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What media companies and
                                         brand marketers can do to
                                         unleash the power of the Web
                                         to build brands online




In search of a premium
alternative: an action plan
for online brand advertising
By John Frelinghuysen and Aditya Joshi
About this study

         The authors would like to acknowledge the support and collaboration of the Interactive Advertising Bureau
         (www.iab.net ) and its members in the development of this Bain Brief. The IAB is comprised of more than 460
         leading media and technology companies who are responsible for selling 86 percent of online advertising in
         the United States.




John Frelinghuysen is a partner with Bain & Company and a leader in the firm’s
Global Media practice. Aditya Joshi is a partner with Bain and a leader in the
firm’s Customer Strategy and Marketing practice.
The authors would like to thank Jason Wiethe and Chris Sims, managers with
Bain & Company, for their contributions to this Bain Brief.


Copyright © 2010 Bain & Company, Inc. All rights reserved.
Content: Manjari Raman, Elaine Cummings
Layout: Global Design
In search of a premium alternative: an action plan for online brand advertising




What media companies                                                           tising revenues fell by just 3 percent in 2009,
                                                                               while print and television advertising saw
and brand marketers                                                            double-digit declines.1 Moreover, future growth
can do to unleash the                                                          prospects appear robust: Bain & Company fore-
                                                                               casts that online advertising revenues will grow
power of the Web to                                                            at an average annual rate of 12 percent between
build brands online                                                            2010 and 2014. Spending on online advertising
                                                                               will overtake print in 2010. Dig a little deeper,
                                                                               however, and some worrying trends emerge
As online advertising approaches maturity, it
                                                                               (see Figure 1). Consider:
faces a major crossroads. The industry can
continue down the path of commoditization
                                                                               •      Much of the projected growth will come
driven by direct response, with its promise of
                                                                                      from direct-response advertising—in particu-
high volumes but little room for differentiation.                                     lar, search. This suits advertisers seeking an
Or it can reinvent itself around brand advertiser                                     immediate, measurable return on invest-
needs and deliver more premium offerings.                                             ment (ROI), usually in the form of website
Making the right choice will not just ensure                                          traffic and sales transactions. However,
sustainable growth—it will redefine the indus-                                        response advertising is not geared to build-
try’s future winners.                                                                 ing long-term brand affinity for marketers
                                                                                      and does not fully value the content and
On the surface, online advertising appears to                                         “premium environment” of specific sites
be in good shape. It has weathered the down-                                          on which ads are placed. For example, two
turn better than other media: Online adver-                                           sites offering comparable response rates



Figure 1: Brand marketers still rely on traditional media, while increasingly, the leading
medium for response marketers is online

                         Brand marketers                                                                Response marketers

 Percent of total advertising spend

 100%
                    Other
                                                                                                     Other

    80              Online                                       +5%



                                                                                                     Online                    +8%
    60



                    TV,
    40           magazines,                                       3%
                 newspapers
                                                                                                     TV,
                                                                                                  magazines,
    20                                                                                            newspapers                    6%



      0
                    2008                       2011P                                                 2008              2011P

 Source: Bain/IAB 2009 Marketer survey; N=700


                                                                                                                                       1
1 AB Internet Advertising Revenue Report: 2009 Full-year Results. Pricewaterhouse Coopers (PWC), April 7, 2010.
In search of a premium alternative: an action plan for online brand advertising




          (that is, click-throughs or transactions)                generated. Implication: As audiences shift
          become increasingly interchangeable—                     online, advertisers and media companies
          even if one is a top-tier content site such as           face serious constraints in their ability to
          FT.com (Financial Times), and the other                  deeply engage consumers and build brands.
          is a relatively unknown financial blog.
          Implication: Premium rates on “premium”             Little wonder that marketers seeking to build
          publisher sites will be difficult to sustain.       brands online have become disappointed with
                                                              the medium. A recent survey of marketers con-
    •     Display advertising is increasingly commodi-        ducted by Bain and the Interactive Advertising
          tizing due to excess inventory, lack of high-       Bureau (IAB) highlighted brand-focused mar-
          impact creative and the proliferation of            keters’ preferences: They spend about 75 percent
          low-cost ad networks. These developments
                                                              of their advertising budgets on TV and print
          have been devastating for online publishers.
                                                              media, nearly three to four times as much as
          Their ability to charge for premium display
                                                              they advertise online. In our survey, marketers
          advertising, measured in CPMs (cost per
                                                              recognized that the Web is inherently more
          thousand impressions), has deteriorated—
          and shows no sign of a turnaround. Despite          interactive and can address a broader set of
          the potential for lower rates in the short          marketing needs (see Figure 2). But despite the
          term, brand marketers also have cause for           immense potential for online advertising, the
          concern. As sites grow more cluttered,              current reality falls short. So, what will it take
          marketers have less control over placement,         in this environment to build brands online?
          the other advertisers adjacent to their ads,        A first step is to recognize the obstacles.
          and the overall quality of the impressions




    Figure 2: The online medium is versatile, with the potential to influence the full set of
    marketing objectives

                    Which marketing objectives are the following media vehicles best suited for?

