Looking to add to your summertime reading list? I recommend the new report from Harvard Business School professors John Deighton and John Quelch and Hamilton Consultants, “Economic Value of the Advertising-Supported Internet Ecosystem” (full disclosure: John Deighton was my marketing professor). The report was created for the IAB to explain the online advertising sector to public policy makers, and literally calculates how much the Internet is worth to the U.S. economy.

In an attempt to solve this seemingly Sisyphean task, the report asserts that the Internet is simply worth what we pay for it, which is roughly equivalent to 2.1% of the U.S. gross domestic product. Due to the commercial diversity of the Internet and its far-reaching socioeconomic impact on American consumers, the authors rely on three different approaches to triangulate their answer:

1. From an Employment perspective (jobs created), the Internet is worth $300 billion;
2. From a Sector GDP perspective (money paid to the Internet sector), it’s worth $444 billion;
3. From an Attention perspective (consumer time online), it’s worth $680 billion.

As well-structured and comprehensive as this report is, I can’t help but conclude that it overlooks another valuable contribution the Internet has made to the economy: behavioral data as a source of consumer insight that can radically improve how companies go to market. Yes, I am probably biased because I am a market researcher (and an online market researcher to boot), but the lack of attribution to these Information/Insight benefits in the report’s value calculation certainly shortchanges the Internet. And, while I haven’t crunched the numbers, I’d assert that the information that the Web creates about consumers exceeds the commercial value of Internet advertising (nearly $25 billion in 2008). In other words, what we can learn about consumers’ digital behaviors is worth more than what companies pay to reach them online.

This may be a provocative view for publishers and their ad sales teams, but it should ring true for the rest of marketers. Part of the challenge is that digital data has been pigeon-holed as only useful for online advertising decisions: simple Internet audience measurement on one end, and highly addressable, behavioral targeting on the other. So as Internet marketing grew up, we became obsessed about the near-term impact of banner ads at the expense of more holistic Internet research. Many marketers, influenced by this CPA-mania, still view the Web as just a direct response medium and a cheaper channel for surveys. We now need to broaden the applications for digital research by measuring people and their behaviors, not just the ads. We have an opportunity to re-define what behavioral research is, so that marketers can more easily access and act on it.

To see what can we do with this new, combined data asset that we couldn’t do before, check out three ideas that can create new insights — and value — for marketers immediately, including Holistic Brand Trackers and Integrated Purchase Funnels, check out Compete’s monthly post on MediaPost.

In a trade publication last month, marketing guru Al Ries proudly declared that “determining the ROI of a marketing program is an expensive exercise with little or no value — an experienced marketing executive instinctively knows whether a marketing program is working or not.” He countered one CMO’s perspective on the value of analytics, by concluding that the practice of marketing “is not even 1% mathematics.”

With math-bashing marketing hand grenades like this, it’s not surprising that the column sparked a healthy response; readers are still submitting comments that wrestle with Ries’ assertions.

What is surprising, frankly, is that “quantifiable marketing” is a topic that is up for debate. Are people really confused about whether marketing should be a primarily creative versus data-driven craft? More important, why does one have to occur at the expense of the other?

Effective marketers know better, and here’s a good example from earlier this year. Eager to penetrate the consumer market, RIM conceived an integrated marketing campaign to support the launch of its new BlackBerry handsets. RIM had access to the right data in advance of the launches — from research that pinpointed consumers’ mobile shopping behavior to competitive data on the iPhone, T-Mobile G1 and Samsung Instinct — to help plan its efforts. The resulting BlackBerry campaign was a well-coordinated palette of marketing activities that used: 1) TV to drive consumer awareness; 2) search marketing and landing pages to capitalize on this interest; and 3) an online purchase funnel that linked shoppers directly to retail partner sites to complete the sale.

The result: fast and sustained growth in BlackBerry interest and sales among consumers. According to Compete’s data, more people shopped online for BlackBerry devices than any other smartphone in the first three months of the year. And, market share data from The NPD Group shows that BlackBerry claimed three of the top five sales slots for smartphones, with the Curve vaulting ahead of the iPhone as the best-selling consumer smartphone in Q1.

Rather than banking on intuition, RIM grounded its campaign planning in really good data. Rather than relying on conventional wisdom about online purchase funnels, RIM encouraged shoppers to complete their purchase on retail partner sites. And rather than waiting until the end of the quarter to measure its effectiveness, RIM could use consumers’ search activities as a leading indicator of sales performance — and adjust tactics throughout the quarter to optimize awareness, intent and conversion. All in all, a superb demonstration of intertwining mathematics and marketing.

