Ad Gurus Find The 'Real Value' Of Online Advertising Remains Elusive

Geoff Ramsey of eMarketerNEW ORLEANS -- What's the real value of online advertising? According to a panel of experts debating the question during the opening day of the American Association of Advertising Agencies media conference here Wednesday, it's still largely undefined, because the proper metrics haven't been put in place to measure it.

Asked by eMarketer CEO and moderator Geoff Ramsey what single word best defines the state of online measurement, the five-person panel yielded five divergent responses:

Copernicus Chairman Kevin Clancy: "Incomplete."

Interactive Advertising Bureau Director of Research Joe Laszlo: "Confusing."

Nielsen President Jim O'Hara: "Enigma."

Mediasmith CEO Dave Smith: "Inadequate."

Marketing Evolution CEO Rex Briggs: "Disconnected."

What they all agreed on is that there still is too much confusion surrounding the bounty of online metrics and data, and that nobody has managed to put it together in a way to produce scalable, actionable insights for planning and evaluating online advertising buys.

"There's a fine line between being the most measurable medium and the medium with the most measures," quipped the IAB's Laszlo.

Mediasmith's Smith also implied that too much attention has been focused in the wrong areas, and they tend to be the ones bearing the most abundant and easiest-to-harvest fruit, like online search.

"I think search is doing a good job of taking a disproportionate amount of the credit," Smith charged, adding: "It's amazing what they've done. They've sold a lot of people that the only thing that matters is the last click."

The real opportunity, Smith said, was to develop "algorithms" and tools that will finally make it feasible for advertisers and agencies to understand the precise role that different forms of online advertising have in the overall marketing funnel that ultimately leads to a click of action online.

Asked to rate the quality of online measurement on a scale of one to 10, with 10 being the best, the consensus among the panelists was that it was a "three or four."

Copernicus' Clancy said that's actually not surprising, given that the advertising industry still has not figured out how to leverage better-known and longer-term tools developed to measure the effects of traditional media.

Clancy cited a recent McKinsey study, which found that only 20% of advertisers use the tools they currently have available to them to measure the "return on investment" of traditional media buys, even though tools such as econometric models have been around for more than 15 years.

"The question is, when is the industry going to move?" Clancy asked. "The industry hasn't moved, with respect to traditional media, that much."

10 comments about "Ad Gurus Find The 'Real Value' Of Online Advertising Remains Elusive".
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  1. Roger Caplan from The caplan group inc., March 5, 2009 at 9:25 a.m.

    Ad gurus have NO idea of what they are talking about, their concern is they are getting left out of the profit side of search. More money for them in the traditional model. Remember to always follow the money. Ad Gurus think of themselves first and the client second! Search done correct is a very cost effective tool to find, get and retain new customers.
    The Rog

  2. Joe Fredericks, March 5, 2009 at 9:34 a.m.

    Analytics remains a problem yet to be solved. And, once it is solved, it will change the way buyers and seller value online display advertising. Understanding that the lead which is fulfilled by Search is actually generated in display remains elusive for now, but with the coming tools and technology of ad exchanges, this will improve dramatically. Online display advertising will be seen as more valuable to advertisers and improve CPMs for inventory in which insight and analytics of the exchange are available.

    Joe Fredericks (http://www.adexchanger.com)

  3. Tiffany Lyman Otten from Tiffany Otten Consulting, LLC, March 5, 2009 at 10:16 a.m.

    All of this is true (the divergent opinions), but one thing I encourage people to keep in mind that just because it's online, and because we can "see" a click, it is still **ADVERTISING**.

    When you talk about print ads, TV, trade show attendance, billboards, or any other non-online avenue, the inability to measure completely seems a non-issue, or at least not as severe.

    Hasn't anyone considered the fact that it's not the tactic, but what the tactic is working for? i.e. just because it's the web doesn't mean that it cures all of the metrics issues that are inherent in advertising. I've heard plenty about the Google Last Click Phenomenon, where people were finally becoming "on to something", but with everyone in fear of the economy, we're scrambling to make something be something it's not.

  4. frank vertolli from Net Conversion, March 5, 2009 at 11:10 a.m.

    I don't know what they expect. Online is definitely not perfect, but it is far more trackable than traditional media has ever been. Update and use traditional measures, add new measures and evolve. This panel sounds like a bunch of old school thinkers.