    Percent of respondents

    100%
                                                                                     Promoting loyalty


                                                                                      Driving traffic/
        75                                                                            purchase intent



                                                                                        Promoting
        50                                                                             consideration

                                                                                       Generating
                                                                                                         Brand
                                                                                       familiarity
                                                                                                         objectives
        25
                                                                                         Creating
                                                                                        awareness

         0
                       TV                          Magazine     Newspapers                Online
    Total ad
    spend
    (2008):      $64.4 billion                $13.3 billion    $34.4 billion           $23.1 billion

    Source: Bain/IAB 2009 Marketer survey; N=700


2
In search of a premium alternative: an action plan for online brand advertising




Barriers to building brands online                          The typical website is cluttered with too many
                                                            banner ads, and the placement of low-cost
Through our survey, as well as interviews                   response ads (for example, mortgage ads)
with brand marketers, agencies and media                    alongside image-oriented brand ads is often
companies, we identified five major gaps that               jarring. Despite the early promise of online
hold online back as a medium for premium                    video and larger-format ads, marketers still
brand engagement:                                           perceive a lack of innovative, new creative ideas
                                                            from agencies and media companies. Many
#1: Ad formats and creative execution                       marketers with whom we spoke believe that
are not evolving with the medium                            agencies are holding online back by not commit-
                                                            ting their best creative talent to the medium.
Brand marketers are disenchanted that the
online medium has not lived up to its potential             #2: The Internet is awash with undiffer-
for storytelling (see Figure 3). Static display             entiated, low-cost inventory
“banners,” originally inspired by newspaper
and magazine ad formats, are still the primary              The recent exponential growth in online adver-
unit of online inventory, and with surprisingly             tising inventory has not been matched by a
little innovation over the past 15 years. Banners           proportional increase in demand. Without truly
are inherently limited for brand advertising,               differentiated, premium offerings, the massive
with marketers preferring more engaging,                    oversupply has forced content publishers to
even interruptive, ads with sound and motion.               aggressively monetize “remnant” inventory




Figure 3: Despite its potential, online advertising falls short on meeting the key needs of
brand marketers

                                                            Perceived strength
                                                                                                    Online
                 Brand marketing needs
                                                       TV   Radio     Magazines   Online       advertising issues

                       • High impact creative,                                             • Clutter
                         customization                                                     • Static, small creative
   Engagement/
                       • Audience attention,                                               • Creative execution
     emotional
                         interactivity                                                       lacking
     response
                       • Cross platform

                       • Precision: right customer,                                        • Often hard to target
                         right time                                                          at scale
     Targeting         • Ad position, timing                                               • Less placement control


                       • Reach and frequency                                               • Reliance on impressions
                       • Ability to gauge brand                                            • Lack of media
                         awareness, equity                                                   comparability
   Measurement
                       • Link to sales impact                                              • Small scale


                       • Pro active solutions                                              • Less access/relationship,
       Sales/            and packages                                                        too reactive
      support          • Cost and resources to                                             • Often small buys,
                         plan/manage                                                         subscale

