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Using Online Advertising To Build Brands

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Using Online Advertising To Build Brands

  1. 1. Presentation Notes • 7/30/2012Good morning, I am delighted to be back in Mexico City once moreand would like to thank IAB Mexico for its kind invitation to speaktoday.I am Chief Global Analyst at Millward Brown and, as such, come froma somewhat different world from many in this room. Millward Brownworks with many of the world’s largest brands, helping them to buildtheir brand, drive sales and improve brand value. For us, online anddigital is an important means for companies to build their brands, but itis not the only one. We devote considerable time and resource toensure that we can measure the full effect of digital media spend andunderstand how it fits with other more traditional media.In my presentation today, I wish to review some learning on whatworks to build brands online. Not to drive direct response, but to buildaffection and the predisposition to buy a brand at a later date. 1
  2. 2. Presentation Notes • 7/30/2012In the first section of my presentation I want to consider the metric thatcontinues to dominate the lives of online marketers: click-through.What it is, what it is not, and how much it might really be worth.Click-though has been referred to as “the core of our digital nervoussystem, and the key to the online economic system,” by TedMcConnell, exec VP-digital for the Advertising Research Foundation(more from Ted later). But do we really understand what it is and howimportant it might be? 2
  3. 3. Presentation Notes • 7/30/2012It is largely as a result of click-through (and other behavioral metricslike expansion rate and video completion rate) that many peoplebelieve that online advertising is the most measurable media.Unfortunately, it is a belief I do not share. We can measure a limitednumber of metrics with complete accuracy online, but these metricsonly give us a partial, and in some cases misleading, view of ouradvertising’s effectiveness. The fundamental issue is that even thoughmuch of the advertising online is designed to affect awareness andattitudes, we still measure its effectiveness as if it were a direct mailcampaign.In a recent survey by Vizu of more than 450 advertising executives,marketers said that they will be allocating nearly 60% of their onlinebudgets to brand advertising in 2012, indicating that spending ononline branding may surpass spending on direct response advertisingfor the first time in the coming year.http://www.prweb.com/releases/2012/1/prweb9084906.htmAs Millward Brown’s Chief Global Analyst, it is my job to make senseof trends and numbers. So here is a number for you. 3
  4. 4. Presentation Notes • 7/30/2012The number is 16. 16 years ago Millward Brown helped demonstratethe brand building power of online advertising for the first time. In 1996,we teamed up with a company called HotWired to measure the brandbuilding effect of online advertising. The research was conducted as aresponse to a growing fixation in the Internet industry with a behavioralmetric called click-through: the proportion of people who click on anonline ad. Our research, the first of its type, proved that onlineadvertising could build brands just like any other medium.http://www.nytimes.com/1996/12/03/business/banner-ads-on-internet-attract-users.htmlSince then much has changed. We have sophisticated ad tracking andtargeting systems. We have online video and rich media. We havesocial networking. But not everything has changed. The majority of theonline advertising industry is still fixated with that simplistic behavioralmetric of click-through. My belief is that most digital advertising today isconducted without recognizing the bigger picture of how brands reallymake more money. So let me lay out my case by sharing a few morenumbers. 4
  5. 5. Presentation Notes • 7/30/2012In a recent survey, 64% of advertising and agency executives claimed to useclick-through rates (CTR) to evaluate performance and optimize their onlinespend. http://www.collective.com/sites/default/files/Collective-2010-Display-Study.pdfA further 61% use Cost per Click and 48% Cost per Acquisition. In spite ofthe fact that the majority of online marketers claim to be using the mediumfor brand building, only a minority used brand awareness or brandfavorability to optimize spend. Why is the click so dominant? Because it iseasy. Because it is universal. Because it is free. Unfortunately, simplemetrics win every time. Yory Wurmser of the Direct Marketers Associationgives us another reason: “Transactional data tends to be more accurate,since it takes the human element out of the assessment and shows exactlywhat happened.”Except, of course, it doesn’t give the whole picture. The problem withtransactional data like clicks and likes is that it tells you what the minority ofpeople did. It does not tell you why those people did something. And it doesnot tell you what the majority of people exposed to the ad did. Worse still,there is plenty of evidence to suggest that click-through is not accurate. Butsetting these points aside, I still find this statement bizarre. What on earthare we doing as brand or direct response marketers if not dealing with “thehuman element”? Brands would not exist and certainly would not helpbusinesses make more money without the human element. 5
