Branding moves to the Internet environment
THE ninemsn 2004 digital marketing summit in Sydney focused on the general theme of how the Internet is changing from a direct response medium to a branding medium. As a followup, I will explore some of the dynamics of Internet advertising campaigns and the potential to quantify the value of Internet brand advertising.
Click rates are declining
One of the key reasons that Internet online display advertising is becoming less efficient as a response mechanism is clear from the recent DoubleClick report on adserving trends for the first quarter of 2004, which shows that click rates are declining.
Given that display advertising on the Internet is generally bought on a cost-per-thousand-impressions (CPM) rate, it is becoming more important for advertisers and media buyers to attribute value to the 99% of the media spend that does not result in a click.
Search engines are effective for direct-response advertising
In my opinion, search engine marketing (placing paid search listings on Google or Overture) has quickly become the best form of online direct response advertising because the targeting capabilities and conversion rates are excellent.
Brand advertising, however, uses display (image) creative and is bought on a cost-per-thousand-impressions. Placements are generally browsing environments such as news, entertainment and lifestyle. These are much less targeted to viewers' specific needs and conversion rates are correspondingly low.
How to quantify exposure reliably?
Perhaps the simplest way to quantify the value of brand advertising is the cost-of-exposure-in-seconds. In the same DoubleClick report, the findings of advertising exposure duration were summarised in Figure 1.
Figure 1: Advertising exposure duration.
Source: DoubleClick Q1 2004 Adserving Report
This provides a useful basis on which to create a simple mod el for valuing advertising exposure with the following parameters:
VED = value of the duration of exposure in dollars per second per unique visitor.
TDI = display time plus interaction time in seconds.
CPI = cost-per-impression (CPM cost divided by 1000) in dollars.
UV = number of unique viewers of the site.
Internet exposure is cheaper than TV exposure
Let's work through an Australian example by placing a rich media 'island' advertisement on 'The Age' website. Assume that the frequency has been capped to 1 and the ad is not interacted with or clicked on. Using a CPI of $0.10 ($100 CPM ratecard from Fairfax Digital website), a TDI of 62 seconds (being the average page duration sourced from Red Sheriff May 2004 Site Ratings), then we end up with a VED of $0.002 per second per viewer.
According to Macintyre ('The Age', 22 April 2004), $27,688 is the average price for 30 seconds on free-to-air TV in metro markets. Based on the ATR ratings of 4-10 July, the average audience size for one metro market was 353,000 viewers (averaged across the top five programs across all markets). Doing the same calculation, this would equate to a cost per second per viewer of $0.003 for television.
To put the value of Internet brand advertising in perspective, with the assumptions made above, Internet advertising exposure is significantly cheaper than TV exposure per second. (And, yes, I have made a few assumptions and the mathematics is less than perfect, but I think this paints an interesting picture!)
Despite having the potential for lower cost exposure, the Internet branding opportunity is being wasted due to poor management of frequency. Figure 2 shows the distribution by frequency of ads served in a typical online advertising campaign. Astonishingly, 50% of impressions have been delivered at frequency of 11 times or more. In other words, the campaign has served 50% of the ads to the same viewers.
Figure 2: Distribution by frequency of ads served in a typical online advertising campaign.
Source: ATLAS/DMT Ad Serving Database, August 2004
This is extremely cost inefficient and is likely to have potentially damaging consequences by significantly annoying viewers (most of us will have experiences where we see the same online ads from the same online advertisers over and over again).
When using the Internet for branding ...
Working on the broad premise that Internet advertising exposure is more cost-effective than TV (but only if frequency is managed properly), then these might be useful pointers to consider in future:
• The brand efficient frequency - the frequency at which campaign reach is maximised (logically, this is a frequency of 1).
• The brand positive frequency - this is the frequency at which the advertising stops reinforcing positive brand attributes and becomes negative or annoying.
I have not managed to locate any specific research on this particular area for online advertising, but I would hazard a guess that, rather like offline, most online advertising is best kept to a single figures frequency (say 5 or less, although this is probably going to vary by site, creative, brand and product).
In addition, it would also be worth considering:
• Frequency management/capping on ALL campaigns.
• Actually measuring how long users are viewing/interacting with your ads even if they do not click through (this can be done with applications such as ATLAS/DMT or Eyeblaster).
• Buying on sites that have longer average page durations.
• Placing ads within content on a page rather than at the top or bottom (particularly if the reader has to scroll).
• Building ads in rich media to increase the potential viewing/interacting time.
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