Brands’ Plodding Online Crawl

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turtle_smallADOTAS – A lot has been written about the movement of advertising budgets from traditional to online media. There’s no debating that it’s happening, but much more slowly than anticipated.

Because the web offers a more effective way for people to find what they’re looking for, low-hanging fruit like classifieds and yellow pages have moved very quickly to their online counterparts like eBay, CraigsList, and local search. But in areas like brand advertising, it’s a much different story.

Nielsen recently reported that time spent online ranks a very close second to time spent watching TV and far outpaces newspaper and radio consumption time. However, online ad spend ranks a distant fourth place behind these traditional advertising mediums mainly because brand advertisers have not felt comfortable moving their budgets online.

A big reason is the lack of transparency and trust. The equivalent of a TV or magazine branding advertisement in the online world is a display or banner ad. While the search ad market (CPC) has grown by leaps and bounds in the past decade, the display ad market (CPM) has lagged.

Brand advertisers are still uncertain about many aspects of online advertising. This uncertainty arises from concerns about transparency, which can be described in three parts:

Lack of Audience Verification: Online display advertising today still operates as a “black box.” Advertisers tell their agencies to reach a specific audience. Agencies utilize multiple channels (ad networks, DSPs, ad exchanges, direct publishers) to buy impressions and then report back to the advertiser when the impressions have been served.

Display advertisers, however, have no easy way to verify that they got what they paid for. They receive reports on click-through and/or conversion rates, but advertisers are provided with little information about where the ads were served, to whom, when, and in what context.

Brand Safety Concerns: Context is critically important for brand advertisers. A brand can be irreparably damaged if it becomes associated with inappropriate content.

In the offline world it is very easy to control the context in which a brand is viewed. Advertisers in The Wall Street Journal, for example, are comfortable with their ads appearing in a premier business publication, just as advertisers in Playboy magazine know exactly what they’re getting. There are no surprises.

But the online world is different. When ad inventory is offered for sale or re-sale through an exchange or ad network, there’s no telling in what context the ad will appear. Lots of content on the web today is user-generated (UGC) or blatantly inappropriate for major brands (e.g. adult oriented, hate speech).

Until brand advertisers can be assured that their brands are protected from appearing near inappropriate content, the flow of brand ad dollars online will remain a trickle.

Show Me the Money: Being able to measure the effectiveness of online display advertising is still a daunting and difficult task for brands. Many online marketers have been told that online ads are more measurable than offline because the click-through and conversion rates can be tracked to the one-hundredth percentage point and beyond.

While that’s helpful for direct marketers, brand advertisers are typically more concerned with the audiences viewing their ads. An advertiser in the U.S., for example, may find out that a banner was displayed one million times, but if 25% of those impressions were delivered in China and 15% of the impressions were “below the fold” (not viewed by a visitor) and 10% of the impressions were generated by bots or spiders, then fully one half of that ad spend was wasted.

Another challenge is determining whether the remaining half of the ad spend not wasted actually reached the target audience or just random web surfers.

The good news for brand advertisers is there are lots of companies developing new technologies and services designed to tackle these issues. There are at least a half a dozen companies focused solely on tracking and ensuring brand safety.

A few more are developing audience verification services and offerings to measure, monitor, and guarantee brand advertising effectiveness. But one thing is certain: until the online advertising community can solve these problems, brand advertisers will continue to hold back the billions of dollars they’re prepared to invest in display advertising.

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