Ad attribution is one of the most challenging analytic problems in marketing today. Who saw which ads, and what purchases resulted? It’s a sticky challenge, especially in an increasingly multi-screen world. As a result, many advertisers use simplified models for attributing customer response. For example, the last click model attributes conversions to the last message a consumer saw.

But smartphone penetration and the age of big data are coming together to create an environment where deeper ad attribution is attainable. This includes the traditionally elusive area of offline ad attribution — connecting the dots between digital engagement and real world (read: local) conversions. The mobile device now provides that link (see our white paper on this topic).

The discussion surfaced again at ad:tech last week. Microsoft data scientist Lin Huang outlined the company’s keyword assist model wherein “the data drives the attribution.” In other words, there’s no pre-existing template about how attribution is assigned. Instead, Bing data (not to be confused with Big Data) determines what search terms naturally cluster together, and what activities they drive.

If a Hyatt property in Hawaii runs a display campaign, impressions resulting from a search cluster could include terms like “Hawaii vacation” or “Hawaii trips.” The attribution weighing of those terms can be measured against a subsequent search for “scuba Hawaii” that directly resulted in a click to book at the Hyatt property. So the earlier — and sometimes more influential — search can get its due credit.

Google and several others have their own flavors of full-funnel attribution. Lin Huang believes the Microsoft’s keyword assist model is “beyond parity” with Google’s latest approach, but of course his inherent bias should be noted. And his examples are mostly around e-commerce transactions, which are of course notable. But offline attribution is where it gets interesting… and very local.

This is important for any advertiser targeting local markets, given that offline is where 93 percent of U.S. commerce happens. Connecting the dots between digital and analog worlds will be the holy grail of local advertising (cue: John Wannamaker quote). And mobile is the key to unlocking that famously illusive challenge, given that it physically goes to the store with you.

So what do these offline attribution models look like? Many extrapolate by creating ad-exposed control groups and measure geographic sales lifts among those groups. There are also ways to measure ad effectiveness by linking social identity to purchase method (see Facebook/Datalogix partnership). Mobile payments will ultimately clarify the path to purchase, but we’re still very early there.

As with most new technologies, initial adoption for all of the above will be with national and brand advertisers. SMBs will adopt through agencies, media companies, and other intermediaries. We expect that SMBs with the greatest economic incentive will move first to sophisticated attribution. Think: high-consideration / high-value purchases like legal, financial, medical and automotive.

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Steve Marshall contributed original reporting and insights to this post

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Microsoft’s Raj Kapoor mapped Bing’s evolving local search strategy at the SMB Digital Marketing Conference, an approach that begins with mobile, infuses social and is geared toward “consumer task completion.”

Kapoor first noted the ubiquity of digital channels in the consumer purchase process, with more than 90 percent using some mode of online search to find local businesses. The location-aware and intent-capturing features of mobile devices have propelled the trend forward.

For consumers, Bing’s focus is on location extensions that enable task completion, whether that be finding a store (locators, mapping), making a call (click-to-call through Skype integration) or finding/buying a deal (a card-linked offers beta test). Bing is also integrating more social signals into search listings: Facebook posts, Quora Q&A and reviews from Yelp and TripAdvisor.

For SMBs, the key is simplicity with Bing Ads Express. The problem that Kapoor is trying solve: “How can a small business come to us quickly and we take care of everything else?” Part of that challenge is educating small merchants on the value of a mobile presence, and the efficiency of mobile campaigns tied to it. “When campaigns are mobile-optimized, they drive a disproportionate share of clicks and budget utilization.”

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Google made up 66.5 percent of the U.S. market share in explicit core search in April, a 0.1 percentage point rise from the previous month, according to comScore’s qSearch analysis. Microsoft came in second at 15.4 percent and Yahoo rounded out the top 3 at 13.5 percent, slipping 0.2 percentage points.

ComScore excludes contextual searches from core search since they do not reflect user intent. Out of the 17.1 billion core searches Americans conducted in April, Google sites ranked first at 11.4 billion. Microsoft sites ranked second at 2.6 billion followed by Yahoo at 2.3 billion.

