The Online Industry Answers its Accusers
In the minds of many buyers, advertisers and agency traditionalists, online advertising has not yet made its case. When we asked some of them recently why they weren't spending more online, the responses read like a familiar rap sheet. The litany of charges against new media's complexity, performance measurement, and effectiveness compared to other media continues to stick.
Yet, when we posed these accusations to other agencies and vendors, we discovered that the industry had beefed up its briefs substantially since 1999, when smug dismissal was the default reply. In fact, with case studies of success at hand, and much better research on the tips of everyone's tongues, the online ad segment may be ready to turn this trial around and present clear and irrefutable evidence that it deserves a much larger share of the media mix.
Objection: Online Results Really Don't Compare to Traditional Media.
"Don't confuse response with results," says Nancy Haynes, communications director at Collins, Haynes & Lully Advertising. After twice buying into a costly AOL and Time Warner cable bundle for a debt-servicing company and a home builder, "both clients received plenty of gross impressions and even click-throughs, but the actual results were dismal," she says.
And The Industry says...
A lot of clients got burned by online buys because "they think of the Web as a black box that spits out sales," says Paul DeBraccio, CEO of InteractiveRevenue.com. "They run on broad sites and do not carefully use the targeting tools available, and then blame the medium."
"Test, test, test," chants Groom. Avoid the low-value inventory that media like to bundle into deals, and use psychographic targeting to bring ads to the right prospects more efficiently. Then optimize, optimize, optimize. "Your trend line should improve over time," Groom says. "If you are running a campaign for more than five to seven days and you don't take action on the creative and media to improve performance, you aren't doing your job."
And showing clients where, how, and how well the Web extends reach and touches people where other media can't is job one now, says Chris Schroeder, CEO and publisher of Washingtonpost.Newsweek Interactive, who is assembling scores of case studies of strong results from his online sales. When a Mid-Atlantic tire and repair shop ran its only ad campaign on WP, users could set up in-store appointments from the Web. In the first two weeks of the campaign, 60% of those sign-ups were from people who had never visited the store before. "If we have evidence that we are matching buyers and sellers, then we want to be measured under those criteria," says Schroeder.
And as with all other media, the conversions from the Web do not come right away, says Scott Spencer, director of product management and publisher solutions at DoubleClick. While CTRs are not improving, "we've seen that view-throughs have risen every quarter in 2002, from .36% to .53% [+47%]," he says. He believes this is "the billboard effect" of larger formats and better creative making Web ads work on our consciousness more like offline media. "The accountability now exists," he says.
Objection: Online is too Complicated to Plan and Buy.
Online is so data-intensive that it is inordinately time-consuming to buy and evaluate, let alone tweak. "You could optimize 24/7," says Edward Kim, interactive media manager at UNUS (Unilever). "If you are spending a couple of million dollars, how much time can you devote to evaluating online and its performance? How do you make this simpler to use for marketers? How do you stop this madness?"
And The Industry says...
No doubt the Web pays a price for its own strength and greater technical sophistication. "I will not argue that there aren't a few more moving pieces," says Modem Media's Tom Zawacki.
But if the agency does its job insulating the client from the Web's messy wiring, then execution should be no harder online than anywhere else. "The truth is that traditional media are all as different from each other as the Net is from them," says DeBraccio. "Network TV is based on Nielsen data, spot TV on local data, magazines on MRI, and tech books on Intelliquest, and so on." Better agencies should already have a good database of media partners and their demos and performance track records, so placement should be simpler now.
And consolidation within Web media and the infrastructure has further simplified media buying. The morass of ad serving companies has shaken out considerably, and by bringing multiple technologies and deployment solutions under one roof, companies like DoubleClick and 24/7 are helping to rationalize the process for buyers. Likewise, the range of plausible vendors is shrinking as Web traffic continues to coalesce around fewer brands and the media themselves merge. For instance, in putting together one of the largest campaigns in Web history, Avenue A's Quimby was able to reach 90% of the Internet audience mainly through buys at only 20 of the top destination sites. "Planning, measuring, evaluating, and optimizing were indeed less complex than the offline space," she contends.
In its award-winning campaign for Delta Air Lines, Modem Media achieved simplicity by focusing the client only on the data points that directly impacted goals. "Of all the wealth of data you can think of, we were really looking at five variables," says Zawacki: response on messaging, cost per acquisition, abandonment rates, and which media gave the highest-value customers. In a good test and optimization plan, "you are laying out what those variables are up front and deciding which are going to drive effectiveness, and clients sign off on those," he says. With a plan in place, the process is less cluttered for everyone. "With Delta we optimized every two weeks and looked at those five variables," says Zawacki. "These are very simple direct marketing tactics and the data is not complicated as long as you plan for them up front."
