March 25, 2008
Measuring Online Ad Effectiveness
By Tom Ryan
While click-through rates, viewer time and even a browser’s ZIP code can be measured, researchers are now seriously looking into how online ads measure up against television ads. The search for better measurement tools comes as a growing number of marketers allocate as much as 20 percent of their ad budgets to online marketing.
IAG Research, which uses online polling to measure how well TV viewers remember commercials, is adding questions about internet ads to its surveys for clients such as Toyota. ARSgroup and TNS Media are also looking for strategies to measure brand impressions around online ads.
“We wanted to be able to have a consistent measurement tool to really start judging the internet compared to TV,” Kim McCullough, corporate manager of marketing communications at Toyota, told The Wall Street Journal. She said Toyota is trying to understand questions like “What is the optimal mix between TV and the internet? Where are their synergies?”
Measuring the brand impressions of any ad – TV or online – is fraught with difficulties. In the case of online ads, one obstacle is that the use of targeted ad sales means that two people visiting the same website aren’t likely to see the same ads. IAG compensates for that in its surveys, placing “cookies,” or small pieces of tracking data, on panelists’ hard drives so its system knows when panelists are exposed to an ad.
Toyota is the first advertiser to use IAG’s new web-measurement tools and has yet to receive any data.
IAG is measuring all kinds of web ads, from banner ads to video spots and sponsorships. IAG Co-Chief Executive Alan Gould predicts that standard banner advertising might prove to be less effective than previously thought – just as IAG’s data show that many TV ads don’t work. “The same thing will happen with the internet,” he told The Journal.
Despite all of the tools designed to measure ads, some marketers caution against putting too much value in the results. Advertisers have long been vexed about the difficulties of measuring the value of TV ads.
“Short of somehow being able to have a chip in my brain, I’m not sure how you could know what it was that really got me to make a purchase,” says Bruce Haggerty, directory of marketing research at Nestle USA, a unit of Swiss food giant Nestle.
Discussion Questions: Do you think advertisers will be able to get a better view of brand impressions around online ads than TV ads? What type of impact do you think the medium has on brand impressions? How do you suspect the ROI for online ads currently measure up against television ads?
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I think Peter’s right. It isn’t right or wrong to use old or new models to understand the impact of advertising. For a long time TV was a bit of an act of faith, but with new techniques we may learn how consumers are influenced by TV and how that impacts sales. Similarly we have ways to directly measure the offline sales impact of interactive advertising (e.g. printable coupons!) but that doesn’t mean we shouldn’t also look at more indirect effects and strive to quantify them.
Online advertising opens many new doors, but the old ones still lead to interesting places as well.
Great comments here. Ryan and Camille took much of what I was going to say, so I’ll just build a trifle: Many people I know never read the ads on the Internet. Like Camille says, you’re actively searching, involved in doing something, and there’s no passive waiting for an ad to be over. You just move past it immediately and continue what you were doing. An example of the only time it works for me: I needed fatwood for the fireplace. I Googled “fatwood,” got a bunch of responses, and chose a vendor. That, in totality, is the only way internet advertising has ever worked for me.
This is so backwards it’s almost funny. According to these researchers, it is somehow conceptually valid to attempt to measure online advertising and other advanced forms of media based on the antiquated metrics devised for a 50-year-old mass medium. Sounds to me like a last desperate act from the old advertising guard to preserve its outdated status quo.
The advertising industry perpetuates the same sad mistake when it attempts to devise a gross rating point metric for in-store advertising via shopper media. This is not TV. This is not TV! Online and in-store media do not and will not conform to the advertiser model perpetuated since the 1950s, no matter how hard some people wish it would.
We shouldn’t even be attempting to measure new media in terms of old media; rather, we should be devising appropriate metrics for the new media based on their mode of action and intrinsic traits and then measuring the old media in that new light. If television cannot measure up to modern standards, then it’s time for television to change.
With all due respect, I disagree with some of the views expressed above about “new media vs. old media” and how consumers process different types of ads. I suspect that the similarities are quite strong, and there is a lot that can be learned and shared across these different domains. The myriad factors that govern how/whether a consumer pays attention to an ad–many of which are and always will be unmeasurable–will dominate the “active vs. passive” distinction.
