The Marketleap Report
Vol. 1 - Issue #17 - September 26, 2001

The Changing Face of Online Advertising
The Road from Clicks to Brand
by Keith Boswell

Americans' affinity for advertising captivates whole industries. The American consumer consumes enough due to exposure to advertisements that it warrants great study and reflection. The frequency, style and effectiveness of various types of ads continue to pace ahead of the general consciousness, slowing only to tantalize those ready for a taste of something new.

A true measurement of an advertisement's performance remains one of the most elusive legends for those involved with creating and tracking them. Television, radio and print only provide estimates of success for an ad based on sales versus the cost to target and produce them.

We know ads work because every brand under the sun has seen or will see its day in sales heaven. Sales increase for companies that advertise. Analyzing the cost of traditional advertising versus the return of increased sales relies on mutual agreement between the ad agency and ad buyer. Both must concur based on evidence from the conclusions of random focus groups or polling and sales figures.

The Internet promised to change everything. An online ad would be capable of delivering the sacred dream stone to marketers everywhere. Accurate, detailed maps could be created tracking every click, move and purchase placed by a consumer. Statistics driven from web servers and tracking code could be compared infinitum, demonstrating true value.

The advertising world shuddered. Overnight, a new medium generated a swell in the ad river, quickly swamping the global brain in a shroud of thick, bayou smog. Creative minds went numb from the magnitude of the potential change.

Click-through and volume would mean guaranteed delivery. Paid performance web sites - offering advertising based on their traffic and click-throughs - would enable advertisers to purchase only those ads that transferred the viewer directly to their offer. Performance alone would drive value. Sites like Yahoo! and AOL that enjoyed unbelievable amounts of traffic could count on advertising as a significant source of revenue.

Now that we've stepped into the world beyond pure excitement with the Internet, we cannot ignore the statistics. Click-through rates for traditional web site banner ads continue to wilt. Now largely ignored because they blend into the background like a peanut shell on light brown carpet, they average a return of just .03 percent.

Still, Jupiter Media Metrix statistics show that at least 60% of ad buyers continue to demand click-through information to measure success for their online campaigns. Only 15% are looking at data more closely aligned with traditional measurements of brand exposure.

As click numbers dwindle, sites that rely on revenue from ad sales are assessing all of their options. Lucky for them, a variety of alternative ad formats has sprung up in response to the abysmal spiral created by the measurement of click-through alone.

New ad spaces have been created that demand more attention from the viewer. Some sites are placing these large ads directly in the center of content. Others are reserving the entire left or right side of their pages for single ads.

For some sites, the traditional advertising model holds more value than the current click-through paradigm. CBS Marketwatch recently announced they would no longer report click-through information to their advertisers unless requested. The move drew lots of attention because it was such a radical departure for an online advertiser.

CBS Marketwatch will begin educating their advertisers about the brand exposure value of advertising on sites like theirs. They will also allow advertisers to buy unique spaces like the wallpaper behind their content of their web pages. In another move to spur interest, the site will allow a sponsor to run ads during specific times of day. Currently, Budweiser is running a Happy Hour promotion through CBS Marketwatch.

Marketwatch's position is that online advertisers are too focused on clicks and not focusing on exposure. Recent statistics seem to back up the assertion. A recent study by Microsoft shows that exposure to many of the new larger, interactive ads tends to increase a person's likelihood to do further research and make a purchase - as much as 25% more than without exposure to the ad.

CBS Marketwatch is faced with a challenge as they try to retain advertisers while actively working to change their perception of value. Online advertisers should expect to receive tracking information. If Marketwatch were a true industry leader, they would show their clients the value from traditional measures but also the real measures of the ad's performance.

Online ad sellers must understand that they hold data that no one else has access to. Just because the numbers don't represent the entire picture, they are still a vital piece. Tracking information offers insight into the pattern that consumers are interacting with ads and being driven to action.

Ad sellers must educate their clients about brand exposure and what clicks really mean. Ad buyers need to appreciate the concept of exposure and mix that with true performance numbers. Then the real value of advertising online can be appreciated. Until then, the murky brain fog won't lift, and none of us will know the real direction forward.

report@marketleap.com.