Is the Internet a direct response medium or a branding/awareness medium?

This question, which not too far back into the past was used as a means of somewhat eruditely suggesting that, perhaps, there is more to Internet Advertising than clicks and immediate conversions, has now become part of a wider phenomenon of over-generalizing that has hindered progress in the Internet Advertising space over the last two to three years.

Few are quicker to point out this fact than Rudy Grahn, a key Analyst covering Internet Advertising, and specifically, online branding at Jupiter Media Metrix - one of the world’s foremost independent Internet Research and Audience Measurement firms.

Over the last months, Jupiter Media Metrix has released important research findings authored by Grahn, concluding that Internet Advertising has significant branding effects, the majority of which go unmeasured by Internet advertisers.

According to Grahn’s latest Jupiter Media Metrix research, the actual return on investment from Internet Advertising is at least 25 to 35 percent higher than most marketers believe. Grahn’s research also indicates that, at the present, a mere 15 percent of marketers are conducting formal online branding measurement.

In what follows, avant|marketer speaks to Rudy Grahn to get his thoughts on the direct response versus branding debate, the future of brand/awareness advertising in the online medium, whether this form of Internet Advertising will soon overtake the various forms of direct response marketing that have come to define Internet Advertising since its inception, and what advertisers need to do to better harness and understand the branding capabilities that the online medium offers.

Grahn’s incisive, to-the-point remarks on these matters are instructive, indeed.

avant|marketer: The prevailing view is that the Internet ought to be leveraged as a direct response medium akin to direct mail, as opposed to a branding/awareness medium on a par with Television. What is your take on this?

Rudy Grahn: This isn't an either/or proposition. It is both.

It's absolutely essential that advertisers stop defining campaign success solely by their intent. Direct marketing ads online may not be intended to do branding, but they brand. Similarly, brand-positioning ads can prompt immediate action, and overwhelmingly - these things are measurable.

The division between direct response and branding is something advertisers sit around and talk about. But, the distinction is basically meaningless to the consumer. Advertisers have to start to think more like the consumer. They must get interested in measuring everything that impacts the consumer's purchase consideration, regardless of the intent, or their degree of control over those inputs.

To sound bite my thoughts on this whole "direct response versus branding" issue: "If it isn't relevant to the consumer, why is it relevant to you?

avant|marketer: Talk about the findings from your recent Jupiter Media Metrix research into Internet Branding. What are the main lessons from this, for advertisers?

Rudy Grahn: This is really quite simple: You're not measuring ROI if you are not doing formal branding measurement in addition to your response tracking.

avant|marketer: Now that money is no longer pouring into the Internet Advertising space from venture capital-backed Internet ventures, it has been said that the focus of the Internet Advertising industry as a whole must be on getting the large-scale traditional advertisers to put increasingly large percentages of their advertising budgets into Internet Advertising. Some have suggested that this can be accomplished by switching to the use of traditional campaign success metrics such as those used offline. Do you believe that making this shift toward traditional campaign success metrics would revitalize the Internet Advertising industry? If so, how?

Rudy Grahn: Again, as I said on the direct response versus branding issue, the choice of metrics isn't an either/or proposition. Smart marketers will try to understand both.

That said, too many traditional advertisers want to treat the Internet like it is Television or Radio or Billboards or Print. It isn't. I am yet to see anyone approach Internet Advertising that way and see them come out with a successful campaign. Yes, the Internet is a synthesis of those other media. But, the whole is bigger than the sum of its' parts. There are unique dynamics at play that marketers will have to respect whether they want to or not. Anyone that wants to come out and say, "Internet Advertising Doesn't Work," should be also willing to throw open the books on their campaign. I am willing to bet 99% of the time, it was their specific approach that didn't work.

The Internet is a mass medium in which the consumer has near complete control of their consumption of content and advertising. That means advertisers have to market to the consumer purely on the consumer's terms. That is no easy feat, but it can be done.

Naturally, the drum beat is already getting louder from some corners to wrestle that control away from the consumer the way it has been done elsewhere. Basically the idea that these people have is to find ways to make ads more intrusive and interruptive and loud and flashy. This is a cop out and laziness - and, I would suggest, not going to be nearly as easy or successful as many people think.

avant|marketer: So, what is the lesson here, so far as metrics are concerned? What are the main Internet Advertising campaign success metrics Internet advertisers and content publishers ought to focus on, going forward? Is CTR (clickthrough rate) one of them?

Rudy Grahn: The most important metric, hands down, is cost. It's that simple.