To see the four main points we can learn from this, check out Compete’s monthly post on MediaPost.

Last week marked the sixth anniversary of TNS Media and Compete’s Digital CMO Summit and, despite the economic gloominess, attendees’ outlook for digital marketing was quite bright. One hundred and fifty senior executives from top brands, agencies and media companies gathered in Newport, R.I. for two and a half days of presentations, knowledge-sharing and extensive networking. The event spawned new ideas about the future of marketing, some forward-looking and many instantly actionable. So, in the spirit of sharing, here are my top five takeaways from the event:

1. There’s a new frontier where neuroscience meets online media. (Julie Anixter, Buyology Inc.)

A new class of research, led by marketing guru Martin Linstrom, uses brain imaging to show that what consumers think is equally important to what they say and do. Unfortunately, classic research techniques rely on self-reported behaviors via surveys, when in fact, most consumer decision-making is non-conscious. By linking research on non-conscious behavior to buying behavior, advertisers can get better insights into their audiences and what programs and messaging stimulates their thinking.

2. Base decisions on data, but don’t substitute data for knowledge. (Brian Lesser, 24/7 Real Media)

With new audience measurement and Web analytics data, marketers have never had so much information at their disposal. However, data can easily lead to a state of information paralysis. To combat this, make sure your analytics tools are focused on generating actionable consumer onsight, instead of just creating more reports. Train all levels of the organization to look for small insights first, then develop hypotheses and take an iterative approach to optimization.

3. Better creative will help online get beyond direct-response thinking. (Randy Rothenberg, IAB)

Anyone who thinks that the future of online media rests on click-through rates is a nincompoop. The beauty of internet advertising is that it is more measurable compared to other media. But that’s also its curse; in their zeal to prove ROI, many advertisers, agencies and publishers have reduced advertising effectiveness to a spreadsheet — and are designing campaigns to achieve narrow and shortsighted numeric goals. This reinforces the myth that the Web is best used as a direct-response and not a branding medium. Great creative will pave the way for a more holistic view of the Web.

Want to see what the last two takeaways from this notable event were? Check out Compete’s monthly post on MediaPost. And be sure to check out the Digital 180 channel to watch interviews with Summit attendees as they share their insights.

“Yes, I have tweeted.” If you’re a fan of Stephen Colbert, you’ll know that his boastful response to Meredith Viera earlier this month wasn’t phrased exactly that way, but it’s clear that America is tweeting along with him.

So, how many people are using Twitter? According to Compete data, 14 million people visited twitter.com in March, a 76% increase from February and a whopping 14 times more than March last year. And this doesn’t count the twitterati who rely on software apps like TweetDeck or Seesmic. The site already attracts more people than Ticketmaster, WSJ and LinkedIn, and the term “Twitter” had more queries than “American idol” and “IRS” across the top search engines last month. Like its social media predecessors, Twitter has captured the attention of consumers — and marketers have to play catch-up once again.

Given this explosive growth, is there any doubt that brands will try to tap Twitter as a marketing tool? But therein lays the challenge: marketers haven’t encountered anything like Twitter before. Despite its large user base, the underlying mechanics of Twitter are really about being atomically small. As a marketer, how can you hope to drive sales or create a branded experience when you’re faced with a 140-character limit and a massively fragmented audience? How do you attract a following? How does it influence your other marketing programs? And how do you know if your efforts are creating ROI?

If you’ve read my other submissions to Metrics Insider on Moneyball Marketing, you’ll know that I am a big fan of marketing that starts with a specific outcome, and then employs creative tactics and new metrics to measure progress and iterate along the way. And in this sense, Twitter is a great tool. While many people are content with Twitter’s soft ROI impact (like seeding and/or listening to conversations about your brand), we are starting to see examples of Twitter’s hard ROI impact, too. Southwest Airlines and JetBlue are tweeting promotional offers to followers, and Dell is probably the first company to achieve $1 million in sales exclusively through Twitter. And you can be sure these brands are taking what they learn from these campaigns and informing the rest of their marketing.

My personal favorite example comes from American Express, specifically its OPEN Forum. The OPEN Web site combines professional editorial, consumer-generated content and product marketing. To tap Twitter, American Express co-opted the popularity of its guest bloggers like Seth Godin, John Battelle and, in particular, Guy Kawasaki, ( who wrote about Twitter on the OPEN Forum site just last week).