Still and all, with PVRs, ITV, and even further media fragmentation occurring on all platforms, it is more likely that offline will start looking a lot like online.
Objection: Nobody Ever Notices Web Ads.
With pathetic click-through rates and little in the way of moving or memorable online creative, the Internet does not seem to be an effective ad platform. Sizing, positioning, low broadband penetration, and the expense of rich media make it difficult to connect with an audience that does not want to be bothered in this task-oriented environment anyway. "On the Internet, the consumer needs to make a conscious effort to find out more than a few words about a product," says Nancy Haynes.
And The Industry says...
Not only has the creative improved demonstrably in the past year, but the better campaigns directly address some of online advertising's perceived weaknesses - low response, lack of emotion, and intrusiveness. With the wider palette of rich media, sites like CBS.MarketWatch let a Budweiser bottle roll out its front page and then fill a skyscraper unit with brew. The message is both unavoidable and too entertaining to resent. As a result, "we've seen a lot more traditional marketers wrap this thing up into their more traditional campaigns," says Scot McLernon, EVP sales and marketing at CBS.MarketWatch.
Creativity is a hedge against intrusiveness, says Doug Jaeger, group creative director at TBWA\Chiat\Day, whose memorable Absolut series of clickable, playable ads show that the Web can "live up to a 20-year print campaign. People are beginning to want to interact with us as we build more engaging experiences."
More to the point, this higher level of creativity is working, according to EyeBlaster, whose technology sends spiders across our browsers (Grey NY's Eight-Legged Freaks campaign) and GameCubes crashing through our monitor screens (Starcom IP's Nintendo campaign). Average CTRs for EyeBlaster ads is an astonishing 5.4%, and higher in many verticals, says Gal Trifon, CEO of EyeBlaster. Nor are these fancy formats expensive to build or viewable only with fat pipes. Many are economical Flash units that Trifon says his servers can amortize across six different formats. "[The] platform guarantees that narrow-band users can view rich media ads up to 100K."
And yes, you can grab the head and heart online. More advertisers are using the NYTimes.com's Surround Sessions to construct sequential ads that tell a story, says Craig Calder, VP of marketing at New York Times Digital. Team One's successful Lexus/Minority Report campaign demonstrated how simple banners could begin telling a story that users can pursue at wholly immersive landing sites. And engaging productions such as a full-screen slide show trailer for the film The Pianist are disproving the old saw that an Internet ad can't make you cry.
Objection: There Are Too Many Ad Sizes and Formats To Create and Buy For.
"From a strategic standpoint, the most frustrating aspect of online media is the lack of standardization," says Eric Blankfein, VP and director of media planning at Horizon Media Inc. With so many different ad units available to so many publishers, and different selections available from each, "it has become a game of matching the most common creative executions with a group of targeted sites that display and serve the ad," he says.
And The Industry says...
The trick with a young, evolving medium is to establish format standards that make the creative and media planning processes easier but at the same time leave room for marketers and publishers to innovate. More than 20 of the biggest online destinations, the AAAA, and now many agencies are getting behind the Internet Advertising Bureau's (IAB) recent Universal Ad Package proposal. While free to deploy other ad technologies as well, publishers would agree to carry four basic formats (160x600, 300x250, 180x140, and 720x90) so that marketers can count on being able to create and place these sizes at most sites. "Eventually, one of these ad sizes will appear on nearly every page of the Internet," say Greg Stuart, president and CEO of IAB. "That's the idea."
Alas, it won't be here tomorrow. After opening the proposal for industry comment last December, Stuart says the IAB now has enough feedback (overwhelmingly supportive) to finalize the guidelines in the next six months. The early returns suggest that the final ad dimensions will be very close to those originally proposed. Still, with the cost and time involved in refitting content publishing platforms, even Stuart suspects that it could take up to two years for the Universal Ad Package to be, well, universally packaged.
Some consolidation and standardization of formats is occurring naturally already. DoubleClick reported in January that 70% of online ads placed in Q4 2002 conformed to one of the IAB's (albeit diverse) standard sizes. Support is also consolidating around some of the more effective units, with skyscraper placements doubling in 2002 to 8% of volume and large rectangles up fourfold.
