Recently, a client and I were discussing online advertising metrics, with topics ranging from engagement to awareness to intent, and of course, Return on Investment. It wasn’t until after the meeting when it struck me that not once did click through rates enter into the conversation. My hope is that this, and other similar conversations, is a signal that the online ad world is moving beyond its longtime fascination with the click through — the low-hanging (and sometimes over-ripe) fruit of online ad metrics.

Toward the goal of helping the industry move beyond the click through myopia that had historically characterized online ad measurement, I pulled together some analysis that is pretty interesting.

At Nielsen, we’ve done extensive work, particularly in the consumer packaged goods and retail industries, to help advertisers quantify the effect that online display advertising has on offline purchases. The results are quite positive. Looking at more than 300 campaigns over a span of about 5 years, using the basic formula below, we find the average ROI is a positive 157 percent.

What’s the bottom line for those watching their bottom line? Display advertising — particularly targeted advertising — works.

OK, But What About Those Clicks?
In an effort to measure the relationship between click through rates and ROI, we ran an analysis across 200 of those campaigns. The table below summarizes our findings. On the X-axis we’ve plotted ROI percent percent and on the Y- axis we’ve plotted click through rate.

If there were a relationship between the two metrics, we’d expect to see a grouping of red dots with an up/rightward inclination (the more clicks, the better the ROI). Instead, what we see is something more like a blob or a swarm. For you quantitative thinkers, the correlation between the two metrics is a negative .07, meaning that there is no relationship whatsoever between the two metrics. More to the point: across the campaigns measured, click through rate was in no way predictive of a campaigns’ overall effectiveness.

Beyond the obvious finding that advertisers should not be overly focused on click through rates, the big idea here is that advertisers should be including online display advertising in their overall marketing mix, increasingly taking advantage of flash/video ad units to reach the consumer, without the hope that the person exposed to the ad will be one of the few that actually click on ads.

Does this mean that display advertising works as well as it could? No, it does not. The online advertising medium is still immature. Great Don Draper-like story- tellers have not yet had their Kodak Carousel moments. While metrics don’t make great creative, in the long run, a focus on the right metrics will ensure that the creative that we consider great creative actually makes money for advertisers.

“Click through” to the comments to add your thoughts.

Looking at our newly expanded panel that includes more than 30,000 sites, we have found that short tail sites (those with a greater than 1 percent reach) remain the most engaging brands online.

It seems that the differentiation between the long tail and short tail is important. Long tail sites tend to have lower engagement levels than short tail sites.

However, it would be reasonable to ask: “well, since not all short tail sites are the same, what happens to those numbers if you remove portals and large social networks?” The answer is interesting. When we look at the data in relation to the highest traffic sites on the Web (e.g., Google, Yahoo!, YouTube, MySpace, Wikipedia, Apple and Facebook) here’s what happens:

Long tail sites tend to have lower engagement levels than short tail sites; however, the largest jump isn’t between long tail and short tail, it is really between everyone and the top 10 sites.

What does this amount to? As much as anyone thinks the future is in the long tail, it’s just not the case-at least not yet. In fact, consumers feel more comfortable on large, mass media sites. We know the Internet is changing. We know there are more blogs, boards, tweets and social networks than ever before. But what’s also clear is that while the Internet itself is fragmenting (like all other media), people continue to spend their time on the sites that offer them the most options and functionality.

“Engagement” refers to the amount of attention paid to a television program by the average viewer.  Nielsen measures TV engagement by questioning a representative panel of viewers about their recall of specific telecasts’ content.

John McCain’s acceptance speech on September 4 drew the most attentive audience of uncommitted viewers, Nielsen reported.  Telecasts of Barack Obama’s and Sarah Palin’s acceptance speeches on August 28 and September 3, respectively, tied in second place as the second most engaging telecasts among uncommitted viewers.

Overall, viewers were more engaged by the telecasts of the RNC vs. the DNC.  Registered voters were 10% more engaged by the RNC than the DNC, while likely voters were 12% more engaged in RNC viewing. 

Male viewers were among the most attentive RNC viewers (15% higher engagement with RNC than DNC), as were older viewers, ages 35 and older, who were 13% more engaged by the RNC than the DNC. 

In contrast, younger viewers, ages 18 to 34, were 13% more engaged by the DNC, as compared with the RNC.

Read coverage of Nielsen’s findings in The Boston Globe and The Huffington Post.

But McCain got much more bang for his advertising bucks, according to an analysis by Nielsen IAG.

Nielsen’s survey of 1,600 likely general election voters who watched the Beijing Games found that McCain’s Olympic ads more effectively communicated a basic message, were recalled by more viewers, and triggered a larger intent-to-vote increase among viewers than ads run by Obama’s campaign. 

On average, the two McCain ads that were surveyed — “Celebrity” and “Washington’s Broken” – were recalled by 52% of those polled.  In comparison, just 40% recalled Obama’s two ads, “Hands That Built This Nation” and “It Begins With a Plan.”

That huge lead in general recall translated into a 10% net boost in intent to vote for McCain, while Obama received only a 7% lift from his Olympics TV ads.

There was some good news for Obama — his Olympics ads were apparently “more likable” than McCain’s.  Forty-five percent of Nielsen respondents said they liked Obama’s Olympics ads, while just 33% said they liked McCain’s.

According to Nielsen IAG, this year’s pharmaceutical commercials have been far less memorable for consumers than drug ads aired in 2007, Brandweek reported Friday.

Nielsen IAG ranked the most-recalled prescription drug ads in 2007 and 2008, and found that consumer recall indexes for this year’s pharma ads were significantly lower than indexes for the most memorable prescription drug commercials in 2007.

“The overall average has come down. A high bar was set, but now it’s just not as high,” Fariba Zamaniyan, Senior Vice President, healthcare, Nielsen IAG, told Brandweek. 

Zamaniyan attributed the dip in consumer recall of pharma ads to new, more conservative advertising strategies adopted by pharmaceuticals companies eager to avoid FDA scrutiny. 

Results of an initial survey conducted during two weeks in late June show that DMG’s 4,110 multimedia displays on four Shanghai subway lines were viewed by 3,055,000 passengers.

DMG and Nielsen will track multimedia subway display viewership on a regular, long term basis in China.

Programming at the pumps varies by location and TV provider, but all offer heavy rotations of 15-second ads.

The story cited a recent study by Gas Station TV and Nielsen, which found that 70% of people who watched the gas station ads remembered the products advertised, while 89% of consumers surveyed were willing to buy a product after seeing an ad on televisions attached to gas pumps.

The story focused on Nielsen’s Product Placement Service, which tracks product placement occurrences, and Nielsen IAG, which measures the effectiveness of advertising and product placements.

Alan Gould, Co-Chief Executive, Nielsen IAG, told the LA Times that Nielsen aims to provide the first comprehensive service for tracking product placement.  “If we do our jobs correctly, we will become the dominant way in which the industry measures product placement,” he said.

A commercial’s likability score reflects the percentage of TV viewers who recall the brand advertised and report liking a particular ad “a lot.”  Nielsen IAG’s panel includes almost 20,000 mostly Spanish-dominant Hispanic viewers living throughout the U.S.

Barbara Zack, managing director, chief strategic officer, Nielsen IAG told Adweek that, in general, humor “usually resonates well with viewers.”  

The Ad Age list also ranked the 10 most-recalled ads for the four-week period from May 19 to June 15, 2008.  Cymbalta’s “Where does depression hurt; Who does depression hurt?” ad topped that list.

Nielsen IAG measures consumer engagement with television programs, national commercials and product placements.