In April, 68.7 percent of searches carried organic search results from Google (up 0.1 percentage points versus March), while 25.9 percent of searches were powered by Bing.

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The Deals space is so hot, yet there are many unanswered questions about it. We know it will be big, but who really knows what it is going to look like 18 months from now?

With that in mind, we have developed a brand-new addition to our regular conference schedule: Deals 3D, a day-and-a-half event taking place in the afternoon of July 18 and all of July 19 at the contemporary Mission Bay Conference Center at UC San Francisco. The event will feature 40+ top level executives and entrepreneurs; a lot of cool demos; and, well – our typically great BIA/Kelsey networking.

Keynotes include MasterCard’s Gary Kearns; AT&T Interactive’s David Krantz and Facebook Local’s Lexi Reese. Featured speakers include such leaders as Microsoft’s Charles Dyer; Foursquare’s Tristan Walker; Loopt’s Sam Altman; BuyWithMe’s Andrew Moss; Shopkick’s Evan Tana; and Savings.com CEO Loren Bendele.

Old friends like Greg Sterling are on the agenda, too, and the event is being cochaired by The Dealmap’s Jon Sofield. You can register here.

SPEAKERS: DEALS 3D (As of June 9)
Samy Aboel-Nil, President and COO, Tippr
Sam Altman, CEO, Loopt
Derek Beckmann, CEO, Descuentro Libre
Loren Bendele, CEO, Savings.com
Robert Boniface, COO, iCoupon
Lilia Martinez-Coburn, VP, TownHog
Matt Coen, CEO, Second Street Media
Kimberly Cook, VP, GreenLink Networks
Charles Dyer, Director, Mobile, Local and Commerce, Microsoft
Jonathan Dyke, COO, Edo Interactive
Perry Evans, Founder and CEO, Closely
Paul Gain, CEO, Monster Offers
Dave Galvan, VP, Schedulicity
Andrea Gilman, VP, MasterCard
David Goldfarb, President, YourBestDeals.com
Alistair Goodman, CEO, Placecast
Oliver Gratry, CFO, Analog Analytics
Jimmy Hendricks, CEO, DealCurrent
Gary Kearns, Group Executive, Information Services, MasterCard
Jonty Kelt, CEO, Group Commerce
Jim Kerr, VP, Triton Media
Jared Kopf, Founder, Homerun
David Krantz, President and CEO, AT&T Interactive
Terry Kukle, VP, Metroland
Bill Lange, CEO, Full Slate
Malcolm Lewis, Senior VP and GM, Local.com/SpreeBird
James Moran, Founder, Yipit
Andrew Moss, Chief Strategy Officer, BuyWithMe
Darin Myman, President and CEO, PeopleString
Florent Peyre, VP, Gilt City
Prashant Nedungadi, CEO, Nimble Commerce
Rich Razgaitis, GM, ReachLocal Deals, ReachLocal
Lexi Reese, Director, Local Sales, Facebook
Jon Sofield, VP, Business Development, The Dealmap
Greg Sterling, Senior Analyst, Opus Research
David Strebinger, CEO, Wantsa
Evan Tana, VP, Product Management, Shopkick
Vinicius Vacanti, Cofounder and CEO, Yipit
Dan Visnick, VP of Marketing, The Dealmap
Darren Waddell, VP, MerchantCircle
Josh Walker, CEO, CityVoter
Tristan Walker, Director, Foursquare
Stuart Wall, CEO, SignPost
Rebecca Watson, VP, RadiumOne

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Last week, the latest spree of entrants forayed into the deal-a-day arena, with AT&T and The New York Times announcing group buying platforms that appear to be almost identical to those popularized by Groupon and LivingSocial. The most interesting of the newcomers, however, could be Microsoft Bing, which opted for an aggregated approach through The Dealmap’s DealExchange for its Web and mobile properties.