  6. 6. Presentation Notes • 7/30/2012I suggested that clicks represented a minority behavior. These daysthe number of people who respond to online advertising is very smallindeed.According to DoubleClick, one in a 1,000 people actually clicked on theaverage ad in 2010.http://doubleclickadvertisers.blogspot.com/2011/08/latest-display-benchmarks-now-available.htmlThat’s less than 5% of how many people clicked in 1998 when it was 1in 50 people. It may be less than reported click-through rates inMexico, but maybe it gives you a glimpse of the future.And wait, there’s worse news ahead. If you think that click-through isan accurate measure of response to an ad, think again. 6
  7. 7. Presentation Notes • 7/30/2012Ted McConnell, exec VP-digital for the Advertising ResearchFoundation, recently reported a little experiment he conducted inAdAge: http://adage.com/article/digital/incredible-click-rate/236233/He and some associates ran six blank ads in three IAB standard sizes,and two colors, white and orange. The average click-through rateacross half a million ads served was 0.08%, which would be good for abrand campaign, and so-so for a direct response campaign. Whenasked, half the clickers said they were curious, the other half admittedto a mistaken click. As McConnell admits, the experiment is notrealistic, after all it was a blank ad, but he states:“At a minimum, the data suggest that if you think a click-through rate of0.04% is an indication of anything in particular, you might be stone-cold wrong.”So if half the people who click on an ad do so by mistake, what doesthat imply about the value of online advertising? ROI calculationsbased on click-through start to look even more dubious than they donow. And yet we know that the overall effect of an online ad is fargreater than immediate behavior would imply. 7
  8. 8. Presentation Notes • 7/30/2012In research conducted by Dynamic Logic, over the last three years anadditional 1.3% of people claim they will buy a brand as a result ofbeing exposed to an online ad (compared to those exposed to acontrol ad). (Source: MarketNorms database) That’s a lot higher thanthe click-through rate.Ah, you say, but that is intent it is not a purchase (but then neither is aclick). It is behavior that matters. We need someone to buy the brand.So what proportion of these people with positive predisposition go onto buy the advertised brand? The answer is anywhere between 10%and 70%.There is a good relationship between overall purchase intent and salesin most categories at an overall level. The same is true when we lookat the response to online ads specifically. Our research estimates thatsomewhere between 50-70% of people follow through on theirpurchase intent for consumer packaged goods after seeing an onlinead. That’s a similar conversion to click-through, but the absolutenumber is much bigger. Estimates for automotive and entertainmentare lower, and in part, depend on the purchase frequency. For CPGbrands measured by SymphonyIRI, the overall average ROI was $1.50for every dollar spent.The truth is that few people are at all interested in thinking aboutbrands when exposed to an online ad. Instead they want to get thenews, find recipes, check out information on celebrities and connectwith their friends. To think that the few that do click are in any wayrepresentative of the total is naïve. 8
  9. 9. Presentation Notes • 7/30/2012Unfortunately all the evidence suggests that click-through andpurchase intent are not correlated.http://www.dynamiclogic.com/docs/presentations/2012/03/14/ARF2009_Behavioral_Branding_Correlation.pdfYou cannot assume that the total response to an ad is reflected in theclick-through rate. This was true of the ads we tested in the HotWiredAd Effectiveness Study, and it still is. We just have far more proof. Forinstance, auto ads tend to get clicked on more than others, but thatdoes not mean that more people want to buy the advertised brand.Automotive ads tend to attract high click-through rates, but onlyaverage increases in purchase intent. Reason? There are plenty ofpeople who are just interested in cars and want to know the latestabout them, even if they are not in the market to buy one.Financial services on the other hand score low on both click-throughand purchase shift. Reason? Few people are interested in banks andare unwilling to consider switching unless forced to do so or the offer isvery attractive.The research from which this finding was taken wasconducted in conjunction with Google in 2009, but recent workconducted by a start-up called Pretarget using ComScore data findsthe same thing for clicks and conversion. Pretarget found that thecorrelation between clicks and a conversion was 0.01.http://adage.com/article/digital/click-rates-matter-thought/234330/So if you are optimizing your media buy against click-through, there isa good chance that you are either overestimating or underestimatingthe impact of the campaign…by a lot. Why does this matter? 9