More to the point, innovation can take place within standardization. Even in designing the memorable and highly interactive Absolut ad placements from TBWA\Chiat\Day, Doug Jaeger says, "we tried to limit the sizes to increase the 'production value' of each ad ... resizing can really kill good creative."
NYTimes.com has had tremendous success with its breakthrough Surround Session programming, letting advertisers like American Airlines hit every site visitor with multiple ads in various formats throughout their stay, with about 400,000 users coming in per hour during peak dayparts in an early June campaign. The scheduling and execution were unorthodox, yet Surround Sessions appeal to major advertisers and agencies in part because they collect standard ad sizes into a novel user experience, says Craig Calder.
Ultimately, says Stuart, marketers, not publishers, are driving the Web's addiction to non-standard sizing. "We have to get away from marketers' each wanting to be unique."
Objection: Online Isn't Measured Like the Rest of Media.
Without a traditional set of performance tools that can compare online numbers with offline, the Web won't get its share in the media mix. "There needs to be a more centralized way of measuring the success and response of campaigns," says Blankfein. And it needs to be a reach/frequency measurement that integrates neatly with TV and print in order to justify moving budgets, says Edward Kim, of UNUS.
And The Industry says...
The Web has metrics for demonstrating campaign results in branding, direct response, and transactions "that in some ways may be better than they would be offline," says Nick Nyhan, president of Dynamic Logic, "but reach and frequency is the remaining gap, and that is being closed."
Chris Schroeder says that his metrics are even more precise than offline. For one large software client, post-campaign branding research from Washingtonpost.com showed that banner exposures were best at attaining the 75% lift in message association, while the big box units were most successful at raising purchase intent 22%. "If we can show true independent brand lift, then I want to be treated the same way as TV," he argues to clients.
Within the last six months, products like Nielsen//NetRatings' Web RF and Atlas DMT's GRP and Reach Forecaster gained substantial traction among agencies and clients, says Tom Zawacki, VP of the customer experience group at Modem Media. "They allow us to work with the traditional agency, to show that director what the RF curves are going to be across our media channels."
"Web RF lets you create a schedule exactly as you do for print and TV," says Manish Bhatia at Nielsen//NetRatings. Better still, the company is about to fuse the online panel with the Nielsen TV panel and print metrics in a partnership with Scarborough. This "multimedia RF tool" will present a unified data set that calculates the incremental reach and frequency the Web investment adds to the mix. "This tool tells me best how to spend my money," Bhatia promises.
Remaining to be done, and critical to proving the Web's worth, is quantifying the value of brand engagement Ñ those 670,000 people who watched the Terry Tate Office Linebacker ads online in the first three days after the Super Bowl, or the 25,000 onliners who submitted TV ad scripts for iDeutsch's Snapple promotion. They will be slow in coming, but the Web also needs better numbers to demonstrate the obvious to clients, says Josh Rose, SVP and director at iDeutsch Los Angeles: "that more involvement in your brand is a good thing."
Of course, the Web's dirty little secret may be that clients already know how well the numbers compare to other buys, which is why they resist telling the publishers. Bergdorf Goodman stopped sharing its sales results from an online campaign at Conde Net's Style.com. "All they will tell us is it was huge," says Sarah Chubb, president of Conde Net. MarketWatch's Scot McLernon half-jokes about his tight-lipped advertisers: "It's either a competitive advantage or a conspiracy afoot that online marketing is a raging success and no one wants the others to know."
Objection: Online is Still a Risk Compared to Traditional Media.
Immature, inconsistent, and generally "risky" is how many clients, buyers, and even agencies still regard the Internet, and in lean times "accounts are lost daily and agencies have to be risk-averse," says GartnerG2 analyst Denise Garcia. "Most of our clients are staying away until they see someone else jump into online media with both feet," adds John Gumas, president of San Francisco-based Gumas Advertising.
And The Industry says...
The biggest risk of staying offline may be in missing your own customers, especially during the daypart when other media don't reach them, and even missing the opportunity to make those other "safer" media buys more efficient.
"Even if your competition isn't online, are your customers there?" Conde Net's Sarah Chubb asked Bergdorf Goodman (one New York store, no website). Forum denizens at Style.com gushed over the kinds of high fashion BG carried, so Chubb designed the store's first online ad campaign and a virtual store window where visitors chose styles and got called directly by a BG salesperson. "They did $100,000 of sales in the first three days," says Chubb. Now a true believer, this Web-averse client is pulling some Manolo Blahnik shoe styles out of the physical store to advertise exclusively online for two weeks. "It's kind of a beautiful thing," says Chubb.
