally, Mediaplex developed publisher and agency/client solutions simultaneously. By definition, third-party ad-serving companies are independent from the media they manage. Nearly all ad-server solutions can track SEM.

But LimeCommerce is owned by Overture. It will soon be a Yahoo company, complete with click, conversion, ROI, and impression tracking features. It puts Yahoo into the ad-serving game.

Nearly all ad-server solutions can be used to track SEM, and clients and agencies are heavily using the major third-party ad-serving companies for SEM. Dr. Gavin Finn, president and COO at Bluestreak, notes: “Marketers are looking to allocate online media efficiently, not just across search but across all media opportunities, often with complex and fluid goals. We see ourselves as the enabler to the marketer and their agency.”

Karen Anderson, media director at Modem Media, believes methodology is critical. “Sure, when DoubleClick had its own banner network or when Atlas was part of Avenue A, some people had concerns,” she said. “But in the end, once the walls between the business units were established, the primary issue became methodology. Validity of analytics across media is of utmost importance.”

The Conflicts

Some may view Overture as the fox in charge of the henhouse. It’s one thing to trust click-through data provided by a search traffic vendor, but many get uncomfortable when ROI and price sharing is involved. Here’s why:

• Many agencies and clients don’t want to share information about the true value of any media buy with the seller.
• Other agencies and clients don’t want one media company to know the CPC, CPM, or ROI of their competitors.
• Agencies and clients may question the objectivity of data about competing media when it’s reported by a tool owned by a competitor.
• Media companies don’t want to be in a situation in which an internal tool proves their inventory is inferior to other media, even if only for a small campaign segment.
• Ad-serving analytics companies that compete with a media company’s tracking division of may recommend clients not buy that media (because they compete).
• Web analytics and tracking companies that compete with a media company’s tracking division may recommend clients not buy that media (because they compete).
• Agencies may feel alienated by a combined media/tracking entity. The reps cross-sell, which may strain client relationships.

Most remote Web analytics companies are independent. They can already measure and track SEM conversion behavior. Many calculate ROI if CPC pricing is provided manually or through integration with a campaign management company.

The Industry Weighs In

Steve O’Brien, sales and marketing VP at Fireclick said, “We’re happy to see an industry leader like Overture acknowledge that the current cost-per-click model is inadequate. Paid search customers are increasingly seeking detailed ROI information, not only to track the return of different search campaigns but [also] to compare those results to email, banners, and affiliate programs.”

John Squire, VP of business development at Coremetrics, is pleased to see Overture acknowledge the need for an ROI measurement solution. “We have been helping many Fortune-class clients get a handle on paid and unpaid SEM,” he said. “The results of feeding back detailed conversion and behavioral data into an optimization strategy can be extraordinary, both from a profit increase and marketing budget savings perspective, particularly when lifetime value metrics are applied to the analysis.”

The HitBox/WebSideStory team seems unconcerned. According to Rand Schulman, CMO and former founder, CEO, and president of Keylime Software, “Overture is focusing on one specific niche, their own search marketplace; firms are looking for more than that in a Web analytics solution.”

“Search engine marketing is a very cost-effective way to acquire more visitors to a Web site,” said NetIQ’s WebTrends Product Manager Jeff Seacrist. “But because paid search is becoming more expensive, marketers today need to go beyond measuring just search engine click-throughs. They need to get more meaningful insight — such as how many of those clicks result in leads or sales? How does the performance of SEM compare to other campaigns within my overall marketing mix? That’s the power of Web analytics.”

Omniture executives were unavailable for comment. However, several staff members mirrored the sentiment expressed by other analytics companies regarding marketer preference for third-party independence and a broad media and marketing view.

My sources say Overture’s current tracking and analytics solution requires manual entry of all CPC costs from non-Overture sources, including Google, FindWhat.com, and LookSmart. It’s a labor-intensive process. Many clients and agencies ask vendors if the ad-serving or Web analytics software integrates with search campaign management vendors to eliminate the need for both bid changes (they’re automated) and CPC cost input (a direct import), while providing centralized ROI data reporting.

Several search engine optimization firms I spoke with are also concerned about the reseller concept. It puts them in the position of collecting client fees and providing primary-level support.

When the Overture acquisition is complete, Yahoo will, to some extent, compete against all the ad-serving and Web analytics vendors. Because resellers are the face of the solution to end users, any Web analytics solution can sour relationships if the reseller doesn’t provide good support. Is the Web analytics business something Yahoo should be in?

Time will tell.