To see exactly how American Express and OPEN Forum are excelling with their use of Twitter and getting measurable ROI, check out Compete’s monthly post on MediaPost.

In my post last month, I contrasted swing-for-the-fence Powerball Marketers from companies that follow a scientific, Moneyball Marketing discipline. The quick summary is that Powerball Marketing is analogous to gambling, and unfortunately many companies continue to make big bets without investing in data or techniques that could improve their odds. Moneyball Marketers, on the other hand, represent a new breed of analytically driven, outcome-oriented practitioners who use new metrics and game plans to consistently beat their competition. While some readers took issue with my criticism of Denny’s “Free Breakfast for America” campaign as pure Powerball, no one disagreed that changes in technology and consumer behavior make relying on conventional marketing wisdom a career-limiting endeavor. To that end, this post will focus on what companies can do to become Moneyball Marketers.

In his book, “Moneyball: The Art of Winning an Unfair Game,” Michael Lewis describes how a handful of Major League Baseball general managers have succeeded in creating championship-caliber franchises despite substantially smaller budgets and supposedly inferior players. My view is that the approach these managers are taking is directly relevant to what marketing managers need to do. In my assessment, there are three skills that companies need to develop in order to win consistently.

Start with quantifiable outcomes. I continue to be amazed by how many agency personnel think that achieving a large number of impressions is the primary measure of a campaign’s success (a fact I have been exposed to when judging industry awards). In my view impressions, as well as reach and frequency, are a simple input into the marketing equation. Outcomes matter more, and if you can’t quantify them, then they don’t count. What are some good examples of outcomes? How about “grow 10% each quarter” or “increase customer retention five percentage points by the end of the year?” Defining great outcome statements upfront is the critical first step in marketing planning — and when they are quantifiable, they establish clear success criteria for your agency and media partners. Point: Don’t invest resources in a marketing program until the desired outcome is identified and you can connect the dots from program execution through to success.

Use new metrics based on new data. Data can be a blessing and a curse; in the end, the determining factor is knowing what to measure. In baseball, sabermetrics has emerged as the new math, complete with new data and metrics. “Run production” is the number one performance measure, and old school metrics like batting average don’t predict run production as well as innovative new metrics like on-base percentage and range factor. Similarly, conventional marketing metrics like purchase intent (collected via surveys) are no longer adequate when we can use consumers’ actual online shopping behavior to better calculate the brand and sales impact of a particular campaign.

Like sabermetrics, clickstream-based marketing measurement has proven to be a better measure of consumer purchase behavior than the conventional techniques it is now replacing. The best example of this may be in the auto industry, where consumers’ online shopping activities have been translated into a whole new class of demand, conversion and shopper quality metrics like cost per shopper, shopper conversion rate, and reverse cross shop. As a result of these new metrics, auto makers now have a better understanding of how their marketing is performing, and precisely what they need to adjust in order to hit their monthly and annual sales goals. Point: Discard old-school data and metrics in favor of rich, new clickstream-based analytics.

To see what other skill Moneyball Marketers like ING Direct and Hyundai possess, check out Compete’s monthly post on MediaPost.

February marks the slow transition from pro football to Major League Baseball, and while dissecting Superbowl advertising and Theo Epstein’s off-season maneuvers, my thoughts gave way to a new view of marketing in 2009. I’ll characterize it this way, “There are two kinds of marketing executives in the world – Powerball marketers and Moneyball marketers.”

Powerball marketers cross their fingers and hope for great outcomes
Take the Denny’s Free Grand Slam campaign, an effort to drive trial and traffic for the restaurant chain. The number of people who visited dennys.com increased twenty-fold immediately after the Superbowl, but consumer interest since then has receded all the way back to pre-advertising levels.

Can a single Grand Slam be so remarkable that consumers remember to choose it over closer, more familiar alternatives? This seems like a big bet with Powerball odds.

Moneyball marketers start with data and then engineer the outcomes they want
Moneyball is the opposite of Powerball. The basic concept is that the conventional wisdom about creating championship-caliber baseball franchises is patently wrong and that several less familiar statistics can be used to predict success.

Want to see how Hulu has become the moneyball advertiser of early 2009? Check out the first of Compete’s monthly posts on MediaPost.