Yahoo Digs Deeper Into Data

According to today's Wall Street Journal, Yahoo is teaming up with Marketing Management Analytics to provide better information about the relationship between online ads and sales. The firm will apply "econometrics" principles used in broadcast to analyze sales and advertising data to find correlation.

Yahoo's customers will have to pay for the service, which will try and factor out all of the other influences affecting sales (such as the health of the economy, personal savings versus spending) to figure out how much of the sales growth is directly attributable to online ads.

Online ads have a much greater potential to effect purchasing decisions because they can prompt immediate sales or at least lead people to find more information. Therefore, the statistics offered to advertisers should be much more reliable and accurate than what is available for broadcast. Perhaps Yahoo will increase its use of using cookies and registration to track behaviors to enhance the models beyond speculation.

As we statisticians (I suffered through a semester of econometrics) say, correlation is not causation, so you have to be very careful in trusting models that project sales figures based on two independent sets of data. I prefer hard data to extrapolating branding and exposure to ads to purchases. Advancing reliable online analytics is key to convincing advertisers that online spending is a wise investment.