  10. 10. Presentation Notes • 7/30/2012It matters because almost 2 in 5 online ads measured by DynamicLogic have a negative effect on purchase intent. (Source:MarketNorms database) Did you really think that ads that pop-up or getin the way of people looking for content was really a good idea?Now what if people follow through on negative purchase intent asmuch as they do positive purchase intent? The implications of thisfinding are scary. Could a lot of online advertising actually be erodingbrand value by undermining people’s predisposition to buy theadvertised brand?I can’t answer that question today, but what I can tell you is that byfocusing on click-through to the exception of other metrics, we riskundermining the value of the very brands that pay online advertising’sbills. Let’s leave the numbers for a minute and ask ourselves what weare really measuring with click-through. 10
  11. 11. Presentation Notes • 7/30/2012What is a click? What does it actually measure? I would like to proposethis definition.A click is an impulse expression of interest in a brand or offer. It is anaction that implies that people not only find your ad of interest, but thatthey have enough time and interest to check it out right now. Morepeople may find your brand relevant but they just don’t have any timeto follow up right now, and other things are more interesting.What I believe most online advertising does is act as an accelerant. Acall to action that gets some people to do something now that theywould have done anyway, given time. I believe that all too often thegreat ROI reported for online advertising, paid search and socialadvertising represents the penultimate step in a chain of events –including exposure to other forms of media – that leads to purchase.The question is, would these people have bought anyway even withoutthe call to action? But, of course, online advertising need not be limitedto a call to action. 11
  12. 12. Presentation Notes • 7/30/2012Last week my colleague John Svendsen, Global Brand Director forMedia at Millward Brown, said this in conversation: “All media arecapable of doing all things on a per person basis.”What he means is that with the right strategy and creativity, any mediacan build awareness, create an emotional response or drive behavioralresponse. The only real difference between media channels is reach.All else is down to the advertiser’s mindset.There is absolutely no reason why online advertising cannot buildbrands just as effectively as other media. We proved that it has thecapability to do this for 16 years. And given the dramatic fall in click-through since then, one could argue that online needs to justify itsexistence by demonstrating that it can build value beyond being anaccelerant of response. 12
  13. 13. Presentation Notes • 7/30/2012So what do we need to ensure that online advertising builds brandseffectively?We have seen a lot of change in the last 16 years and learned a lot ofnew things. But not everything has changed. In the remainder of thepresentation I want to consider what remains true today and what isnew. 13
  14. 14. Presentation Notes • 7/30/2012The first thing that has stayed the same is that online advertising stillhas the capability to build brands. 14
  15. 15. Presentation Notes • 7/30/2012Data from Ad Index studies conducted in Latin America prove thispoint.Exposure to online advertising still has the potential to raise ad andbrand awareness and improve brand favorability and purchase intent.MarketNorms Q2/11 (Category: LATAM, N= 18 campaigns; n=19,060,last three years) 15
  16. 16. Presentation Notes • 7/30/2012Importantly, we still find that creativity matters to online advertising, justas it does with other media.The problem is that we often find that simple things that could improvethe effectiveness of online are ignored. Online media is different fromother, less actively consumed media. This means there are severalthings unique to the medium. 16
  17. 17. Presentation Notes • 7/30/2012This data was for a display ad campaign tested here in Mexico.As you can see, the campaign delivered strong results. Ad awareness,the precursor to attitudinal and sales response, rose nearly 28%between control and exposed cells. Purchase intent rose nearly 8%,over five times the average for Latin America.So why were the results so good? Because the brand followed thethree golden rules of online display advertising. 17
