Why The Lack Of Branding Online And What Can Be Done About It

(This post is bit longer than our other posts. That said, we think it's worth it.)

Brand advertising budgets represent about two-thirds of a $186 billion advertising market. Yet, only 5% of overall marketing budgets are spent on the Web.

In 2009, U.S. advertisers will spend only $3.1 billion online on rich media and video ads in a branding-oriented capacity.

That’s in spite of the fact that users spend up to a third of their media consumption online, not to mention, the Web’s reputation for being an accountability-oriented, data-rich medium.

Why is this?

With all of the data available on the Web and ample opportunity to engage consumers, why aren’t advertisers spending more than a tiny fraction of their advertising budgets online?

For Branding To Grow Online, A Separation of Responsibilities Is Needed

When it comes to branding, whether offline or online, there are two very distinct and different steps that have to be followed.

Step one is to reach the intended target consumer. This is done through the efforts of the media agency and is measured through impressions.

Impressions are good for determining how well the advertising worked at creating awareness. But as the consumer moves down the purchase funnel and it becomes time to create interest, desire and action, in other words, build the brand; impressions become an inadequate measurement of effectiveness.

Impressions measure the number of opportunities a marketer has to involve a viewer in a message. But impressions fail to measure whether a viewer was actually involved in the message or not.

Engaging or involving a viewer in the message is the second, and equally important prerequisite if branding is going to be successful.

Involvement in the message is the responsibility of the creative agency. If the commercial doesn’t involve the viewer, it becomes more difficult to be able to influence that viewer’s attitudes, perceptions or behaviors associated with the brand.

While both reach and involvement are necessary components to having a successful branding campaign online, advertisers are currently being asked to judge the effectiveness of their branding campaigns on reach, i.e. impressions alone.

Are The Media Agencies To Blame?

Although it’s unfair to lay the lack of an adequate measure of branding effectiveness at the feet of the media agencies, in this case it wouldn’t be completely off-base.

The reason is that the majority of a media agency’s income is structured around media mix models where reach, frequency and GRPs are the inputs and outputs.

Introducing new metrics that don’t fit into the traditional marketing mix model, and even more importantly, which don’t fit into the way media agencies make money, will not be well received by media agencies.

Or, their CFOs.

Is There A Solution? And If So, What Is It?

It’s a given that branding would increase online if better measures of effectiveness were put in place. The questions that need answering are:

1. What would the appropriate metric or metrics be?
2. And, who would implement them?

Currently the front-end and back-end of an online buy are monitored so that click-streams going in and results—in terms of sales—coming out, are measured and monetized.

What is overlooked is the qualitative part in between–the level of viewer involvement, measured as time spent.

If branding is about building relationships, and relationships are built through time spent together, then we would argue that the solution is to continue to use impressions. But, in addition to impressions, as Geoff Ramsey, co-founder and CEO at eMarketer put it,

“To overlay the time spent data that is unique to the online space and provide a digital footprint measuring how the consumer is engaged with the brand over a period of time.”

We currently know how many impressions a $5 million buy delivers to the advertiser. What advertisers also need to know is how much time spent that same $5 million delivered?

A Rapidly Growing School Of Thought

There is a new school of thought that is quickly attracting followers that says that the measurement of advertising online should involved time-based measures rather than impression-based measures.

One such advocate is Jon Gibs, vice president, media analytics, at Nielsen Online. According to Jon,

“Instead of buying 100 million impressions on a web site, we should be buying X% of a person’s time.”

While we agree that time spent is a critical measurement, we don’t feel that time spent should replace impressions. Rather, our belief is that time spent should be an effectiveness measure that is used in addition to impressions.

Fortunately, time spent is now being measured by third-party analytic companies for use with most, if not all, digital platforms. Currently, this information is being provided to online publishers, who in turn provide it to media agencies in an attempt to better convince those media agencies to run advertising on their site.

As media agencies have yet to realize how to optimize and/or monetize time-spent data, it is seldom shared with clients. Where is the upside for the media agency? They currently make money by selling impressions whether the commercials are actually viewed or not.

What is needed is for an outside group to start to broker time spent for advertisers just as media agencies are currently brokering impressions.

(In order to be completely transparent, our company offers a product called CreativeAudits that allows advertisers to both optimize and monetize time spent with their advertising.)

By separating impressions from time spent, advertisers can start to hold their media agencies accountable for what they do well, building reach. Yet, at the same time, they can hold their creative agencies responsible for what they are paid to do well, creating time sent with the brand.

There is, after all, only so much time in a day. The more time a marketer can convince consumers to spend with their brand, the less time those consumers have to spend with the competitor’s brand.

