Branding And ROI: A Symbiotic Relationship

More often than not, the discourse about branding and ROI in the online advertising industry presents them at odds with each other. The image that comes to mind is one of two tigers fighting over an available antelope (which in this case happens to be grazing on a green grass full of advertising dollars.)

However in the interactive era, the relationship between branding and ROI doesn't have to be a Darwinian, "I win, you lose" relationship. Rather their interplay can be viewed as a symbiotic one -- symbiosis of course referring to the mutually beneficial relationships between different organisms in the universe that allows them to flourish.

There are many examples of symbiosis in nature. Take the example of the shrimp and the goby fish. The shrimp digs a hole in the ocean floor, which it shares as a home with the goby fish. In return for the dwelling, the goby fish alerts the blind shrimp to approaching predators many times a day for years at a time (or presumably till the lease runs out).



But can the advertising world take a cue from the larger world and make branding and direct response campaigns converge at a junction of symbiosis? After all branding campaigns have traditionally relied on a "broadcast" approach, while direct response campaigns are heavily focused on garnering response from a targeted audience.

Remarketing allows for branding and ROI campaigns to come together in a mutually beneficial way. In a remarketing campaign, the advertiser receives consent from the consumer to be contacted through a targeted advertisement. The advertiser then engages the end consumer in a series of communications with an eye on maximizing lifetime value.

Some of the best online campaigns in recent times -- the 2008 Obama Presidential email campaign, the Dell community site, the JetBlue Twitter forum and the Coca-Cola rewards program -- have used remarketing both to drive branding metrics and improve ROI.

Remarketing provides the brand marketer with a profoundly different method to engage the end consumer and improve awareness, recognition and recall metrics. Instead of broadcasting a message to a wide audience, remarketing allows advertisers to deliver relevant branding messages in a more targeted way. For example one of our travel clients sends information-rich messages to consumers that are in the initial stages of planning their vacation. In addition, they send destination specific promotions and discounts to people who are further along the sales cycle and looking to buy tickets. By enhancing message relevance, this travel company posted record branding metrics in 2008.

Remarketing also enables marketers to increase ROI. A 2008 study asked marketers which media enabled them to generate the most returns on their marketing investment.

The winner?

In-house lists were rated as the most effective medium by a wide margin. It does appear that when it comes to increasing marketing ROI, a bird in the hand is definitely worth more than two in the bush.

In fact, in-house lists required far lower budgets and delivered higher returns than both paid search and banner ads, which is probably the prime reason why more than 90% of marketers surveyed reported a heavy use of email to communicate with their consumer pipeline.

But just how can marketers generate greater ROI from their in-house lists? They can focus their efforts on two key fronts:

1. Growing in-house lists in a cost-effective manner: Advertisers can grow their in-house databases by deploying advertising campaigns purchased on CPM, CPC and CPL pricing models. The industry is already moving away from CPM advertising. In the same industry study referenced earlier, less than 15% of marketers surveyed said that banners were generating a good ROI. The trend held true even for rich media banners, which were rated poorly in terms of performance by a majority of the respondents.

Luckily for advertisers, today they can easily scale their acquisition campaigns from a wide publisher universe using CPC and CPL pricing models. That said, our industry is always trending towards a greater ROI.

"The industry is moving towards CPL advertising," says Daniel Taylor, senior analyst in Yankee Group's Consumer Research group. "CPC pricing models are placeholders for CPL advertising," he says. "Advertisers only want to pay for very specific consumer interactions, and not for wasted clicks or impressions."

2. Getting the most out of their in-house lists: In addition to the campaign front-end, marketers need to devote more attention to backend CRM efforts. The good news is that this shift has already begun to happen. According to Datamonitor, the CRM industry is forecast to reach $6.6 billon by year-end 2012, growing at a compound annual growth rate of 10.5%.

Building qualified house lists in a cost-effective way will be critical to success in 2009. The degree to which marketers can remarket to their house lists successfully will help them boost branding metrics as well as increase ROI.

Let the symbiosis begin.

3 comments about "Branding And ROI: A Symbiotic Relationship".
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  1. Scott Brinker from ion interactive, inc., April 1, 2009 at 7:59 a.m.


    I've heard it said that the divide between ROI and branding dates back to the offline split between "advertising" people and "direct marketing" people. That those sentiments and perspectives have carried forward into the 21st century -- the "interactive era", as you call it -- is silly and bizarre.

    Absolutely agree that it's time for fresh thinking that seamlessly blends brand and ROI objectives. Symbiosis is a great way to frame it.

  2. Michael Mcmahon from ROI Factory / Quick Ops, April 1, 2009 at 5:27 p.m.

    I agree that in-house lists are an invaluable asset, and must be a priority for marketers. However, it seems your article goes astray from the brand vs. ROI argument when you describe remarketing. It is only possible to "remarket" in the way that you describe to someone who has already RESPONDED. The quote, "Advertisers only want to pay for very specific consumer interactions, and not for wasted clicks or impressions" implies that any impressions that do not lead to "very specific consumer interactions" are "wasted".

    Yet we all know that impressions that don't result in clicks or direct sales still have value. The traditional emphasis on "branding" objectives is simply a by-product of our inability to correctly measure the many various positive financial effects of advertising. How does one account for advertising's impact on a company's stock price?

    Improved conversion rates?

    Employee retention?

    In the absence of an accurate accounting for these "returns", the catch-all term "brand" evolved to describe the value that could not be directly attributed to profits generated by specific marketing expenditures. Digital advertising and its inherent closed-loop systems make it easier to measure more of the impact and to ascribe value, but improved accountability should not be confused with better performance.

    As we continue to develop tools to measure the full impact of all forms of advertising, the 50% of advertising dollars that have been "wasted" will be more accurately attributed to the bottom line ROI, and the brand vs. ROI argument will fade way.

  3. Rob Perrier from Adometry, April 2, 2009 at 6:56 p.m.

    This somehow still misses the point of including brand advertising as part of the total picture. What is really needed is a full set of transparent, ROI metrics that whenever possible are not sampled. Anything else leaves branding campaign metrics falling well short of search metrics. Those managing display budgets should be demanding the same level of detail available to their search counterparts.

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