Source: Synthesis of marketer interviews and surveys


                                                                                                                         3
In search of a premium alternative: an action plan for online brand advertising




                     and depend even more on less-premium,                #4: Online offers unreliable targeting—
Brand marketers      response-driven advertising and ad networks.         especially on a large scale
                     In fact, Bain’s 2008 digital pricing study, con-
struggle to target                                                        Brand marketers struggle to target specific
                     ducted with the IAB, highlighted that leading
specific consumer    publishers were releasing excess inventory to        consumer segments online, at a scale that is
segments online,     ad networks at one-sixth to one-tenth the price      comparable to traditional offline brand cam-
                     of direct sales. This behavior further reduces       paigns. While network TV can deliver a large
at a scale that
                     the attractiveness of the online medium for          audience watching a specific show in a specific
is comparable        premium brand marketers, worsens the supply-         time slot, websites have the much harder task
to traditional       demand imbalance and conditions buyers to            of gathering traffic from across their pages and
offline brand        shift dollars to ad networks. Airlines typically     across different points in time. Consequently,
                     create a premium experience for first-class          marketers have difficulty accurately assessing
campaigns.                                                                the unduplicated reach of their ad, the frequency
                     passengers; they don’t place them in the same
                     seats as budget travelers paying a fraction of the   with which it is viewed and the gross rating
                     cost. But this is essentially what online media      points (GRPs) across multiple sites. Large
                     companies have been doing, with costly results.      marketers (such as consumer goods companies)
                                                                          told us that the complexity and uncertainty
                     #3: Too many metrics, too few that                   associated with targeting at scale on premium
                     brand marketers really need                          sites actually makes them recognize the value
                                                                          of mass reach with ad networks and portals.
                     Marketers are inundated with online tracking         At least, these non-premium options can offer
                     measures, from click-throughs to page views          high unduplicated reach and delivery metrics
                     to unique visitors, and many more. These can         which can be measured with a single cookie.
                     be valuable metrics for direct response adver-
                     tising, but marketers can’t use them to answer       #5: Support from agency and media
                     branding questions, such as: What is the impact      partners is underwhelming for premium
                     of the campaign on increasing brand aware-           brand campaigns
                     ness in my target audience? Does it influence
                     purchase intent? While various survey-based          Marketers indicated in our survey that they
                     alternatives (such as, Dynamic Logic, comScore,      want media and agency partners who under-
                     Brand.net) exist to track such measures, mar-        stand their industries, develop innovative ideas,
                     keters indicate they are too expensive and don’t     and help them execute consistent and integrated
                     allow for effective comparison across media.         campaigns across media platforms. Instead,
                     Also, as different vendors are often used, there     agencies are hindered by silos, both within
                     is no standard “currency” on which buyers and        individual agencies and among different agen-
                     sellers can agree. This limits marketers from        cies serving the same account. Online media
                     comparing online with other media, and thus          companies also fall short in brand marketers’
                     from making the decision online media com-           perceptions. Today, many sales teams use a
                     panies want most: shifting more brand spend-         selling approach that, unintentionally, further
                     ing to the Web. A leading consumer packaged          commoditizes their inventory: They focus on
                     goods marketer summed up the problem:                buying agencies, respond almost solely to
                     “What we need to see is: If we move 10 percent
                                                                          requests for proposals (RFPs) and provide
                     of our TV dollars to online, are we better off?
                                                                          limited customization or innovation in offer-
                     There’s no way to measure that today.”
                                                                          ings. In addition, online sales teams often lack


4
In search of a premium alternative: an action plan for online brand advertising




industry vertical expertise, interact with mar-           service models that address different marketer
keters too late in the media planning process             objectives (see Figure 4). At the same time, they
and do not have the caliber of talent required            need to determine which model, out of the
to advise senior decision makers. Media com-              three, will be their “core” business.
panies with both online and offline operations
often struggle to deliver integrated cross-platform       Strengthen direct-response offerings. This is
ad campaigns; their respective sales teams tend           the proven “killer app” of online marketing
                                                          today. It focuses on specific customer actions
to work in silos, too.
                                                          and satisfies a marketer’s critical need for
Making brand marketing                                    immediate “transactions” and “traffic,” both on
work online                                               the Web and in the bricks-and-mortar world.
                                                          The Web as a medium for direct-response
In the battle for advertising dollars, online pub-        marketing is becoming more cost-effective than
lishers, portals and other sellers of premium-            ever before, and continues to grow rapidly.
priced inventory face the most significant                While search captures the majority of this spend-
challenges. To better meet the needs of brand             ing, billions of dollars are still up for grabs in
marketers and enhance the prospects for premi-            direct-response display and other formats.
um CPMs, we suggest the following action plan:
                                                          Determine the right “brand reach” strategy.
1. Develop “triple play” capabilities
                                                          Recently, brand marketers have seen the oppor-
                                                          tunity to “scale up” investments in high-cost
Online media companies must develop and                   campaigns on premium content sites, as well as
effectively deliver three distinct product and            increase impressions through a broader swath of




Figure 4: “Triple play” offerings will help media companies serve three distinct marketer needs



                            Response                      Brand reach                       Brand engagement

Marketer       • Drive customers to site      • Supplement buys in other media   • Build brand awareness and
objectives     • Generate transactions and    • Generate wide exposure at          purchase intent
                 immediate ROI                  low cost                         • Deliver custom, high impact
                                                                                   campaigns


Online         • Banners, rich media          • Banners, rich media              •   Digital video, rich media
product        • Mix of premium and           • Mix of premium and               •   Premium position banners
offerings        non premium positions          non premium positions            •   Social/UGC applications
                                              • Content/placement control        •   Cross platform integration


