Substantiating return on investment (ROI) will present the biggest challenge for agencies catering to online advertisers this year, according to JupiterResearch. Of the 42 percent of online advertisers that use an agency, only 19 percent are satisfied with their agency's cross-tactic ROI, and only 23 percent, with measurement.

According to the report, nearly half of agencies agree their top challenge this year is, in fact, measuring and attributing ROI. Sixty-one percent say better measurement tools would have the greatest positive effect on their implementation. While many full-service or cross-media planning agencies offer some form of media-mix modeling, very few offer accurate ROI attribution. To succeed in the near term, agencies must implement tools from best of breed providers.

"Companies such as Digitas, Avenue A/Razorfish, and Starcom IP have pioneered ROI measurement, offering insight across search, display, as well as online and off-line sales. But they have accomplished this through the use of strategies or tools developed in-house,” explained Emily Riley, JupiterResearch Analyst and lead author of the report. "This isn’t the case for many agencies who must instead work with service provider partners. Agencies that don’t have the ability to create advanced tools internally must work with the very best service providers available -- to stay ahead of the competition.”

Much of the problem with measurement, specifically cross-tactic measurement, comes from the advertisers themselves. Surprisingly, advertisers using agencies want help executing across both search and display, but only 19 percent said they work with an agency specifically for cross-tactic execution, with only 26 percent using cross-tactic measurement and analysis. Although advertisers’ likelihood to work with different agencies for different parts of their online spending partially explains this inconsistency, it reflects an unfortunate inefficiency that online agencies must address.

"Advertisers expect successful execution. However, they are not taking into account the opportunity to vastly improve their results by coordinating their efforts across tactics,” said David Schatsky, President of JupiterResearch. "Advertisers should encourage and initiate a team approach among multiple agencies to developing and executing a plan that complements each tactic. In addition to an improvement in efficiency, such cross-tactic coordination could increase the success rates of their campaigns.”

About this study

The JupiterResearch Vision report, “Agency Agenda: Proving Value Through Measurement and Analysis,” finds online advertising is becoming increasingly complex to execute and manage. Advertisers are therefore turning to agencies to provide efficient execution, and expect measurable results. Key questions addressed: What are advertisers looking for in an online agency? Which factors must agencies enhance to prove their value to clients? How can agencies confront the major challenges they face in the near term? It cites two case studies.

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