Meeting the Needs of Traditional Advertisers

Internet professionals used to refer, derisively, to people who didn’t “get it.” People who didn’t get it worked for traditional advertising agencies or brick-and-mortar companies and didn’t fully embrace the opportunity of the Internet.

But now the chickens are coming home to roost.

Dot-com advertising budgets have slowed to a trickle, and the same people who dismissed traditional advertisers as hopelessly old-school now realize that these “old schoolers” hold the key to online advertising’s future.

According to a recently published study by Morgan Stanley Dean Witter, the Internet currently accounts for only about 1.5 percent of all marketing money spent by advertisers. The top six advertisers spend less than 1 percent of their budgets for online ads, whereas Americans spend approximately 12 percent of their media time online.

The big question is why. Looking for an answer, I hosted “What Do Traditional Advertisers Want When Buying Media Online?” last week, a panel discussion with representatives from Nabisco, Castrol North America, Yahoo, and MediaVest. The event attracted an audience of 125 people.

As you might expect, the panel spent most of its time exploring the reasons for traditional advertisers’ inertia in shifting their ad dollars to the Internet. According to the panelists, here are some of those reasons:

  • Online agencies and publishers don’t address advertisers’ objectives. All too often, interactive agencies and Web sites talk about traffic, click-through rates, page views, and other metrics that are completely irrelevant to most advertisers’ objectives.

    Nobody clicks on a television ad, and you don’t drive traffic to a billboard. Traditional advertisers evaluate advertising based on measurements such as brand awareness and intent to purchase. Online advertising needs to learn to speak the language of traditional advertising to become relevant.

  • Marketing integration is ad hoc or nonexistent. Advertisers want to integrate the Internet into their communication strategies. But because of the way the Net is quantified, it is hard to put Internet tactics into the marketing mix.

    Because online advertising doesn’t fit into the formulas of gross rating points (GRPs), reach, and frequency, advertisers find it hard to calculate its value relative to other media. Consequently, the Net is often treated as a side bet.

  • Online advertising is complicated. TV commercials haven’t changed much in decades. All major advertisers have a process for developing TV spots, and they use research to maximize their results.

    But online advertising is hard. The best online marketing campaigns often combine rich media, sponsorships, sign-ups, standalone Web sites, email, and banners. Putting these programs together is daunting, and many advertisers don’t have the in-house expertise to supervise their development.

  • Online advertising is unproven. Traditional advertisers know that television advertising works. For established brands, results from copy-testing research, combined with reach and frequency calculations, yield good estimates of how a particular campaign will affect sales.

    But because online advertising is so new, few companies have developed benchmarks to reliably predict its ability to drive purchase. Consequently, companies are unwilling to divert money from TV, seen as a safe bet, to the Internet, perceived as a risky one.

Of course, these challenges need to be put into perspective. When television was five years old, commercials were rudimentary and experimental. Within a few decades, TV advertising blossomed into one of the most powerful storytelling media of all time. The Internet represents at least as much opportunity, and traditional advertisers (at least the ones on last Thursday’s panel) know it.

But a huge divide still exists between the traditional and online worlds. It’s no longer about who gets it, however. Instead, it’s about both sides needing to work together to foster a relationship that will benefit us all.

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