Rather than dedicating resources against selling deals itself, Bing will instead rely on the network to source locally targeted offers from more than 300 group buying channels that open up their content to DealExchange. CityGrid Media, Local.com and SuperMedia are among the growling list (now 36) of publisher/distribution partners.

Leading search engines and portals have used different strategies to jump into group commerce. But this much is certain: They all feel the urge to play. AOL (through WOW) and Google set up their own deals platforms, while Yahoo opted for an aggregated network initiative through Tippr that resembles Bing.

As noted above, Bing mobile is also included, reinforcing what The Dealmap’s Jennifer Dulski told BIA/Kelsey at ILM West — that mobile and social commerce would make for a potent combination. Dulski noted that half the site’s usage already comes from mobile devices.

The enthusiasm over deals is well-founded, with BIA/Kelsey projecting that domestic revenues could touch nearly $4 billion by 2015, at a 35 percent compound annual growth rate (CAGR).

As the market becomes increasingly fragmented, aggregators will play a central role in both organization and distribution. DealExchange positions The Dealmap particularly well to strike partnerships, especially with the functionality it provides for the deals being sourced — location, price, sentiment and time (all part of its “relevance algorithm”).

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The 360-degree views of real estate listings were remarkable for their time, but are giving way to new technology that lets users look at many things at once, says Microsoft Live Labs Technical Fellow Gary Flake, who was speaking last week at Inman’s Real Estate Connect in San Francisco.

“We’re used to Web navigating from one image to another,” especially with video games, said Flake. Microsoft’s PhotoSynth technology lets users zoom in and out of backyards to bedrooms, etc. It is the same technology used by CNN for the Obama inauguration, he notes.

Indeed, Photo Synth, combined with Pivot, a program for collecting information, creates new experiences and allows you to embed them within your own Web site. “It will make you want to change the ways you take photos to take into how you stitch together hundreds of things,” said Flake.

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The default strategy for many start-ups is to plan to be acquired by Google or Microsoft. But the M&A scene is much more complex than that. Jordan, Edmiston Group Co-President Tolman Geffs, speaking today at IAB’s Annual Leadership Meeting in Carlsbad, California, joked that Google is set to buy Oregon, Washington and Canada “just to mess with Microsoft.”

Speaking more seriously, he noted that “we don’t need Google and Microsoft to buy everything.” Incumbent specialist firms would find higher value in a number of areas. These include marketing analytics, consumer data, cable and entertainment, Web delivery, infrastructure, major agencies, large display ad networks and performance advertising (such as Demand Media).

Geffs noted there is currently a vibrant deal environment, with 178 deals made in the second half of 2009 worth $13.3 billion. This was a major change from a “dead” first half when just 129 deals were completed, he said.

Still, there has only been a “partial recovery from previous levels for online plays. Classifieds is the only sector of advertising that was down,” he said. Especially hot areas include online media, interactive marketing, video and infrastructure plays.

A real “head scratcher” for Geffs is the $1 billion+ committed by Google ($750 million) and Apple ($275 million) for two mobile ad networks: AdMob and Quattro Wireless. “That’s the entire forecast for 2012 mobile ad revenue” he said, noting that the high prices have led to a stunning $211 million worth of investment in nine other mobile ad nets by VCs.

In fact, Geffs questions whether mobile is even a good ad medium. “They help consumers complete tasks,” he noted. But “is this a great promotional medium?”

Geffs, former president of IBS, a TV station Web site builder and advertising provider, is also critical of “vertically integrated” models that rely on content aggregation and search, such as Citysearch and ReachLocal. Costs are too high.

ReachLocal, for instance, is a vertically integrated play that only leaves 7 percent of its revenues to support its product and platform, after spending 55 percent on consumer traffic and 38 percent on sales and marketing.

He’s more excited about local companies that solve a problem and keep content, audience and sales costs low, such as Outside.in, Datasphere, Triton Media, MerchantCircle, Manta, Yelp and Angie’s List. “We are big fans,” he said.

