Commentary

Total Time Spent Online Is Not Indicative Of Online Media's Worth

David Meer, chief research officer at Enfatico, observes many frustrated and idealistic people in the online media business. Particularly ones that persistently point out the discrepancy between time and money spent online: "Despite the fact that people spend around 30% of their media time online, advertising online captures less than 10% of media budgets-and the gap has persisted over the last several years."

Which begs the question: Why do people automatically and narrowly apply time spent in a given channel as a proxy for value and justified ad dollars? It boggles my mind. In terms of branding and customer acquisition goals, I will gladly pay a lot more for one channel with almost no time spent versus one with a lot of time spent -- if the former were to perform better against my objectives. And objectives and their achievement should factor in return on ad spend, including profitability to my business. It's that simple.

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So what best explains this lopsided online-offline equation? Meer says that both traditional and online advocates tend to be parochial: "We know that online allows us to measure conversion and business results with brands immediately and with more specificity than any other medium. Importantly, it also enables two-way conversations between customers and brands. But TV remains a powerful communications vehicle, one that consumers still embrace. What's missing so far is better knowledge of how the two work together. When marketing is truly integrated, offline and online work together seamlessly, with robust analytics to make sure the allocation between them leads to the best outcome."

Meer's right. Advertisers are stymied by their inability to understand and properly attribute the impact of individual and collective advertising investments toward predetermined goals. When that happens, we'll see an adjustment to a more enlightened media cost-to-value ratio.

But beware: in the near term, greater value may be reinforced with offline channels, not online. But in the mid- to long term, the dichotomy of online versus offline will blur and disappear -- if for no reason than because the world's going digital. Theoretically, more media on a single digital grid (or compatible ones) will yield centralized, smarter marketing investments.

What do you think?

7 comments about "Total Time Spent Online Is Not Indicative Of Online Media's Worth".
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  1. Cesar Brea from Force Five Partners, April 10, 2009 at 12:49 p.m.

    Max,

    I agree with your premise that over the long run, as offline and online blur, this apparent "market inefficiency" goes away.

    Meanwhile though, it's useful to consider why it persists, because the opportunities for advertisers and the firms that serve them are at the evolving margin of the problem -- parsing when the more expensive / inexpensive channel is or isn't worth it, or when the focus should be on the sum rather than the parts.

    For some folks, whose pitches (say, for beauty products) depend on reaching people more emotionally, TV is still a more dominant channel for reaching people in "lean-back" mode. For others whose products engage the left-brain more (e.g., refinancing a mortgage), online channels catch and engage them better when they're "leaning forward".

    Autos are a good example of a sector where online spend is ramping up fast because the need to appeal to both mindsets is more balanced. These are advertisers for whom "experience marketing" -- designing and optimizing spend across multi-channel campaigns -- will be especially relevant, and will push their organizations and agency partners to move toward the world you describe (see also this related post: http://www.octavianworld.org/octavianworld/2008/03/the-revolution.html).

    Or, as William Gibson put it, "the future is already here. It's just not very evenly distributed."

  2. Mark Walsh from mediapost, April 10, 2009 at 1:08 p.m.

    Max-
    There's no question the 30%/10% gap between time spent and money spent online has become an article of faith in the online ad world and an assumption underlying aggressive projections for Internet ad growth.

    In an interview with BusinessWeek just this week, Facebook COO Sheryl Sandberg invoked the 30/10 split in discussing the company's business model:

    "But there is a real imbalance right now: Between something like 28% to 29% of people's time is spent online, but only 8% to 10% of the dollars are spent online. So there is this migration of ad dollars from other places going online."

    So Facebook's ad business is premised on those figures coming into alignment--sooner rather than later.

  3. Dennis Yu from BlitzLocal.com, April 10, 2009 at 1:32 p.m.

    The longer the session, the less valuable per unit time-- not just because the user is more likely to be playing games or doing something non-commercial, but because the CTRs are lower. More pageviews per session means that any particular page is less likely to get a click.

    The article here doesn't take into account social media traffic, which is a vast portion of internet traffic that has high session length and low monetization. Subtract that out and see what happens to figures.

  4. Craig Mcdaniel from Sweepstakes Today LLC, April 10, 2009 at 1:33 p.m.

    Max, the big difference I see is online contents is not fully accepted as entertainment where as primetime TV is. What I have done with online sweepstakes is to turn sponsor’s ads into entertainment and has become major source of entertainment for my 100,000 plus members. The numbers bear this out. I can run the same company’s advertisement, one ad with a sweep and the other without. The sweep will always get a minimum of 50 times as many clicks than the non-sweep ad. This number can go to over 150 to one when the sweep has high quality prizes. Clearly my members would rather be entertained by the possibility of winning a big prize than to watch a average TV show.

    My overall point is, online contents does fully understand how to be entertaining. While blogs and the social websites can come close, they do fall short.

  5. Paula Lynn from Who Else Unlimited, April 10, 2009 at 1:55 p.m.

    An addition: There are still a finite number of ads hawking wares on TV. On line, you can be deluged with emails and spam up the wazoo. Click something on and whamo, you are a target. The Stalking Syndrome. How many people who see an ad and then go directly to a website instead of clicking it on? As TV ads become more targeted a la Canoe, well, the on line ventues may become no more stalky than TV and claim more of their budget. Unintended consequences?

  6. Thomas Kurz from EFP, April 10, 2009 at 2:23 p.m.

    I'm not sure I completely agree with Meer regarding this point:

    "We know that online allows us to measure conversion and business results with brands immediately and with more specificity than any other medium."

    I actually think that the tools for tracking user behavior and measuring conversion provide more often than not misleading information about how consumers and brands connect online.

    I do agree with Kalehoff that one wants to apply more dollars to the marketing tools that provide the best results against objectives but I also think that online media publishers are failing to get their proper share of ad dollars because marketers are still figuring out how best to communicate online. As soon as advertisers begin paying less attention to misguided tracking data and more attention to developing sound creative that takes advantage of all the opportunities that online publishing brings, I am quite certain they will be pleased with the results of their online media spend.

  7. Max Kalehoff from SocialCode, April 12, 2009 at 10:31 a.m.

    Thomas Kurz: "marketers are still figuring out how best to communicate online" -- yes, advertisers and publishers have yet to figure out the real purpose of online (with search as an exception).

    Dennis Yu: "The longer the session, the less valuable per unit time" -- great point. It probably means a person is deeply engaged with something of purpose, and more likely to block out distractions or interruptions. The holy grail for an advertiser is to actually be of value.

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