The main reason the old advertising models never quite did the job is because of the poor quality of the data. Better data might finally help us better understand the nature of this uncertainty, and will offer insights and methods that will be equally applicable to the old world as well. I doubt we can ever “crack the code” and know (with any reasonable certainty) which ads will be viewed by which consumers in which circumstances. But we can get a much better idea of what we can or can’t learn, and begin to allocate dollars a little more effectively as a result.
Why is the basic assumption that consumers process TV ads and Web ads the same process so that direct comparison of impact is possible? I don’t agree with the basic assumption. When watching TV ads, consumers are in a passive information processing situation. The most active they are is clicking to another station but they are still passively watching. Using the Internet is not a passive situation. Consumers are actively going somewhere, following a trail of interest, or looking for something. Ads should function differently when consumers are absorbing information differently.
Regarding the impact of either kind of advertising on purchase behavior, there are many studies of indirect impact. Direct causal impact is not available except for direct marketing ads that generate immediate response.
Using the old advertising model to study the impact of messages using new media is not likely to be very fruitful.
Since I think the answer to the first question is “No” I’m not sure how I can answer the next two. If you can’t measure general effectiveness how can you speculate on how Internet ads impact brand awareness? Ditto for ROI.
Now on to what IAG Research thinks they might find. Banner ads not effective??? Gosh, that’s groundbreaking. The Internet (especially as we migrate to Internet 2.0 and beyond) is a new media. I’m not sure why we keep trying to apply old media metrics to it. After all, when we learn to speak German we don’t begin by applying the rules of Chinese grammar.
I thought we killed the idea that recall was the key ingredient in an ad’s effectiveness years ago (like the mid-1980s)? The question is whether an ad (TV or online) generates sales–and we have tools to measure whether one ad is better than another or what the appropriate exposure level/frequency of exposure needs to be–this is nothing new.
If Nestle doesn’t know what makes their consumers tick, and the role advertising plays in that, they need to get going on their homework. While nobody has THE MODEL for consumer choice, most companies have a pretty good idea of what is and is not effective in driving purchasing, and if they don’t, they are doing the research to figure that out. We might ask, rhetorically, how one runs a business without knowing this.
I believe that people will always give their attention, even a minute amount of it, to something that catches their eye. Regardless of the media (web, TV or print), if an ad is visually interesting or clearly conveys a message that resonates with the viewer, then there is a greater chance of capturing interest. In this case, that would result in a click-through.
In my opinion, where the problem lies is in the fact that most advertisers have yet to design web ads that are interesting or send an appealing message. Combined with the fact that a viewer can be subjected to dozens of ads during a single site visit, it’s no wonder these ads may prove to be ineffective.
I think in the end, IAG will just confirm what we already know: Lousy ads don’t work, and great ads don’t necessarily generate sales.
When a marketing chief or ad agency can’t prove that ads don’t lead to sales, she/he talks about “awareness” and “building the brand.” Shareholders and smart executives want sales and profits, not indirect measures of success.
It’s not hard for an advertiser to test TV alone, internet ads alone, radio alone, circulars alone, billboards alone, or any combination, while measuring sales results. National advertisers can select test markets. Local advertisers can vary their weekly or monthly budgets among the media choices.
One of the best things about retailing: sales results are measured daily, if not hourly, so immediate feedback is easy. Of course, you don’t get immediate feedback on “building the brand” but sharp executives know that means “no results.” Measuring awareness is very easy, but of course that’s the first cousin to “building the brand.”
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I think Peter’s right. It isn’t right or wrong to use old or new models to understand the impact of advertising. For a long time TV was a bit of an act of faith, but with new techniques we may learn how consumers are influenced by TV and how that impacts sales. Similarly we have ways to directly measure the offline sales impact of interactive advertising (e.g. printable coupons!) but that doesn’t mean we shouldn’t also look at more indirect effects and strive to quantify them.
Online advertising opens many new doors, but the old ones still lead to interesting places as well.
Great comments here. Ryan and Camille took much of what I was going to say, so I’ll just build a trifle: Many people I know never read the ads on the Internet. Like Camille says, you’re actively searching, involved in doing something, and there’s no passive waiting for an ad to be over. You just move past it immediately and continue what you were doing. An example of the only time it works for me: I needed fatwood for the fireplace. I Googled “fatwood,” got a bunch of responses, and chose a vendor. That, in totality, is the only way internet advertising has ever worked for me.
This is so backwards it’s almost funny. According to these researchers, it is somehow conceptually valid to attempt to measure online advertising and other advanced forms of media based on the antiquated metrics devised for a 50-year-old mass medium. Sounds to me like a last desperate act from the old advertising guard to preserve its outdated status quo.