That’s why we believe that there’s a direct correlation between share of time and share of mind. And, as we all know, share of mind ultimately leads to share of market.

So are we saying that time spent can serve as a proxy for sales? The definitive answer is still out on that. But common sense seems to indicate that if consumers aren’t paying attention to what the messaging is saying, it will prove difficult to build a brand. No matter how many impressions you have.

Time spent starts to measure if anyone is paying attention.

And, if you did up to here…thanks.

Procuring Creativity Out Of Advertising

Well, it’s happened.

Marketers are now starting to rewrite the rules in regards to which production houses an agency can work with. The marketers will contract with certain production houses, locking in the costs of lighting, labor, anything to do with the mechanics of a shoot.

The thinking, I’m sure, is that mechanics have little, if anything, to do with creativity.

If only.

In return for agreeing to be “locked-in” to pricing, these production companies would achieve “preferred vendor status.”

It was inevitable that it would come to this. Although procurement specialists have been employed by marketers for some time now, there was the always the unwritten rule that the cost to create the work (production) would be around 10% to 20% of the cost to run the work (media spend).

But today, with viewing audiences fragmenting and different screens (TV, computer, phone) requiring different creative, the ability to aggregate a large enough audience to justify the cost of doing creative the right way is becoming more difficult.

When marketers were able to reach 20 million viewers with one fell swoop, they could easily justify $500,000 plus for production. This is more difficult when the number of viewers is closer to 200,000.

Even though today’s improved targeting methods mean these 200,000 are probably a more relevant audience, it's hard not to do the math and justify the cost of production based on size of audience.

As the viewing numbers get ever smaller, the procurement specialist’s pencils get ever sharper.

Unfortunately, creativity suffers.

Hal Riney, one of the smarter people the advertising business has known, put it this way. “If we can, though the expenditure of an extra hundred thousand dollars or so in production, increase the impact, involvement and memorability of, say, a five-million dollar budget by even ten percent, we’ve added a half of million dollars in value for a hundred thousand dollars in cost.”

Seems like money well spent, doesn’t it?

Those extra hundred dollars or so in production is exactly what marketers want to cut back on. It pays for the lighting, the casting, the music, all intangibles that make one commercial strike an emotional chord while another one doesn’t.

Intangibles are why agencies are hired. Anyone can do the tangibles.

Anybody can strategize, anybody can rationalize, anybody with a few charts and graphs and common sense can find the target market. But to add the emotional element that separates one commercial from another, one brand from another, is in fact, something that only good agencies bring to the party.

To tell them to paint brilliantly, but to only use two colors because the marketer wants to save money, seems to be counterproductive.

I’m not saying that agencies and production companies should have free reign. That’s the other extreme and it has proven to be equally foolhardy. Agencies and production companies need to be held accountable.

But instead of tying their hands upfront, is it not more motivating to tie their profit into outcome?

The outcome that they are immediately responsible for is to get those that express interest in the commercial to actually watch it. Not just ten percent of it. But all of it.

If the marketer pays to have thirty seconds produced, then those producing it should be held accountable for those thirty seconds being watched.

If so, pay them well. If not, well, why should an advertiser pay full fare for failure?

Don’t restrict brilliance. Enable it. Trust in it. If it’s not delivered, then let the profit of those that promised they would deliver it, suffer.

Tying mark-up and profit into outcome (measured as time spent), rather than the size of the job, will have the production companies eliminate some of those lights before the procurement specialists even gets involved.

Maybe it's just me. But I've always found it easier to inspire—rather than punish—someone to brilliance.

For more on outcome-based pricing for agencies and production companies, go here.

Will Virtual DVRs Virtually Change Advertising?

Monday’s ruling by the U.S. Supreme Court to allow Cablevision to go forward with its virtual DVR product paves the way for on demand television.

It also spells the end of the current, and somewhat antiquated, VOD model.

Most VOD systems only allow you to choose from shows that are on the VOD menu. Cablevision’s virtual DVR allows viewers to ask for any show to be recorded to be viewed at their convenience. As TiVo’s own CEO touts, when viewing shows in a time-shifted mode, the majority of commercials are skipped.

If I had access to a virtual DVR, I’d ask for all my shows to be recorded for me. Since the shows are stored on Cablevision’s server rather than a hard drive, there is not a space limit to the number of shows I want recorded

Which means it only makes sense to have them all recorded.

When I then decide to sit down and watch one of my favorite programs I, like the majority of people, will skip any interruptions to my viewing pleasure.

What the U.S. Supreme Court’s ruling means is that commercials should now be considered optional viewing if they continue to be delivered in their current intrusive manner.

