This week, I was immersed in advertising: three days of wall-to-wall interactive adspeak at the Jupiter/IAB AdForum. Following are my takeaways, based on three days of research, reporting, prognostication, debate, bellyaching, and not a few rays of insight and illumination, on why traditional advertisers and their agencies are air-kissing (rather than embracing) online advertising.
The Good News and the Bad: It’s Measurable
“The Internet will transform advertising because of its trackability, not its beauty,” said Google CEO Eric Schmidt in his keynote address. Yes, it will. But only if advertisers bother to track it.
Web campaigns create a need for agencies and their clients to deal with quantities of data the likes of which they’ve never before imagined. Let’s put aside for a moment that “trackability” equals “accountability” (what marketer in their right mind wants to be held accountable after furnishing the Emperor with new clothes, season after season)? Who’s crunching these numbers? Research firms track the industry as a whole, but what about your campaign?
Back in TV Land, when figures were needed for a marketing initiative, I’d pick up the phone and call the 12th floor, which housed the research department, to place my order. Annotated Excel spreadsheets (or PowerPoint slides, if that was my whim) were on my desk in the morning. A far cry from, “Here’s the password to access the stats. Good luck.” Many marketers (who never took Statistics 101) are sinking in an ocean of data not yet charted by the experts.
Jupiter analyst Patrick Keane told the AdForum audience 67 percent of marketing departments still use click-throughs as a legitimate measuring stick for online ad performance, ignoring any branding effects of the medium. Only 35 percent track branding and predictive behavior. Not good news. Not surprising, either, with limited resources, personnel, and training.
Lower Margins? Marginalization
The Internet Advertising Bureau (IAB) presented additional findings from its ongoing cross-media study, designed to demonstrate increased online spending ups brand awareness. This time the victor was McDonald’s, with a 232 percent lift when the online component of a sandwich campaign was boosted relative to traditional media. Of its target audience, 5.6 million additional people became aware of the sandwich. Neil Perry, senior director of Internet marketing, said his company was so pleased with results that it will increase online spending by 50 percent next year. “This study confirmed for us that the Internet can provide us with an excellent way of reaching out to important customer segments, particularly the 18-24-year-old demo.”
Almost a headline, until a harder look reveals 50 percent moves online from 1 to 1.5 percent of McDonald’s total ad spend.
Traditional agencies continue to view online as a value add. They cannot make enough creating online campaigns compared with their core business practices. This goes for the account side as well as the media buys. To handle online effectively, they would need to invest in staff and technology to handle and interpret the avalanche of data generated by these campaigns. Their reward for the additional effort and expense? Less billable stuff. They’d be accountable for their work. They might have to work even harder.
The End of Advertising As We Know It?
To really advertise effectively online, some advertisers might dispense with ads and advertising altogether. That can’t be good news for ad agencies. The most thought-provoking discussions at AdForum were about campaigns that dispensed with traditional, one-way messages (“Whiter teeth! Fresh breath!”) to permit true interaction. Not a new online concept, but not one many advertisers or brand managers are warming up to, either. Empowering and listening to customers (discussed by Len Ellis) requires marketers not only to invest (during belt-tightening times) in technology to enable such practices but also to allow audiences to talk back for a change. Worse, you have to listen when they do, and even do what they say — much more often than you’d like. You loosen the reins on your brand. Ouch!
This means not only sifting through more mountains of data but also seeking new allies within your organization, such as the customer service department. It may mean finding ways of impacting customers and prospects with methods that aren’t advertising at all. That’s bad not only for agencies and their clients, but for publishers, too.
Bottom line for agencies and traditional marketers: Budgets have never been tighter. You’re understaffed. Your highest-margin revenues are generated by traditional campaigns for traditional companies. You can pay lip service to developing the best possible “solutions” for clients and to developing long-term strategies. That would have to include interactive and, truth be told, that’s not in your interest right now. It requires time, money, people, and radically new skill sets. At the end of the day, you’d be accountable for stuff you never before had to defend or justify in quantitative terms. Interactive is the last thing you’d want to recommend to your clients — especially in this environment. Clients are running scared too. So they stick with the tried-and-true. Instead, they should ask their agencies harder questions.
Eight of Adweek’s top 10 interactive agencies were digital boutiques in 2000. A scant year later, full-service agencies rolled back with a vengeance, reclaiming seven of those slots.
Just this morning, a couple of pure-play digital shops, including Avenue A and BURST! Media, announced they reached milestones toward profitability and growth. Perhaps the marketing revolution many still believe the Web guarantees won’t occur until the digital shops are back from the brink.
If that revolution does happen, I promise you it won’t be televised.
You can meet Rebecca at ClickZ Email Strategies in San Francisco, November 18-19.
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