The advertising industry perpetuates the same sad mistake when it attempts to devise a gross rating point metric for in-store advertising via shopper media. This is not TV. This is not TV! Online and in-store media do not and will not conform to the advertiser model perpetuated since the 1950s, no matter how hard some people wish it would.
We shouldn’t even be attempting to measure new media in terms of old media; rather, we should be devising appropriate metrics for the new media based on their mode of action and intrinsic traits and then measuring the old media in that new light. If television cannot measure up to modern standards, then it’s time for television to change.
With all due respect, I disagree with some of the views expressed above about “new media vs. old media” and how consumers process different types of ads. I suspect that the similarities are quite strong, and there is a lot that can be learned and shared across these different domains. The myriad factors that govern how/whether a consumer pays attention to an ad–many of which are and always will be unmeasurable–will dominate the “active vs. passive” distinction.
The main reason the old advertising models never quite did the job is because of the poor quality of the data. Better data might finally help us better understand the nature of this uncertainty, and will offer insights and methods that will be equally applicable to the old world as well. I doubt we can ever “crack the code” and know (with any reasonable certainty) which ads will be viewed by which consumers in which circumstances. But we can get a much better idea of what we can or can’t learn, and begin to allocate dollars a little more effectively as a result.
Why is the basic assumption that consumers process TV ads and Web ads the same process so that direct comparison of impact is possible? I don’t agree with the basic assumption. When watching TV ads, consumers are in a passive information processing situation. The most active they are is clicking to another station but they are still passively watching. Using the Internet is not a passive situation. Consumers are actively going somewhere, following a trail of interest, or looking for something. Ads should function differently when consumers are absorbing information differently.
Regarding the impact of either kind of advertising on purchase behavior, there are many studies of indirect impact. Direct causal impact is not available except for direct marketing ads that generate immediate response.
Using the old advertising model to study the impact of messages using new media is not likely to be very fruitful.
Since I think the answer to the first question is “No” I’m not sure how I can answer the next two. If you can’t measure general effectiveness how can you speculate on how Internet ads impact brand awareness? Ditto for ROI.
Now on to what IAG Research thinks they might find. Banner ads not effective??? Gosh, that’s groundbreaking. The Internet (especially as we migrate to Internet 2.0 and beyond) is a new media. I’m not sure why we keep trying to apply old media metrics to it. After all, when we learn to speak German we don’t begin by applying the rules of Chinese grammar.
I thought we killed the idea that recall was the key ingredient in an ad’s effectiveness years ago (like the mid-1980s)? The question is whether an ad (TV or online) generates sales–and we have tools to measure whether one ad is better than another or what the appropriate exposure level/frequency of exposure needs to be–this is nothing new.
If Nestle doesn’t know what makes their consumers tick, and the role advertising plays in that, they need to get going on their homework. While nobody has THE MODEL for consumer choice, most companies have a pretty good idea of what is and is not effective in driving purchasing, and if they don’t, they are doing the research to figure that out. We might ask, rhetorically, how one runs a business without knowing this.
I believe that people will always give their attention, even a minute amount of it, to something that catches their eye. Regardless of the media (web, TV or print), if an ad is visually interesting or clearly conveys a message that resonates with the viewer, then there is a greater chance of capturing interest. In this case, that would result in a click-through.
In my opinion, where the problem lies is in the fact that most advertisers have yet to design web ads that are interesting or send an appealing message. Combined with the fact that a viewer can be subjected to dozens of ads during a single site visit, it’s no wonder these ads may prove to be ineffective.
I think in the end, IAG will just confirm what we already know: Lousy ads don’t work, and great ads don’t necessarily generate sales.
When a marketing chief or ad agency can’t prove that ads don’t lead to sales, she/he talks about “awareness” and “building the brand.” Shareholders and smart executives want sales and profits, not indirect measures of success.
It’s not hard for an advertiser to test TV alone, internet ads alone, radio alone, circulars alone, billboards alone, or any combination, while measuring sales results. National advertisers can select test markets. Local advertisers can vary their weekly or monthly budgets among the media choices.
One of the best things about retailing: sales results are measured daily, if not hourly, so immediate feedback is easy. Of course, you don’t get immediate feedback on “building the brand” but sharp executives know that means “no results.” Measuring awareness is very easy, but of course that’s the first cousin to “building the brand.”