Not surprisingly, advertisers don’t like their commercials to be considered optional viewing.

No doubt Cablevision will find a way to require a viewer to choose how he/she wants to consume advertising, either before the program plays, or throughout.

Hulu employs this model, and the preference by most viewers is to sit through the advertising before the program plays and then watch the program without interruptions.

Of course, no one really watches the commercials before the program plays on Hulu. After all, it does offer us a two-to-four-minute window to go check emails or what’s happening elsewhere online.

It’s like the previews before you start playing a movie on a DVD. How many of you fast-forward through those?

Yep, thought so.

The role of programming in the past was to deliver viewers to advertisers the way that the advertiser wanted.

The role of programming in the future will be to deliver advertisers to viewers in the way the viewer wants.

Does this mean that advertising is dead? No. What it means is that advertising needs a new way to market itself. A way to transition from involuntary viewing to voluntary viewing.

So, how do we do that?

Like most things, it starts and ends with making money.

Which means the industry needs to figure out how to make money on fewer viewers rather than more viewers. On how long people spend with a message rather than how many see it.

On involvement rather than impressions.

As the number of people who actually see a commercial continues to decrease, a commercial’s ability to hold an audience will become ever more valuable.

An impression's depth will start to outweigh the number of impressions that are made.

Instead of converting 100% of the people 10% of the way, we will need to focus our attention on how we can best convert 10% of the people 100% of the way.

There's an upside to this. Well, actually two.

Not only will the advertising get better.

But, we will need much less of it.

How Behavioral Targeting Misbehaves

The other day I went to the website of a men’s clothing store. I wasn’t interested in buying anything. I just wanted to find out some information about the company.

That was three days ago.

For three days now, I’ve been inundated with nothing but ads for this company wherever I go online.

Before I visited their site, I didn’t even know they did digital advertising.

I do now.

I wish they didn’t. The fact is, after seeing nothing but their advertising online for three days, I now find the store to be quite irritating.

All the money the advertiser spent to run the the advertising has convinced me of only one thing. Never shop there.

And therein lies the problem with behavioral targeting. Because there isn’t enough advertising created for online use, what there is becomes over-used. Which in turn, makes it irritating rather than welcomed.

Of course, making advertising welcomed is what behavioral targeting is supposed to be all about. The promise of only delivering ads about products that your online behavior indicates that you should be interested in sounds good in theory.

But, in practice, it’s another story.

It’s not that I don’t visit sites other than men’s clothing stores. It’s just that those sites don’t have advertising ready to go where I go.

So instead I get one ad, over and over and over.

At this point, I’d rather be getting ads about products that I’m not interested in.

No, I won’t buy those products either. But at least my irritation would have some variety.

To Engage With The Future Requires Us To First Disengage From The Thinking Of The Past

Everyone seems to be claiming that advertising is broken. Especially in the way that we buy and sell it.

With impressions fragmenting, CPM no longer seems to hold the allure it once did. Cost-per-click, cost-per-sale, click-thru-rate, all have their negatives.

Reach and frequency is a legacy of a one-way medium. If, as some will argue, the point of advertising is engagement, then the current forms of payment based on clicks and impressions fall short.

The problem seems to be that we are hoping to operate 21^st century marketing platforms under 20^th century compensation models. Or, as Marshall McLuhan put it so succinctly, we now find ourselves “marching backwards into the future.”

Dysfunctional?

To be sure. But what is needed to institute change?

The key, at least in my opinion, lies in coming to the realization that it’s not about media or creative anymore.

What it’s about is data.

If so, it should make publishers very happy. After all, the data is theirs to sell.

Instead of contracting with advertisers to deliver audience, measured as impressions, why don’t publishers contract to deliver data? Ten days worth, 20 days worth, 30 days worth, corresponding to how long the creative runs.

Instead of a two-week buy delivering “X” amount of impressions, why not a two-week buy offering “X” amount of data?

Each piece of data, be it impressions, click-through rate, time spent with the commercial, forwarded to a friend, etc. could all be for sale. The more data requested by the advertiser, the more it will cost for that two-week run.

Would advertisers be interested?

You bet.

The reason is that advertisers today are rapidly trying to find ways to shift to performance-based compensation models with their agencies. Performance is what data measures. Performance, not audience, is what publishers should be selling.

Today, publishers give most of this data away for the cost of 2 cents per impression ($20 CPM). In other words, they are giving the valuable stuff away for free, while charging for what most no longer find value in.

Unfortunately, as impressions continue to fragment, they’ll need to raise the cost per impression. Which will only serve to drive advertisers even further away.

