• by Steve Smith , Staff Writer @popeyesm, November 1, 2002

The simple, direct approach for integrating content and advertising. As ads get bigger, louder, and faster in that never-ending bid for consumer attention on the Web, another very different philosophy of online promotion may be taking hold. Call it marketing’s version of a Zen art — the philosophy that less may be more, that a more passive but giving approach to advertising in the end sells more goods more effectively than any number of interstitials, animated roll-overs, or Surround Sessions. At Meredith Interactive’s BHG.com, Purina Ralston doesn’t need dogs wagging and barking across the screen, because it may have something better than advertising — content ownership of the site’s Dog Lover’s Guide, predominantly objective editorial about caring for Fido and Co. created by Meredith for the underwriter. Likewise, at CondeNet’s Epicurious.com, Gallo pays for a regular wine column and newsletter by a noted critic, while Lexus provides an essential restaurant guide. An idea as old as ’30s radio and black-and-white TV is starting to take shape online as advertisers learn the art of the soft sell, the value of simply associating their brands with people’s “passion points,” and giving them more of what they come to the medium for — not more ads, but content. Some in the ad industry and publishing are looking to the age-old sponsorship format to lead the way out of the Internet ad depression. A longtime researcher into the effectiveness of the sponsorship format, Bill Harvey, CEO of Next Century Media, says, “Look at the Internet and how quickly it grew, then topped out, and its potential to grow again. If this true sponsorship thing is discovered and widely adopted it could be a renaissance in the Internet growth space and change everything.” Or maybe it already is. According to GartnerG2’s survey of the top media sites online, about 45% of ad revenue now comes from sponsorships. “They are one of the fastest-growing types of online ad sales,” says Research Director Denise Garcia. While as an overall share of online ad spending, sponsorships show a statistical decline from a high in 1997 of 37% to 26% in 2001, Andrew Sussman, CEO StudioOne Networks and chair of the Interactive Advertising Bureau’s Sponsorship Committee, says that when classified spending is factored out, sponsorship constitutes the fastest-growing category of online advertising. And because the very definition of online sponsorship is as slippery as they come, Sussman and others suspect that a good deal of sponsorship spending is not reported as such, and so the importance of this format online may be underestimated.

“It’s huge,” agrees Bobbi Halfin, managing director of Meredith Interactive. Sponsorships accounted for about 50% of her revenue in the first half of 2002 and are on track to make up 75% in the second. In fact, Halfin’s crew is enjoying great success by using new media to go really old-school, with items such as sponsored downloadable PDF recipe books for one soup company. “These are some of our strongest products,” she says. “They get very strong user response.” “[Sponsorships] really are where’s its going,” says Derek Oien, president, music and media group, Vivendi Universal Net, who is seeing 30% to 40% of ad sales coming from special sponsored content programs with clients such as Skechers at RollingStone.com and Pontiac Five at his network of music sites. “It’s a migration from banners to rich media to sponsorships.” They are also where the money is for publishers and agencies. Oien estimates that sponsorship deals involving custom content are selling in the area of $200,000 — way, way beyond the banner buy. What Is It? The size and scope of this model online, let alone its potential, is tough to calculate in large part because no one is entirely sure what constitutes an online sponsorship. “It seems when you say ‘sponsorship’ to a publisher, they come back with giving you a section of a site and a high rotation of ads,” complains Andy Simms, media director, AFInteractive. “That doesn’t seem like a sponsorship.” Although most advertisers and publishers use a familiar set of terms to describe the model (“integration,” “content ownership,” etc.), definitions range from a purist school, which sees it as a kind of custom publishing, to buying simple ad dominance on a page. Paul DeBraccio, CEO of Interevco, says it gets even worse: “We’ve been able to call something a sponsorship based on inserting an 88x31 button near the title bar. The standards aren’t there because we have done a terrible job as an industry with standards for anything.” In order to clarify definitions and terms as well as demonstrate the effectiveness of the format, the IAB’s Sponsorship Committee has begun a campaign to raise awareness, establish metrics, and propose best practices for a format that Sussman says “is so misunderstood that it isn’t accounted for in some interactive advertising revenue reports.” It seems likely that any IAB definitions will err more on the side of purity since Sussman and Harvey, who is conducting the initial research, are proponents of “true sponsorship.” In this model, “information or entertainment is brought ‘as a gift’ to the consumer by a sponsor where the gift is not tainted by the intrusion of sales pitches into the editorial content,” says Sussman. This soft, soft sell, the theory goes, does