Key decision   • Buying agency (downstream)   • Brand marketing team             • Brand marketing team
maker          • Creative agency              • Creative agency (upstream)       • Creative agency (upstream)
                 (large clients only)         • Buying agency                    • Buying agency




                            Larger scale,                  Larger scale,                       High touch,
                          more automated,                reduced service,                    higher priced,
                          efficiency model               efficiency model                    premium model

                                                                                                                  5
In search of a premium alternative: an action plan for online brand advertising




                   lower-priced online advertising opportunities.       their full-priced ads alongside heavily discounted
The third leg      Mercedes-Benz, for example, supported its            remnant ads. Sites must clearly designate their
                   premium ads in top-tier newspaper websites           premium placements, limit the clutter around
of the triple
                   with low-cost placement through ad networks          them and restrict access solely to brand-oriented
play—and the       to expand the reach of its E-Class launch cam-       ads. Bottom line: premium means offering
one with the       paign. The difference from direct-response           fewer, but better, inventory units.
most growth        ads is that brand reach advertising still values
                   the brand “environment” and is focused on            Manage “non-premium” inventory better.
potential—is       impressions as opposed to click-throughs. It’s       While not all ad placements offer the equivalent
to create          an opportunity for online publishers to extend       of NBC TV’s Thursday primetime position, the
emotionally        their offerings, but can be a double-edged sword     key is having a clear definition for what isn’t
                   if not managed carefully. Online publishers          premium and creating disciplined processes to
compelling                                                              manage that inventory. One online publisher
                   can sell less desirable inventory at $3–$5 CPMs
online brand       for brand-reach applications, but if they canni-     we interviewed created packages of second-tier
advertising that   balize other brand sales, they can quickly erode     “run-of-site” ad inventory that sells at a 30 percent
                   a publisher’s ability to charge $8–$12 CPMs          to 50 percent discount compared to the CPMs
builds long-term
                   for premium units and services.                      of higher-end inventory on the site. These less
brand affinity.                                                         expensive packages are clearly separated from
                   Develop premium engagement skills. The third         more premium placements and are sold with
                   leg of the triple play—and the one with the          minimal sales support. Net result: the publisher
                   most growth potential—is to create emotion-          cost-effectively monetizes less premium inven-
                   ally compelling online brand advertising that        tory, minimizes cannibalization and maintains
                   builds long-term brand affinity. Today, that         the premium positioning of the website.
                   remains largely the domain of television and
                   magazines. But it’s a huge untapped opportunity      Invest in ad-format innovation. Protecting
                   for online media companies, as the vast majority     premium ad inventory is good, but rejuvenat-
                   of national advertising dollars reside with large,   ing the ad units themselves is even better. In
                   brand-oriented advertisers seeking deeper            our survey, brand-oriented marketers identified
                   engagement with consumers. To make that              formats utilizing video, sponsorship and social
                   happen, online media must recognize that a           media as exciting options that go far beyond
                   transformation of their current offerings and        typical display ads. Apple’s “Mac vs. PC” cam-
                   sales approach will be required.                     paign on the New York Times, Yahoo! and Wall
                                                                        Street Journal sites showed a willingness to
                   2. Re-commit to delivering a                         experiment with new formats—using video as
                   “premium” offer                                      well as custom ad units that interact across
                                                                        the page. Similarly, the creative for Nintendo’s
                   Online publishers who want to increase their         “Wario’s Land: Shake It!” on YouTube was a
                   share of premium-priced brand advertising            sophisticated execution that appeared to break
                   dollars must put their house in order and build      apart the actual page. The ad hooked visitors
                   a truly premium value proposition for brand          and eventually generated several millions of
                   marketers. They must:                                views through word-of-mouth publicity. Today,
                                                                        such custom efforts are expensive, but by devel-
                   “Wall off” premium ad inventory. In our sur-         oping more standards and tools in the future,
                   vey, marketers consistently expressed frustra-       the online ad industry can increase this type
                   tion with clutter, unreliable context and seeing     of business.