  18. 18. Presentation Notes • 7/30/2012Leverage the brand’s iconic assets and show the brand nameprominently on all frames.You cannot guarantee that people will see all the frames of an ad. Youcan’t even be sure they will see the first one! Reveal ads that assumepeople will follow along to get the message are very likely to backfire.Keep your messaging simple.If you hope to create a positive response to your advertising, do notuse interruptive advertising. You only set up a negative reactionmaking it difficult for people to respond positively to any message. 18
  19. 19. Presentation Notes • 7/30/2012Here is a comparison of three ads for Gillette that were tested inconjunction with IAB Mexico a couple of years ago. The overallcampaign performed well, but it is clear from this chart that ad 1performed best in terms of persuasion and ad 3 the worst.Why?Because ad 1 obeyed the golden rules of display advertising and ad 3did not. Ad 3 was confusing and did not show the brand until the lastreveal. 19
  20. 20. Presentation Notes • 7/30/2012In April 2001 I was here in Mexico City to present at anotherconference.That one was hosted by ESOMAR, the international researchorganization. The title of my presentation was “Is bigger really better?”My answer to that question was yes. Bigger was better then and it stillis today. 20
  21. 21. Presentation Notes • 7/30/2012In 2012 we conducted a retrospective analysis of three new and threeestablished online ad formats using Dynamic Logic’s MarketNorms®data.While the results differed depending on the metric looked at, the onethat created the biggest bang for the advertising buck was thebillboard. The large, full width ads that appear at the top of a page.Wallpaper ads, that essentially take up the full page but sit behind thecontent, were next most effective.And whether sites and users like it, this is the sort of advertising thatwe are likely to see more of. Because the first step on the road tobrand and sales success is to get noticed.Source: Dynamic Logic Global analysis of 770 campaigns for IAB UK 21
  22. 22. Presentation Notes • 7/30/2012Back in 2001 I also reported that streamed ads had a significant impacton brand metrics compared to the normal ad banner. 22
  23. 23. Presentation Notes • 7/30/2012Streaming and online video have come a long way since then, but ourtesting still demonstrates that video has more impact than otherformats.Standard and rich media ads require substantially more exposures tomatch the first exposure impact of video. However, global data showsthat with over-exposure, high impact formats can begin to drive downattitudes toward a brand, particularly in regards to purchase intent.http://mediatel.co.uk/newsline/2012/06/07/fast-forwarding-your-brand-with-online-video/ 23
  24. 24. Presentation Notes • 7/30/2012On the whole, we’ve seen that in-stream ads are better for driving awarenessand message association, but non in-stream may be better for drivingfavorability and consideration.The reason is that while we remember events automatically, we do notnecessarily reflect on their importance to us at the time. No one pauses toreflect on what they have seen in-stream because they are already watchingthe content they really wanted to see. Click to play or autoplay ads are differentbecause attention is given to them in isolation. When the ad ends, the viewerhas time to reflect on how relevant and meaningful the ad was for them. The in-stream video experience is analogous to watching commercials on TV, and isbetter at delivering implicit impressions. Out-of-stream ads are consumed morelike print advertising and are better able to deliver more explicit messages.Source: Dynamic Logic MarketNorms, Q4/09, Last 3 Years, In Stream VideoN= 42 campaigns, n= 51,781 respondents; Not In Stream Video N= 209campaigns, n= 234,949 respondents
  25. 25. Presentation Notes • 7/30/2012So many of the basics of online advertising have stayed the same overthe years. But many things have changed. The technology has evolvedand we now have that vast new playground called social media. Overthe years, Millward Brown has sought to measure and understand thepotential of these new opportunities. 25
  26. 26. Presentation Notes • 7/30/2012One major change that marketers here in Mexico will have to come toterms with is that “viral” needs help. 26
  27. 27. Presentation Notes • 7/30/2012Across over 100 ads on YouTube analyzed by Millward Brown, only13% achieved more than 5,000 views per week on YouTube.Even for these ads, although the additional views are worth having,they cannot really be defined as “viral.” Viral would only really happenif each person who viewed the ad sends it on to more than one other,and none of these ads came close. 27
  28. 28. Presentation Notes • 7/30/2012The good news is that based on our research into what makes ads goviral, we can now predict the viral potential of any ad. The keyingredients are the ability to create A,B,C,D:Awareness, which depends on people finding the ad enjoyable,engaging and well branded.Buzz, which depends on people finding the content funny, edgy,gripping or sexy.Celebrity, which acknowledges that the more interested people are inthe person featured the more likely the ad is to be shared.Distinctive, the degree to which people believe the ad stands out fromother ads.Combined, these elements explain a substantial proportion of howmany people view the ads, but not all. This is because viral ads alsodepend on mass seeding. People need to be able to find them easilybefore they can share them. 28