The real risk is losing customers to a competitor during the daypart when eyeballs are not seeing your message in TV and print. Scot McLernon sees more cross-platform buys like a holiday Jaguar campaign that sought to follow consumers throughout the day: TV and print at night at home, radio driving into work, and then an intro and follow-up call-to-action units when they fired up CBS.MarketWatch over coffee at work. "It's really completing the circle, and more marketers are taking advantage of that large reach," he says.
"The Internet gets into trouble on its own, but it plays well with others," adds Josh Rose. The best case for this medium is how it enhances the rest of the media mix, how at TV's point of diminishing returns moving those dollars to the Web actually bolsters campaign efficiency. The forthcoming DoubleClick, Nielsen//NetRatings, and IMS Cross Media Reach and Frequency study makes good on that assertion, says James Hering, SVP and director of the interactive marketing research group at Temerlin McClain. In post-campaign analysis of Subaru and American Airlines campaigns, when just a small share of a budget moved from TV to online, "effective reach decreased slightly on TV but increased significantly online, because online is immediate and direct and available to 9-to-5 consumers," says Hering.
The best case for including the Web may be the ways in which it can optimize and make more efficient the costlier offline pieces, says Avenue A's Della Quimby. Within five days of the massive cross-platform MSN 8 launch, she could feed response data from online messaging back to the offline agency so that they could optimize TV, radio, and print buys. "That's the great value of the Internet," says Quimby.
Objection:Online Ads Do Not Drive Offline Traffic and Sales.
Mass retail and packaged goods brands continue to underspend online. Store chains stay away, "probably because they feel it does very little to drive in-store traffic," says Doug Jaeger of TBWA\Chiat\Day. "They have an online store and do marketing around that through barter deals."
And The Industry says...
In fact, online advertising may have a dramatic effect on in-store sales, because we have been underestimating how broadly and deeply shoppers use the Web Ñ and especially a client's e-commerce site Ñ to research all kinds of offline purchases. "This is not a 'halo effect' of branding, but a direct sales effect," says Clark Kokich, president of Avenue A, whose accounts include Best Buy, Nike, and Eddie Bauer. The agency has been developing metrics that track how online campaigns for multi-channel retailers not only drive warm and ready credit cards to their e-stores but may result in even more sales offline. "Every time we do it, there is a direct link, a direct impact," he says. Although the company is continuing to refine the correct methodology before releasing formal research later this year, recent tracking on one major retail account produced stunning results. "For every sale that the online advertising drove to the website through e-commerce, it directly drove an additional 4.6 sales through the store," he says.
And 2003 may be the year publishers also help retailers devise campaigns that exploit that undervalued link between online and offline. "One of the things we're going to do with clients this year is spend a lot of effort driving people to stores with things like printouts to bring to stores," says Sarah Chubb, of Conde Net. "It's going to be very important for us to have some tangible feel for what kind of influence we do have." The online/offline link may be even harder to dispute next year, when Nielsen//NetRatings partners with sister A. C. Nielsen "to tie our software with their panel and link online behavior and purchase experiences," says Manish Bhatia, SVP of product marketing at Nielsen//NetRatings. By the end of 2003, Nielsen will begin monitoring Web media exposure in 30,000 of its 64,000 panel homes and compare online exposure to offline spending. And if clients won't buy into Nielsen, then whom will they believe?
But retailers already know that many shoppers come to stores carrying Web printouts. "The only thing people haven't been doing is measuring it," says Kokich. Virtually all retail clients are increasing their online spends, he adds, but once they see firmer evidence of how this cycle works they will acknowledge the efficiency of the medium. Consumers making high-consideration purchases go to the Web to do research and make their brand decisions. "You need to make sure you are on their desktop so that they go to your website and not your competitor's," says Kokich.
After years of youthful arrogance the young turks of online have evolved into mature advocates of their position. In the court of media spending, hard evidence counts, and we were impressed by the number of case studies, solid research reports, and success stories the industry was marshaling in its own defense these days. No doubt, skepticism about the newest medium will wax and wane for years to come, and no one in the industry expects online advertising's share of the media spend to approach the enormous media mindshare it already enjoys among consumers for a long while. But if recent reports about increased online expenditures are correct, then apparently a stronger case now is being made among advertisers, albeit one juror at a time.