not change consumers’ perception of the product so much as it positively influences their perception of the sponsor, which in turn rubs off on perceptions of brands. To Poke or to Integrate The sponsorship trend exposes a growing schism in online advertising philosophy over whether bigger, louder, more intrusive advertising really constitutes the future of the medium. As users complain about ad clutter and pop-up fatigue, some in the industry are looking to sponsorship as a cure for what ails Web marketing. “We are starting to see more of a consumer backlash,” says Oien, “especially in the youth market. People are aware that someone has to pay the bill, but they prefer to have a little logo of an advertiser as opposed to being beaten up with a pop-up every four pages.” Harvey contends that Web advertising mistakenly adopted the scatter-plan approach to media buying from TV without considering differences in how we consume each medium. TV is about relaxing, a mode that tolerates interruptions, especially entertaining ones. But the Web is about finding, and “when you are in the middle of searching for something and get interrupted you are likely to feel annoyed,” he says. This medium may be better suited to the original sponsorship notion of radio and early TV, which conferred gratitude, or the “halo effect,” on the underwriter of important or entertaining programming. More than soft and fuzzy theory, Harvey and Sussman argue, hard and sure metrics demonstrate that while the intrusive eyeball-grabbing approach may raise brand awareness, it does not influence the critical set of “persuasion” metrics that are more predictive of sales. Sussman and the IAB are in the midst of a major study of sponsorship effectiveness, which will be reported by year’s end. Earlier, highly preliminary research by Harvey’s Next Century Media showed that online content sponsorships could lift purchase intent for packaged goods up to 93% among current users and 137% among non-current users. For more complex, high-involvement products such as autos, a sponsorship helped lift consumers’ willingness to consider a brand over 100%. Affinity and Interaction Metrics aside, many publishers and their clients are recognizing the unique power of the sponsorship model to satisfy a range of marketing goals. As it does offline, this method buys affinity, a deeper association between a brand and its audience. By sponsoring a restaurant guide at Epicurious, Lexus “wants to connect with their likely consumers at their passion points,” says Jennifer Cole, publisher. With 50% to 60% of revenues coming from the format, she says, “it is really growing for us with upscale brands, things like liquor and automotive, that are really concerned with brand image.” The client has re-upped for a second year. After last year’s involvement with tire blowouts on Ford Explorers, no one was more concerned with brand image than Bridgestone/Firestone. It devoted about half of its online ad budget to sponsorship, including a year underwriting Sussman and StudioOne’s DrivingToday.com. Compared to his own broad banner buy across other sites, “I think you get more bang for the buck,” says Michael Fluck, Internet and diversity marketing manager at Bridgestone/Firestone. A three-month test over-delivered by 25% on click-throughs to Bridgestone’s tire safety site. Not only were the CPMs lower, but “the impressions are more valuable, rather than throwing scattered banners. This is clearly an audience with interest,” he says. In fact, in the increasingly cluttered and raucous world of in-your-face Web ads — or all ads everywhere, for that matter — the greatest strength of the sponsorship model is its ability not to rise above the noise but move to the side of it. Sponsorships are especially attractive to advertisers who want to differentiate themselves from other brands on a site, a key reason why up to 80% of RFPs include some request to go beyond the banner, says Garcia. “In this far more cluttered and media-intense environment, that’s where the sell side needs to offer as a value proposition,” says John McManus, editorial director at Primedia’s Media Central and a member of the IAB Sponsorship Committee. “They really need to distinguish a value of programming that comes to an audience exclusively through a relationship with the underwriter’s dollars.” Sponsored content seems to work best with high-involvement items and complex purchase decisions: products for babies and pets, computers, cars, travel, and entertainment. SFInteractive’s Simms reports great success developing custom webcasts for Cisco systems that he distributed to multiple tech sites. “Even though it got low reach, it got really high response rates,” says Sims. Halfin’s building-supplies clients find it very effective to underwrite online planning tools for remodeling because it keeps their brand in the consumer’s mind during the protracted 18-month buying cycle for these products. “In normal retail, you have no way of doing that,” says Halfin. Indeed, she thinks that by sponsoring interactive tools online, with which users interact longer and more regularly than they do with editorial, “there’s a much higher level of involvement and brand association as a facilitator in accomplishing the user’s goals.” Measuring the Halo As with all things ad-related on the Internet, many complain about the lack of format and metrics standards in