  29. 29. Presentation Notes • 7/30/2012In order to create good levels of pass along, you need to publicize yourcontent.For instance, in work conducted for YouTube, we found that homepage ads are directly or indirectly responsible for 86% of all views, andimprove overall viewership by a factor of 6 compared to unpublicizedads. Featuring the ad on the home page meant that even the ads withlow viral potential got some views, and only the ads with the bestpotential came close to matching the featured ad performance. 29
  30. 30. Presentation Notes • 7/30/2012Back in the early days of online, it was often proposed that the newmedium would supplant all other forms of advertising.Instead it has created a sort of parallel universe. Online video is theequivalent of TV advertising. Banners are billboards. And Web sitesextended print ads.Moreover, it has become apparent that the Internet does not workalone. It has to be considered in the light of the overall mediacampaign. 30
  31. 31. Presentation Notes • 7/30/2012The reason is simple. During the life of a campaign, online advertisingis almost always seen in conjunction with other media.In this example taken from one of our CrossMedia studies, we foundthat less than 2% of respondents were likely to have been exposed toonly the online display advertising. More people had actually seen thebrand on Facebook. 31
  32. 32. Presentation Notes • 7/30/2012But just because there is overlap, it does not mean online is ineffective.This chart shows that in our analysis all three media channels returneda positive ROI. 32
  33. 33. Presentation Notes • 7/30/2012And our findings demonstrated that TV alone would not have createdthe same impact as the combination of media. TV had the biggestimpact overall (reflecting its stronger reach) but Facebook had thestrongest return on investment. 33
  34. 34. Presentation Notes • 7/30/2012And mention of Facebook brings us to one of the biggest and mostimportant changes in the last 16 years: the advent of social media.In 2011, 87% of Mexican Internet users claimed to be registered to asocial network. And most of them – 94% - claimed to be on Facebook(up from 86% the year before).Of these, 40% belonged to a fan page. And that seems to be goodenough for many marketers. All they seem to want is people to liketheir brand assuming that this will be noticed and encourage others tobuy the brand. Heck, some marketers are even willing to pay for likeseven though they could get them for free with the right strategy. 34
  35. 35. Presentation Notes • 7/30/2012Unfortunately, I believe that likes are very similar to clicks…only lessso.In most cases they are superficial indications of brand allegiance andmostly given in response to incentives – offers of freebies andgiveaways – or prior affection for the brand. For some time now, wehave been observing an arms race to get people to “like” brands onFacebook.The trouble is, relatively few brands have figured out what to do withthose people once they have liked the brand. 35
  36. 36. Presentation Notes • 7/30/2012The first thing to do is to recognize that fans are important to you. Theyalready outspend non-fans by over 4x. Source: Millward Brown’sBrandZ, 2010 global database. The fan page challenge is to deepenthe relationship that you already have, not try to pitch them or get themto persuade their friends to buy the brand. Given the rightencouragement, they will do that by example.What influences people to like a brand? Well, to start it depends on thecountry. Latin Americans are very positive about brands and tend tolike them more easily than, say, those colder blooded Brits. Then itdepends on the product category. Categories which encourageconversation; e.g. software/ hardware, diapers, telecomms, mobilephones and cars, tend to get more likes than others.And then brands which are particularly creative and desirable, andjustify their premium, are likely to be liked. There is a strong correlationbetween brand equity and the number of likes on Facebook, with thestrongest brand getting the most likes. Challenger brands often pick upmore than their fair share, but otherwise most brands are liked byrelatively few people. 36
  37. 37. Presentation Notes • 7/30/2012In order to help advertisers maximize the impact of their Facebookpage, we provide a service called FanIndex. Exposed respondents arerecruited directly from the fan page and one of the questions we ask isFor each of the following attributes, has your opinion of BRANDchanged since you became a fan and visited the fan page?In this case study for a brand here in Mexico, we find that theFacebook page had a strong influence on perceptions that the brandoffers something different from others. This is a really important findingbecause this perception helps define whether a brand can command aprice premium or not. So what sorts of things help a brand to achievethis type of response? 37