  5. Michael Mcmahon from ROI Factory / Quick Ops, March 5, 2009 at 11:10 a.m.

    The value "remains elusive" as compared to WHAT?

    I find the comments from the "gurus" to be ridiculous. Online advertising provides more opportunities for measurement and analysis than any other form of media, period. One cannot begin to compare the opportunities for analysis and optimization using online tools like frequency caps and multi-variate testing to traditional make-believe "metrics" such as reach, frequency, and print pass-along.

    Media Post recently reported that less than 50% of online advertisers analyze their effectiveness. Misguided "gurus" such as these gentlemen only serve to confuse and confound marketers who could be testing and learning now, rather than waiting for some pie-in-the-sky magic online metric. Keep telling your clients that online measurement is "incomplete", "confusing" and "inadequate"; we'll use the data to help our clients kick your clients butts!

  6. robin kent, March 5, 2009 at 1:42 p.m.

    Are these the same people who were frightened to have accountable measures for traditional media?

    When I first came to America billions of dollars were spent on TV ads without any accountability at all. It seemed as if the advertisers, media buyers and TV salesmen liked it that way. If you're not accountable you can play the big swinging dick all day long.

    One day someone will put a number on the wasted TV dollars. But in the meantime while searching for the holy grail of internet metrics, don't continue to under invest in the net. It's the future.

  7. Rob Perrier from Adometry, March 5, 2009 at 1:51 p.m.

    Agreed that Search measurement appears to be en route to maturity, but I believe that is due to a combination of a couple things; the measurements for direct response are more obvious, and a structure for branding metrics existed (and so defaulted) to similar measurements from traditional media. This has unfortunately left us with a surplus of those faulty measurements mentioned in the article.

    The discussion needs to not only turn to better algorithms, but to better shaping of the metrics. The data available and its uses are potentially mind-bending. More algorithms without informative and relevant output for those who are most likely to use the information (media planners, CMO’s, CFO’s) accomplishes nothing.

  8. John Grono from GAP Research, March 5, 2009 at 8:59 p.m.

    Well I think a few of the "ad gurus have no idea" responses have shown a few hands. FINALLY, some of those in the industry have had the kahunas to stand up and say that online measurement is a mess - and they get pilloried and told they have no idea.

    To that I say, those who think things are rosy in the world of online measurement are deluded.

    As just ONE example, uniques are over-reported by many orders of magnitude - for example in Australia with a 21.5 m population of which around 80% are online, we end up with 42m uniques! And you expect me or any advertiser with a scintilla of common sense to believe that! Pull you heads out of the sand and admit that some SERIOUS work has to be done to sort these issues out!

    The focus on 'last-click' is a serious concern as well. That is akin to saying that the check-out operator in Wal-Mart is the most important link in a CPG advertisers marketing campaign. C'mon - get serious!!

    Sure online is the most 'countable' medium - but certainly less 'accountable' than the traditional electronic brodcast media are (and rest assured they still have some way to go !)

  9. Cecelia Wogan from Google, March 6, 2009 at 3:31 p.m.

    1. Michael McMahon = kahunas.
    2. Test and iterate has been the only way we have made progress over the last 10-15 years in this space (and longer in the Ad industry) and the notion of perfection is killing humanity much less preventing growth in measurable advertising among old-school clients, etc.
    3. It amazes me that, like a lunar New Year repeats itself, we're back to the year of data and accountability. This time the plea of ignorance of how to accomplish it really just elevates those who haven't been doing their homework all this time. Stunning data points from Geoff R and McKinsey re: 80% of senior marketers continue to make budget decisions subjectively so their plea falls hard on unsympathetic ears.
    4. Nonetheless, something needs to change from good data points that offer reasonable guidance to something that shifts the earth on its axis -- packaging up that information in such a way that it wields powerful psychological influence if we want to see real shift. It's the data-oriented folks who must bear that responsibility.

  10. Kevin Pike from Kevin Pike, June 4, 2009 at 10:43 a.m.

    I COULDN'T DISAGREE MORE!!

    Because they have "CEO" in their title doesn't make them right. I bet they have traditional marketing bias - I mean backgrounds - and don't even look at Adwords or Analtyics reports. Ask anyone that actually does online marketing and it not rocket since.

    I bet they are smart people, I would be happy to teach them how to measure and adjust online ads for better ROI in under an hour if they need my help.

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