sponsorship. Of course, unlike banners and even rich media, the inherent amorphousness of a sponsorship does not lend itself to pixel counts and download sizes. Nevertheless, McManus thinks that at the very least, the industry should try to settle on a set of criteria about the relationship between a sponsor and publisher in sponsorships, “so that there’s clarity from the marketer’s standpoint and from the seller’s standpoint and from the viewer’s standpoint.” There also needs to be some agreement about the ROI expected from these programs. Nail is hopeful that the more sophisticated metrics now being deployed, such as Dynamic Logic post-campaign branding studies, will help demonstrate the format’s true value. Even better will be the emerging school of market mix modeling, which compares and contrasts consumer effects from different components in a multi-platform campaign. When it comes to sponsorships, “you can measure it,” says Nail. In fact, Harvey believes that since sponsorships have such a clear effect on intent to buy, in some cases you could calculate a solid ROI for clients. In the auto sector, for instance, consideration is worth one-sixth of the sale because research shows that car buyers consider six makes, test drive three, and then buy one, he says. In his study of sponsored and unsponsored versions of StudioOne’s DrivingToday.com, he found that 46% of viewers of the sponsor-driven content had a willingness to consider that brand in a purchase decision, compared to only 22% of the unsponsored content. “By getting 24% more into the consideration set, that’s predictive of raising sales,” he argues. Warm and Fuzzy in Hard-Boiled Times For all of its recent success and industry goodwill, the sponsorship format still faces tough challenges in a depressed ad market where media buyers want their ROI here and now. Selling the “halo effect” in this environment is a bit like extolling the benefits of slow-moving t’ai chi as a weight control method: It’s not an immediate connection. Even Harvey’s research demonstrates that sponsorship doesn’t improve the reputation of specific brands so much as it lifts good feelings about sponsors, and that in turn influences a consumer’s purchase decisions. “OK, so you changed that attitude, but does that ever really amount to sales?” asks Nail. “It has a very oblique effect.” Not surprisingly, management is not buying oblique these days. “Branding in a tough economy is a tougher sell to corporate management,” says McManus. “It’s hard to say that even though sales are tracking down, branding is increasing. Sales ROI is the metric that management looks for.” Sussman admits, “It’s a longer sales cycle because the investment tends to be larger and it is more co-creative.” Moreover, even the ancient, gentler Zen of sponsorship has to measure up to Internet-age accountability. Both agencies and publishers say that most of these deals still contain some front-end measurement, either click-throughs to branded landing sites or consumer names and addresses. If the sponsorship format is going to flourish online, it will have to be within the direct response expectations the medium already has built. You have to identify goals and manage expectations especially well in a sponsorship, says Oien. He uses experience to tell clients how many names they are likely to capture in a typical contest or the sort of CTR to expect if the goal is driving traffic. “Sponsorship has to come with reach that pays out,” Sussman says in agreement. Nor is everyone in the industry ready to return to those thrilling days of yesteryear, sponsored by your good friends Tide and Velveeta. The custom publishing model or sponsorship “gift theory” that some are embracing has shown its credibility weaknesses in magazine advertorial, says DeBraccio. Contemporary, savvier consumers believe that “even though [sponsored] content could be altruistic, it is going to be self-serving.” Among the RFPs and business plans he sees, the future of sponsorship is more along the lines of current TV, where a client may dominate but not actually contract content. “My definition of a sponsorship is 50% or more of the impressions in a given area and sponsorship ID or a creative unit that is integrated with the section.” In the end, brands want to be associated with high quality, pre-existing content, not necessarily make it. Moreover, direct response is still the Web’s chief selling point among buyers. Even in sponsorship deals, DeBraccio says, “they are looking for back-end conversions or name acquisitions.” Harvey says that the brand advertisers are starting to see the light, however. Procter & Gamble was impressed enough by his research to instruct its brands to explore sponsorship opportunities online, and Bounty towels is sponsoring one of StudioOne’s content projects. Ultimately, the fate of online sponsorship may rest with how the industry as a whole handles the even larger media issue of clutter and intrusiveness in advertising. McManus sees a future for the approach in part because it could be an antidote, albeit perhaps an ancient herbal one, to these contemporary advertising maladies. “If there is a clarity of definition and there is a different value for a marketer to secure a sponsorship relationship with a content franchise, then there is a clear upside to that, because of the trend of fractionalization [in audiences] and overexposure to commercials.”