  38. 38. Presentation Notes • 7/30/2012In our analysis of effective Facebook pages, four things stood out asdifferentiators: variety, interaction, useful information and community.http://millwardbrown.com/Libraries/MB_Articles_Downloads/2011_FanZ_Social_Media_and_Brand_Fans.sflb.ashxHere in Mexico…79% want news about the brand.51% want promotions (look out, it’s a trap!).50% relevant information.44% to know other users opinions.And 31% to communicate directly with the brand.(Digital Media Consumption Study of Mexican Internet Users 2011conducted by Millward Brown in conjunction with Televisa and IABMexico). 38
  39. 39. Presentation Notes • 7/30/2012One of the major roles of advertising is to make a brand salient andvital.Salient in that the brand comes to mind easily and quickly whenrelevant. Vital in that people are drawn to brands that seem successful,growing, popular and contemporary.And increasingly people judge how vital a brand is by its presence insocial media. This is why one of Millward Brown’s latest innovationprojects has been to develop a methodology for measuring the onlinesocial vitality of brands. 39
  40. 40. Presentation Notes • 7/30/2012To monitor the social vitality of a brand, we use Twitter. In 2011, 45%of Mexican Internet users claimed to be on Twitter (up from 39% theprevious year).Twitter is a very useful tool for marketers and market researchersbecause it acts as a portal into all sorts of different content sharedonline. And it is an open platform which means we can analyze thatcontent as much as we like.To understand social vitality, we parse the entire Twitter stream toidentify people who are talking about a specific brand. 40
  41. 41. Presentation Notes • 7/30/2012The Twitter data gives us the raw material to create the VerveIndex: aone-number social impact score.To do so, we calculate Verve for everyone who talks about the brandor its competitors in a certain way, and we weight the scores forsharing and influence. Unlike many other monitoring systems, we haveleveraged our understanding of brands to create an in-depth measureof social vitality, and have dealt with the substantial biases that need tobe taken into account with this type of listening. 41
  42. 42. Presentation Notes • 7/30/2012The end result is a metric that allows marketers to understand just howvital their brand is when it comes to the online domain. Here we seethe vScore tracked over time. As with search and viral advertising, thelevel of social commentary is very dependent on other advertising andevents. As TV advertising drops away, so too does commentary fromfans. A FourSquare special boosts comments but fails to sustain thatlift. Moreover, in a competitive context, Brand X’s lower frequency ofmentions counterbalanced out the impact of its positive sentiment in itsvScore.The Foursquare promotion was double-edged in that it promoted morementions and check-ins, but many of those who tweeted about it werenot discussing the brand beyond that. In future, the brand needs toimplement mechanisms to sustain the discussion beyond the initialtweet.Source: Millward Brown’s Emerging Media Lab 42
  43. 43. Presentation Notes • 7/30/2012That was a whistle stop tour of the last 16 years of online advertisingas seen by a market researcher.For me, the scary thing is the degree to which a very simplistic metrichad dominated our approach to online advertising. If we stick to usingclick-through as the primary metric by which to evaluate advertisingresponse, I can’t help wondering if there is a threshold at whichmarketers suddenly come to believe that their investment in online iswasted. 43
  44. 44. Presentation Notes • 7/30/2012And yet the silly thing is, there are 16 years of evidence that online canhave just as much brand building impact on a per person basis as anytraditional medium. Whether it is a static display ad, online video or aFacebook page, the right research methodology can tease out itsbrand building effects. And after all, that is what people really buy –brands – not advertising. 44
  45. 45. Presentation Notes • 7/30/2012To end on a positive note, I am glad to be able to tell you that some ofthe largest and smartest online advertisers are now beginning to take amore integrated approach to evaluating and optimizing their onlineadvertising. Instead of relying on one metric or another, we work withthe client and their media agency to help optimize their campaignsbased on both behavioral and attitudinal data. The end result is a moreeffective and efficient approach to managing online marketing spend.Hopefully developments like this will mean that in future onlinemarketing will no longer be hostage to a single behavioral metric andassume its rightful role as a brand building medium. 45
  46. 46. Presentation Notes • 7/30/2012Thank you for listening. 46