Once in this vicious vortex of self-destruction, survival is questionable.

Strategies For Survival In A Time Of Change

Publishers need to transition their strategies to be more compatible with the needs of advertisers in the digital marketplace. Advertisers want to pay based on performance. Every data point offers a measurement of performance.

To an advertiser, what is measurable is pleasurable. The reason? What can be measured can be monetized.

Which means any and all pieces of data can not only be used to help plan the next media buy and creative execution, but also, to help pay for the present media buy and creative execution.

After all, while data makes actions transparent, it also serves to make media and creative agencies accountable.

To be able to offer advertisers accountability, as well as audience, can only make publishers more valuable.

Turning data into dollars is how publishers can best engage with future.

If, of course, they can first disengage from the thinking of the past.

The Ad Unit Is Only As Effective As The Ad

You have to love media agencies.

Basically, they’re in the distribution business. But, truth be told, they really want to be in the creative business.

God bless ‘em.

Plumbers who want to be poets.

Even the names that they’re giving their new divisions are becoming more creative. Take Vivaki, for instance. It doesn’t seem to matter to The Starcom Mediavest Group that nobody can pronounce it correctly the first time they see it. Or, that they need to include a phonetic spelling next to the name on their website.

To them, it’s creative.

Interestingly enough, Vivaki is now testing what they believe could be today’s most effective video ad format for creative.

Format, mind you. Not commercial. Format. As if how the commercial is crafted is irrelevant to the commercial's effectiveness.

Alan Schulman, a genius when it comes to digital creative, was the creative lead on this Vivaki initiative. He wrote a nice piece about how it’s not the plumbing but the poetry that makes a commercial work, or not work.

Alan believes that good creative has to make you feel, not just think.

Alan, as usual, is bang on.

Hopefully, since he was involved in this Vivaki process, this ultimate video ad format will be able to be evaluated on how well it allows "viewsers" (Alan’s word) to feel.

Of course, Vivaki will no doubt charge advertisers the same amount for this new video ad format whether anybody feels anything or not.

Which should leave advertisers feeling as if they’ve been ripped off.

After all, I’m assuming that this new video ad format, like all video ad formats today, will be able to offer advertisers data as to how well the commercial was able to hold a viewer’s attention.

Will Vivaki charge advertisers for this new format based on these view duration metrics? In other words, the longer viewers watch the commercial for, the more Vivaki can charge.

It's difficult to argue that the longer viewers are engaged in a commercial, the greater the chances are that they’ll be persuaded to buy the product.

Or, according to Alan, to feel something.

So is it Vivaki’s new video ad format that is responsible for more time being spent with the commercial itself? Or, is it the skill of the creatives who crafted the commercial?

I’m guessing that Vivaki will initially take the credit. Until, that is, advertisers ask if they can pay Vivaki based on time spent, i.e., results.

At which point, Vivaki will back down, claiming that they’re in the plumbing business after all. Someone else makes the actual shit.

It seems to me that no matter what number people want to put on advertising, 1.0, 2.0, 20.0, 300.0, one basic principle remains the same.

It’s the creative idea that makes a media format work. Not the other way around.

Which means, Vivaki, you’re still in the plumbing business.

No matter how creative your name is.

(By the way, it’s viva-key. Had it wrong, did you?)

Who's Responsible For Being Dugg On Digg?

I think Digg is on to something by allowing its community to vote on the worthiness of a commercial.

With Digg Ads, the more an ad or commercial is dugg on Digg, the less an advertiser will have to pay to run the commercial. Conversely, the less the commercial is dugg on Digg, the deeper the advertiser will need to dig into its pocket to run the ad.

It’s a nice idea. But, I feel that it is rewarding the wrong group of people.

As it works now, Digg is allowing any steller efforts by the creative agency to pay off in lower media costs.

In my opinion, having a commercial dugg on Digg should lead to the creative agency being rewarded. The more the work is dugg, the more the creative agency should make. The less the work is dugg, the less the agency should be able to put in its pocket.

Of course, viewers’ opinions of commercials are voted on every day across the digital platform, not just on Digg.

Viewers vote through the amount of time they spend with the commercial. If they watch thirty out of thirty seconds, it’s a good indication that they have dugg the commercial. If they watch only five out of thirty seconds, then no, they haven't dugg the commercial.

View duration data for commercials offers advertisers the ability to start paying for creative on a performance basis. Performance, in this case, being the amount of time viewers choose to spend with the commercial.

Kudos to Digg for being one of the first to allow viewer behavior to affect cost.

Now, if they would only reward those who are actually accountable for being dugg.