Forrester: Industry Needs to Focus on More than Branding

Flying in the face of industry-wide efforts to promote online ads’ branding effects as a way to boost favor with advertisers, a new study from Forrester Research says that such pushes won’t be enough to end the woes of the industry.

“Clearing the branding bar is an important step,” writes analyst Jim Nail. “But it won’t end the online advertising’s slump. The shift of branding dollars from traditional media to online will require more time, persuasion, and proof.”

In recent weeks, groups like the Interactive Advertising Bureau, an industry trade association headquartered in New York, and players like DoubleClick, Dynamic Logic and Microsoft’s MSN have all come out with big-budget studies touting online advertising’s ability to shift brands. Such studies are thought to be instrumental in convincing companies that traditionally buy offline media to part some of their budgets in an online spend — since online media ostensibly can deliver the same sorts of branding effects as television and radio, with the added benefits of targeting and interactivity.

And we’re only going to see more of those sorts of studies. As online media firms wrangle with audience measurement and difficulties of executing large-scale buys, Nail said he sees industry players including bundling metrics with ad buys, “to compensate by bundling brand-impact research studies into the buy to prove their sites’ effectiveness.”

But according to Forrester, more needs to be done.

For instance, marketers of consumer-packaged goods have long been using special modeling techniques to determine advertising’s impact on sales. According to Nail, the IAB and other groups ought to work with big players in the field — Nail highlights Kraft and General Mills in particular — to create a methodology for similarly analyzing the Web’s impact on sales.

Additionally, groups like the Advertising Research Foundation recently have touted the importance of engaging consumer attention in creating effective advertising. By focusing on proving brand impact, studies neglect the way the Web can encourage consumers to pay attention for more than, say, they might to a 30-second TV spot.

Commanding consumer attention is a feature that advergaming firms like YaYa.com and recently launched VirtualGiveaway.com preach on a regular basis, but it’s an area that needs more focus, according to Nail.

Most importantly, Web advertising firms need to make a better case for the value of Internet media.

For instance, the medium’s lower cost can deliver the equivalent of four magazine impressions for a fraction of the CPM rate. Similarly, and at least theoretically, Internet ads have guaranteed exposure — unlike magazine ads, which can’t be tracked to determine how much of the publication’s user base saw the ad.

“Online ad sellers hesitate to bring it up, but falling CPMs and a surplus of inventory point to one compelling argument: value,” Nail wrote.

Additionally, Nail foresees wise ad sellers taking steps to alter their pricing to reflect the amount of impact the medium can have on different advertiser segments — similarly to the way magazines and newspapers have long had different rate cards for national, retail and direct marketing clients.

As a result, media sellers can maximize revenue by going after vertical segments that are likely to pay more for consumer attention than nationally focused CPG companies, he wrote.

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