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Zvents, the events lister, is reporting 35 percent year over year growth with over eight million unique visitors, largely due to its powering events for 285 local media brands, including  major newspapers and the NBC owned-and-operated TV stations.

CEO Ethan Stock cites Quantcast data showing Zvents Media Network as the 250^th most used net on the Web, ahead of Citysearch (#267) and Local.com (#291). “We’re a very large local property by any measure,” he says.

The company, which has raised $32 million over its five year history, also claims it has been averaging 12,000 monthly event listers. These use the site to promote a wide range of local events and activities, including live music, performing arts, sporting events and community activities.

Of those listers, roughly 1200, or 10 percent, are now boosting their presence by taking out ads via self–serve – a percentage that Stock thinks will climb to 20 percent in 2010. The company also sells regional and national accounts via telemarketing and national sales, with top categories including major concert promoters, sports teams, casinos and  home and garden events.

High end shopping, with its sales-oriented events, such as Williams Sonoma cooking demonstrations, are also becoming more important to Zvents bottom line.  “There is a significant segment of consumers who perceive shopping as entertainment,” says Stock.

The key to the company’s future in local, however, is to stay away from the trap of focusing on directory-type advertising. Instead, Zvents will stay focused on events and shopping, he says, which have the most highly motivated advertisers. “They are also relatively concentrated in terms of the volume of advertising.”

Indeed, the company’s focus on events and advertising puts it most in competition with social sites such as Facebook and Google, rather than local sites such as Citysearch and Yelp, who may be more directory oriented, says Stock. Other events oriented companies include Eventful, and “new city guide” players such as Center’d and American Towns.

In hindsight, the company’s initial focus on teaming with newspapers “look like a very smart choice,” adds Stock. While newspapers are commonly disparaged in today’s climate for their declining circulation and advertising, “they have high repeat traffic. Much more than national partners.” Top Zvents newspaper partners include SFGate, the Denver Post, Seattle PI, Boston.com, the Dallas Morning News, the Atlanta Journal Constitution, New York Daily News, and the Orange County Register.

Stock also sees a major boost coming from renewed efforts in local from national partners such as AT&T’s Yellowpages.com, which has been an investor in the company ; and from MSN, where Zvents listings will be showing up in Bing, and trigger Instant Answers via Silverlight search.

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Spot Runner announced that it is laying off 115 people, or less than 30 percent of its staff. It confirmed that a big chunk of the layoffs are coming from its local sales division, formerly known as Weblistic.

Company officials say they are getting mean and lean for the recession, but that Spot Runner has significant cash in the bank. They also say they will continue to support local search initiatives, but that the company is going to focus harder on its core video business. The layoffs, which follow earlier layoffs of 50 staffers in August, have been hinted at for several weeks.

Weblistic was purchased in March 2008 for $22 million worth of Spot Runner options. At that time, major synergies were envisioned with Spot Runner’s national advertising franchisee sales (i.e., Coldwell Banker, 24 Hour Fitness), video and display ad production, and media placement. But it isn’t apparent that there turned out to be much synergy between these units.

In some ways, the company seems to have been lurching from one strategy to the next, with local ad sales just the latest of many efforts as the company positioned itself for an ultimate exit. The dominance of Google in a local SMB space that seemed primed to have many other channels (Yahoo, Ask, Superpages, Yellowpages.com, etc.) seems to have hurt the company’s prospects to be profitable as a search reseller. As a reseller, Spot Runner doesn’t receive any discounts on Google purchases.

Spot Runner was rumored to be in talks with Microsoft last year, with a hefty Microsoft offer said to have been rejected. A Spot Runner spokesperson says they are simply “unconfirmed rumors.”

In the meantime, “alternative strategies” are being pursued for Weblistic, which had been scaled for massive sales, with at least 30 engineers. At the very least, the layoffs will enable the division to be “right sized” for profitability.

The Weblistic layoffs may have implications beyond Spot Runner. People will be closely watching the prospects of other companies in the space, including ReachLocal, WebVisible and Marchex.

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