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Web advertisers use wrong measuring tools
Study: Higher returns when looking beyond clicks

The big debate over internet advertising, particularly in this lagging ad market, is whether it works as well as advertising in other media, or even at all.

But the real issue is how results are measured, and a new study from Jupiter Media Metrix suggests the tools that most advertisers use to gauge a campaign's effectiveness are the wrong ones.

By focusing on immediate results such as click-throughs, advertisers are undervaluing the real power of web advertising, the study concludes.

Looking at more inclusive data, they would find they're actually getting 25 to 35 percent greater returns on their investment.

Jupiter bases this estimate on case study data for companies with web sites and primarily online advertising campaigns in which researchers quantified customer acquisition volume based on directly observable click-streams, demonstrating both immediate sales and sales that happened after original exposure to the advertising.

Undervaluation of return on investment can be even greater for companies with ad campaigns that integrate online and off-line media, says the report.

"Ultimately, the greatest barrier to developing online branding practices isn't the internet's branding abilities, but an intransigent marketing culture," claims the report.

"Quantifying branding online requires measurement of the user's actual experience, not just metrics that correspond to the marketer's intent."

Because so much web advertising has been intended as direct-response advertising, marketers have largely sought to measure it with direct-response metrics.

This has been a serious mistake, says Rudy Grahn, an analyst in Jupiter's online advertising group and the report's principal author.

"Direct marketing measurement captures only a fraction of the actual ROI an online campaign generates, whether it's intended as direct marketing or branding or whatever," he says.

Grahn believes marketing intention is more or less irrelevant to effective measurement in the first place.

"The distinction between direct response and branding is an artificial thing that marketers talk about but consumers don't care about," he says.

The report highlights two serious blunders made by many involved with online advertising that have stood in the way of measuring its true impact.

First is the all-direct-response mistake-that is, approaching web advertising as if it's all about direct response simply because consumers can literally respond to it. This has led to an over reliance on direct-response metrics and a warped picture of ad effectiveness.

"The direct marketing measurements being used are almost purely quantitative," says Grahn. "They don't tell you about the quality of anything going on."

Jupiter research has indicated that only 15 percent of online marketers are doing any formal branding measurement, relying heavily if not exclusively on metrics such as click-throughs and cost per conversion.

The second mistake the report delineates as blinding the industry to the true value of online advertising is the branding-for-the-wrong-medium mistake.

Not only are advertisers unable to ascertain the value of branding online when they measure only for direct response, they will also get nowhere if they seek both to do branding and to measure it with techniques and methodologies imported from traditional media.

"The people who came online and practiced branding as they did on TV got to the internet and failed," says Grahn. "But rather than question their own practices, they have assumed the medium itself has failed. That simply is not the case."

"The internet resists traditional branding practices," he adds.

Likewise does the internet expose the limitations of these traditional branding practices, Grahn notes.

For instance, many have already observed that it's difficult if not impossible to offer advertising with so-called "emotional" appeal on the internet. The prevalent assumption is that you brand with emotional appeal.

Grahn begs to differ.

"Branding is not emotional appeal. Rather, emotional appeal has become a proxy for branding," he says-an effective shortcut that has over time become an end in itself.

"Online, rational messages make the needle move much more than emotional appeal," Grahn continues.

"But people who have been branding for 30 years don't want to hear this."

Another traditional-media practice the internet resists is the mass-market type of reach/frequency model.

No matter how much we hear about the web becoming consolidated in the hands of a few media companies, in reality it remains a drastically fragmented medium, says Grahn.

For instance, while Yahoo can on one level claim a 35 percent share of the total internet audience on a typical evening at 8 p.m., this audience is spread across more than 400 separate domains, Grahn notes.

"You just don't have an audience that's united around a single event online the way it can be off-line."

This doesn't mean advertisers can't do brand advertising online, Grahn says. It simply means they can't do brand advertising online the same way they can off-line.

It seems a simple idea. But until more people heed it, the web is going to languish as an ad medium.


Jeremy Schlosberg, Media Life Magazine. June 27, 2001

Copyright © 2001 Media Life. All rights reserved.