Advertising ROI Lies In Branding, Not Clicks Or Traffic

The actual return on investment (ROI) from online advertising is likely 25 to 35 percent higher than most marketers believe, according to Jupiter Media Metrix, and this hidden value lies in branding.

Jupiter’s research predicts that marketers who begin measuring the value of online branding will find a significant increase in the ROI of their digital marketing initiatives. But only 15 percent of marketers are conducting formal online branding measurement — while the majority continue to favor direct response metrics, including click-rate (60 percent) and cost per conversion (75 percent).

“Jupiter case study data show that the actual number of customers driven to Web sites by online advertising is greatly underestimated by traditional click-rate metrics. Furthermore, when brand advertising programs generate synergy across all marketing channels, that number can grow significantly beyond what can be tracked,” said Rudy Grahn, an analyst at Jupiter Media Metrix.

The problem with trying to correlate ad spending with an increase in traffic is that online advertising is still secondary to other factors when it comes to driving traffic to Web sites. Online advertising only contributes to 17 percent of the traffic to a Web site, according to Jupiter, while seasonality and the regular increase in Internet adoption (the addition of potential visitors to the market) contribute to 46 percent and 37 percent of the growth, respectively.

Jupiter analysts suggest that marketers can measure branding value by correlating behavioral data (including individual user click streams, repeated surfing patterns and aggregate user behavior) with the flights of specific ads. The problem is, there are no standards for determining this correlation, even though marketers have begun experimenting with calculating the relationship between aggregate spending and the corresponding volume of user behaviors such as store locator pages hits, information requests and hits on phone-ordering information pages.

Jupiter also blames the fractured reach of the Internet as a major reason the Internet has resisted traditional branding practices. For example, Yahoo is widely considered as one of the Web’s mass reach vehicles — with a unique user base of more than 20 million in the 8 p.m. hour, a near 35 percent share of total Internet unique users for that time, according to Media Metrix. But Jupiter analysts point out that this aggregated Yahoo audience actually represents traffic spread across 438 separate domains (including pseudonyms), making it difficult to generate message association online using offline marketing practices.

“Although much of the talk about the ‘new economy’ has been debunked, the old dogs still have new tricks to learn,” Grahn said. “What is learned in online branding may not ultimately set completely new rules for marketers; but it will offer lessons wise marketers will heed. What marketers learn about building targeting models from observed behavior rather than pre-campaign demographic or psychographic data must be factored into offline campaign planning, as well.”

Not only is the measurement of click throughs now considered to be missing the boat, but the practice has also been blamed as one of the reasons that online ad market all but collapsed in the past year. According to a study of top executives and strategists in the publishing and advertising industries by the Content Intelligence Group of Lyra Research, the essential cause of the Web advertising collapse was an imbalance in supply and demand. Too many Internet sites chasing too few ad dollars. Also contributing was a media sales pitch based on click-through rates until those rates plummeted; many advertisers also failed to understand the dichotomy between direct-response and brand advertising, which muddled the goals of many online campaigns.

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