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Effectiveness of online advertising
Digital Lead, Asia Pacific at Ogilvy
13 August 2002 08:53am
Does anyone know of any stats relating to the effectiveness of online advertising?
I am responsible for trying to divert offline media spend to online. It's hard to do when:
a) The cost of banner advertising can never deliver VFM or ROI, compared to other forms of affiliate marketing (for the entertainment / film market)
b) I can't find studies demonstrating online advertising's beneficial effects on brand recognition / recall or the propensity to purchase
c) Some CPM rates are effectively more expensive than TV ratings "TVR's"
Are their any good reports, stats, consumer / brand surveys that could help build the argument to divert some of the offline media spend to online?
Thanks
Barney
CEO at Econsultancy
22 October 2002 16:35pm
Hi Barney
Have you looked at some of the pay-per-click forms of online advertising? The likes of Espotting, Google Adwords, Overture.
I've had experience with Espotting and Google Adwords and one of the nice things about them is that assuming you can work out your conversion rates for a 'hot lead' visiting your site then you can easily work out your overall customer acquisition costs and ROI.
For example, if you pay say £1.50 per click through on your ad, which appears when people search on 'designer kettles', and you then convert 10% of these with an average purchase value of £55 then you pay on average £15 to get a £55 sale. If you're making £25 profit per kettle then the ROI is pretty easy to justify.
Ashley
Digital Lead, Asia Pacific at Ogilvy
23 October 2002 08:23am
If only life in a widget factory were that easy! PPC can make life simple, but it is a difficult model for relatively low priced product such as cinema tickets.
I am trying to justify spending money in online advertising rather than offline advertising such as TV, media and outdoor. The difficulty is that there is no measurable conversion rate for different existing media when you are marketing e.g. films.
One of the options is to create "calls to action" within your advertsing such as "go online to get your free screensaver", or "print off this voucher to receive a free hot dog to be redeemed at your nearest cinema" (?)
I am also interested in the importance (requirement?) of online within the marketing mix in order to ensure a rounded campaign. When trying to create an "event" such as a film / album release, how ubiquitous does your message need to be across different media? Importantly - to a cynic - how can you demonstrate the effect online has? Is there any research?
Thanks for your thoughts. Any further help welcome!
Barney
On 16:35:36 22 October 2002 Ashley wrote:
>Hi Barney
>
>Have you looked at some of the pay-per-click forms of
>online advertising? The likes of Espotting, Google
>Adwords, Overture.
>
>I've had experience with Espotting and Google Adwords and
>one of the nice things about them is that assuming you can
>work out your conversion rates for a 'hot lead' visiting
>your site then you can easily work out your overall
>customer acquisition costs and ROI.
>
>For example, if you pay say £1.50 per click through
>on your ad, which appears when people search on 'designer
>kettles', and you then convert 10% of these with an
>average purchase value of £55 then you pay on average
>£15 to get a £55 sale. If you're making £25
>profit per kettle then the ROI is pretty easy to justify.
>
>Ashley
CEO at Econsultancy
23 October 2002 14:27pm
I take your point that PPC is perhaps not quite as attractive, or clear cut, for selling film tickets.
It seems to me that we are at a point where interactive advertising is just about making a case for not being any *worse* than any other channel but it is still struggling to make a case for being that much *better.*
The recent netimperative report on interactive advertising (more at http://www.e-consultancy.com/knowledge/whitepapers/whitepaper_view.asp?id=666) begins as follows:
"The debate over whether internet advertising can be used for brand-building is, according to many, now over. Following convincing studies, particularly in the US, discussion now deals with the internet’s comparable value as a brand-building medium compared with its media competitors: press, DM, radio, and TV."
I'm not so sure there have been that many studies proving beyond doubt the brand-building power of interactive (you can find some at http://www.iab.net/resources/casestudies.asp) but I would say a) that it seems hard to believe it is any worse than, say, billboards and b) that the real challenge, as you say, is to show that interactive is in fact *better* than other channels in terms of ROI.
There is still quite an investment gap in interactive when you look at its reach versus proportion of ad spend it gets. This gap is closing, slowly, as you might expect. No doubt due to people like you fighting for more online budget as part of the 'overall mix'. Presumably the challenge is a) to get any more money for interactive at all and then b) to get proportionately *more* money to spend on interactive?
The hard thing is correlating spend to end value by marketing channel, particularly when you have an integrated cross-channel campaign. I've been wrestling with this one for many years in relation to broadcasters who want to drive ratings (among other things) - not so dissimilar to promoting films, especially with TV being increasingly hit-driven (i.e. more like the film business). Separating out and tracking the impact of interactive to the final BARB ratings is not easy.
You can do it with awareness level surveys, of course, with questions specifically around interactive. I know of an interesting test going on with one broadcaster at the moment who are promoting a particular TV show *only* using interactive means and then doing awareness level studies to try and gauge the impact. This should help give a better feel for returns on interactive spend as separate from other channels.