I am amazed at how often I see studies that are released about the effectiveness of certain types of placements or creative formats, yet, they fail to mention how much of a premium you need to pay to get the premium performance from the placement or format.

It's like the NFL releasing a study saying Super Bowl Ads are better at raising mass awareness than Kung Fu Movies on UHF stations. Of course they are! But is that performance cost effective? Everything measured must be measured against cost. Performance is meaningless without it.

As for CTR, it should be tracked, but as a secondary metric. I have found that CTR's greatest use is in indexing it with conversion rate to tell me whether or not the traffic that a specific creative/placement is driving is qualified or not. At the end of the day, I am far more concerned with the quality of my clicks than the quantity of them. Of course, advertisers need both quality and quantity, so the advertiser should use CTR as a way to figure out which combination of creative sets and placements provide them with the volume of clicks they need, at the highest possible ROI.

avant|marketer: But, isn't there a pressing need to move away from the CTR as a central Internet Advertising metric? What do you think of CBS MarketWatch.com's recent move to stop reporting CTRs to their Advertisers? And, more broadly, does the content publisher have a role to play in weaning advertisers off of a focus on clickthroughs?

Rudy Grahn: We've gone on the record to say that CBS MarketWatch.com has taken a good idea too far. CTR should be taken down a few notches in valuation, certainly, but it is not, as the CBS folks have said, a "meaningless" metric; if only for the reasons I mentioned just a minute ago.

With regards to publishers' role, the debate here though should be far bigger than this narrow issue. The overarching concern should be that publisher's are in the measurement and reporting business at all. For the Internet to achieve maturity, it will need its' performance measured by neutral, 3rd parties. Otherwise, you have the fox guarding the hen house; not to mention the fact that under the "publisher-as-auditor" model, an advertiser has to collect, integrate, interpret, and manage data from multiple sources, and often, collect data via multiple methodologies, which is not scalable.

avant|marketer: It has been speculated that the rapid, continuing decline in Banner Ad clickthrough rates is a result of the fact that Web users are simply paying less and less attention to Banners. Assuming that this indicates a general problem with existing Internet ad formats, what needs to be done with regards to improving the appeal of Internet ad formats, particularly in order to make Internet Advertising more appealing to advertisers accustomed to the "richer" creative formats of some of the traditional media?

Rudy Grahn: Unfortunately, I think the debate over creative format has become so simplistic that it is losing its meaning.

Where a piece of creative is placed, and how much the advertiser paid to be there are factors that are at least as significant as creative format in terms of whether or not the creative, or the whole campaign succeeds. The consumer is infinitely more agnostic to creative format than advertisers are. The value of Internet Advertising to the consumer is in its' relevancy. Creative format can correlate to relevancy, but it is by no means a stellar predictor of the ads relevance to the consumer. Text links are very un-sexy as creative, but they can have phenomenal click rates if they are relevant. Banners get beat up on, but there are tons of contexts in which they add utility to the user experience, and those banners have click and conversion rates that prove it.

And, I might challenge the premise of this question to some degree, too: Yes, consumer tune-out is certainly one factor in the average click rate dropping; but it by no means the only reason.

I would suggest that the growth in CPC media buying has been a big culprit in dropping CTR averages. The way the delivery of those buys is structured, seldom are these CPC ads appearing in the types of targeted inventory that tend to generate the better click rates, so you have enormous amounts of impressions being used to get clicks, resulting in low averages. Beyond that though, things like the rise in international traffic to US content sites, publishers dramatically over-delivering on buys, and the deliberate efforts of advertisers to bring in more qualified traffic have also dampened CTR significantly.

Yes, these aren't as sexy of answers as consumer tune-out, but I think they are just as important.

avant|marketer: Lastly, you have pointed it out as being a failure that only a tiny percentage of Internet advertisers measure the branding impact of their campaigns. At the same time, it has been said by others that measuring the branding impact of Internet campaigns is very difficult, and that the methods by which this should be done are not at all clear. Does the industry need to evolve more effective ways to measure the branding impact of Internet Advertising?

Rudy Grahn: No. There needs to be no advances in technology or thinking for branding impact to be measured successfully online. The consumer surveying practices that provide this data are decades old and could probably be done with pen and paper. And even for the more interactive, Internet-centric metrics, the tracking technology that exists is sufficient as well.

The real problem here is with the culture of advertising. Advertisers tend to silo their efforts in ways that are entirely self-referential, and which bear little resemblance to how advertising is consumed in the real world. It's the "If it doesn't fall under my budget, then the group down the hall should worry about it" mentality. Advertising culture can be toxic.