What I'd be interested in, however, is looking a step further to try and understand how interactive can be *better* than other channels, not just comparable. For example, to me 'awareness' isn't that compelling a metric - so what if I see a billboard for a film? I still might not be in the slightest bit engaged by it or want to go. I'd be interested in metrics like 'involvement', 'commitment', 'advocacy' and - best of all - conversion. I would have thought that it is in these areas that interactive has most to offer i.e. blending brand-building with more direct response / CRM type approaches.
CEO at Veriest
05 December 2002 10:20am
Hi Barney,
I did some research into this a while ago, the following links may be helpful, I think most if not all of them are still valid. If you need further information let me know.
Cheers
Adam
Title URL Sector
Internet Advisory Bureau UK / http://www.iabuk.net Advertising / Research
Internet Advisory Bureau US / http://www.iab.net / Advertising / Research
Lemonad / http://www.lemonad.com / Advertising / research / European Market
Forrester http://www.forrester.comhttp://www.forrester.com/ER/Products/Tools/InternetAdwatch/0,3306,,00.html / Advertising / Research
The Advertising Association / http://www.adassoc.org.uk / Advertising / Research
Ad Forum / http://www.adforum.com / Advertising / Research
IPA / http://www.ipa.co.uk / Advertising / Research
Jupiter / http://www.jup.comhttp://uk.jupitermmxi.com/home.jsp /
Advertising / Digital TV Research
Biz Report http://www.bizreport.com Advertising / Research
Ads Guide http://www.adsguide.com Advertising / Research
Oftel http://www.oftel.gov.uk Internet / Digital TV / Research
Datamonitor / http://www.datamonitor.com / Datamonitor
On 08:53:41 13 August 2002 Barney wrote:
>Does anyone know of any stats relating to the
>effectiveness of online advertising?
>
>I am responsible for trying to divert offline media spend
>to online. It's hard to do when:
>a) The cost of banner advertising can never deliver VFM or
>ROI, compared to other forms of affiliate marketing (for
>the entertainment / film market)
>b) I can't find studies demonstrating online advertising's
>beneficial effects on brand recognition / recall or the
>propensity to purchase
>c) Some CPM rates are effectively more expensive than TV
>ratings "TVR's"
>
>Are their any good reports, stats, consumer / brand
>surveys that could help build the argument to divert some
>of the offline media spend to online?
>
>Thanks
>
>Barney
CEO at Econsultancy
05 December 2002 10:30am
Thanks for the useful set of links Adam - but to save wading through them (as I have in the past) did you actually find anything there which would actually help support Barney's efforts? Nothing I have come across is that convincing yet.
The most convincing argument, which you hear a lot, is that the internet has 12% advertising reach but only 1% of ad spend which just doesn't seem right. The big portals and likes of the IAB are making an effort to try and push this up to 2% next year and up to 3%-4% over the coming years. As with most things internet, my feeling is that it is just going to take longer than people thought, or some people want, but it will get there in the end as levels of education and awareness grow along the value chain, there are more case studies etc.
The biggest obstacle at the moment seems to be at the client end which spills over into the media buyers/planners. But look at the position Barney is in trying to justify online spend and consider what a tiny % online represents of overall ad spend and it isn't difficult to see why the big brands aren't in any particular hurry.
Ashley
CEO at Veriest
05 December 2002 11:44am
Hi Ashley,
I have not looked at this market for quite a while. I see the IAB reports a rise in online advertising for 2001 whilst a downsizing in offline but there are no figures I beleive as yet for 2002. However, I personally don't think the argument can be won by quoting figures. The figures are low I suspect because most people do not realise how accountable internet advertising is. I think a brand building spray and pray approach to the internet is doomed to failure because it's just too big a market to cover. However, if you want qualified traffic/customers then there is no better medium I believe.
The Internet is the first commercial medium in which it is actually possible to measure consumer response, not just to assume it. In recessionary times, advertisers want accountability as is evidenced usually by a rise in direct mail campaigns. The internet offers unparalleled scope for precision marketing whether it be cost per click strategies, search engine optimisation, key word related banner placements etc You cannot get this kind of accountability offline and the cost is miniscule when compared to offline advertising. A short trial would suffice to persuade any doubters I susepct.
Adam
On 10:30:58 5 December 2002 Ashley wrote:
>Thanks for the useful set of links Adam - but to save
>wading through them (as I have in the past) did you
>actually find anything there which would actually help
>support Barney's efforts? Nothing I have come across is
>that convincing yet.
>
>The most convincing argument, which you hear a lot, is
>that the internet has 12% advertising reach but only 1% of
>ad spend which just doesn't seem right. The big portals
>and likes of the IAB are making an effort to try and push
>this up to 2% next year and up to 3%-4% over the coming
>years. As with most things internet, my feeling is that it
>is just going to take longer than people thought, or some
>people want, but it will get there in the end as levels of
>education and awareness grow along the value chain, there
>are more case studies etc.
>
>The biggest obstacle at the moment seems to be at the
>client end which spills over into the media
>buyers/planners. But look at the position Barney is in
>trying to justify online spend and consider what a tiny %
>online represents of overall ad spend and it isn't
>difficult to see why the big brands aren't in any
>particular hurry.
>
>Ashley