6
In search of a premium alternative: an action plan for online brand advertising




3. Become a strategic partner                                        media partners and hear their best thinking
for marketers                                                        on how to improve what we do. But we’ll only
                                                                     have time to do that with a handful of partners.”
Brand marketers are accustomed to receiving
a high level of support from television and                          While this raises significant change manage-
other offline media providers. In the future,                        ment challenges, we believe change is critical.
online media sales teams too will feel the pres-                     Developing “category-focused” sales teams will
sure to meet and exceed the emerging needs                           help media companies in several ways. Sales
of brand marketers for “partnership” and con-                        teams with higher-caliber talent and category
sultative selling. But this will require different                   expertise interact directly with marketers earlier
selling and serving models—ones that offer                           in the planning process, are able to offer more
more senior client contact and more value-added                      custom solutions and influence the creative
support throughout the media planning process.                       aspects of the campaign. For these reasons,
Key requirements include:                                            Google invested in a multi-year effort to develop
                                                                     category expertise in selling and services, and
Delivering new ideas and category expertise.                         hired from the ranks of traditional marketers.
The number one capability marketers want                             Similarly, the New York Times integrated its
in a partner is category-specific knowledge                          online and offline sales organizations to offer
(see Figure 5). Just as with their agencies,                         advertisers a category-focused, custom and cross-
marketers expect media companies to under-                           platform approach. Such efforts have raised
stand their businesses and bring innovative                          the bar for media sellers and are delivering
ideas to the table. Says one CMO, “We want                           substantial benefits for brand marketers.
to sit down once or twice a year with our key



Figure 5: Brand marketers seek category expertise, customization and a relationship mindset
from online media companies

                        Which capabilities are most important in supporting your online advertising?

Percent of respondents

40%



  30
           #2


  20



  10       #1



   0
          Deep                     Strong             Customized       Digital advertising     Cross platform       Streamlined
        knowledge               relationship           options          success metrics      campaign options       purchasing
       of marketer             with marketer                                                                           options
       and industry
                       Effective          High impact       Digital advertising     Best contextual          Full ad
                      targeting          online creative       knowledge              fit for ads          placement
                                                                                                         transparency
Source: Bain/IAB 2009 Marketer survey; N=700


                                                                                                                                  7
In search of a premium alternative: an action plan for online brand advertising




    Make cross-platform the norm, not the exception.     online world, that audience is typically shared
    Over the next three years, brand marketers           across multiple sites, making measurement
    expect nearly 40 percent of their ad budget to       even more challenging. At the non-premium
    be spent on integrated, cross-platform cam-          end of the online advertising market, ad net-
    paigns—with another 25 percent on advertising        works are able to track overall consumer reach
    that is at least coordinated across platforms.       by using common cookies. For premium sites,
    Media companies that have both online and            however, the challenge is complex: their
    offline properties can develop fully-integrated      approach of a separate cookie for each site
    packages with online and offline components,         complicates the evaluation of the reach and
    often providing customization of inventory           frequency of an ad served to consumers across
    units and creative input. For pure-play online       multiple sites. “De-duplicating” the audience
    media companies such as portals, cross-platform      across multiple sites is difficult and will likely
    can involve developing ways to extend offline        require new industry standards and publisher
    campaigns to online and link them to their           collaboration. Larger online publishers and
    sites. While such cross-platform solutions are       the IAB can use their influence to lead this
    still far from the norm, they are growing in         industry-level collaboration.
    popularity among all the publishers we spoke
    to. And while online might represent as little       Measure what matters. Marketers are clear that
    as 5 percent to 10 percent of the overall deal       traditional brand metrics—especially brand
    value with brand marketers, it might account         awareness, favorability and purchase intent—
    for half of the sales discussion and most of the     will help guide their decision to shift dollars
    customization and creative support. In other         online from other channels (see Figure 7).
    words, online capabilities are increasingly the      Today, these metrics are delivered in part by
    key differentiator in gaining share of offline       custom service providers like Dynamic Logic
    brand ad dollars.                                    and Nielsen IAG. But the lack of an ongoing,
                                                         syndicated common “currency” and standards
    How might the typical sales structure change         means that marketers are unable to compare
    to make all this a reality? We believe it requires   across campaigns and across media platforms;
    a fundamental shift from an online-versus-           nor can they assess impact over extended
    offline model to one organized around the            periods of time. Industry forums such as the
    customer’s needs, offering brand-focused and         Association of National Advertisers and the IAB
    direct response-focused sales teams with deeper      have a leading role to play in defining specifi-
    category expertise (see Figure 6).                   cations for such metrics—and helping move
                                                         existing players toward a more comprehensive,
    4. Speak the marketer’s language                     cross-platform offering.

    For online advertising to mesh seamlessly into       5. Gain scale
    the brand planning process, content sites need
    to go beyond “hits,” “clicks” and “gross impres-     Traditional brand campaigns often need to reach
    sions” as the primary means to measure impact.       what are, by online standards, very large audi-
                                                         ences. For example, a leading women’s mag-
    Talk GRPs. Brand marketers plan their adver-         azine might reach 30 million to 40 million
    tising around gross rating points (GRPs)—            readers monthly. In contrast, the website for
    reaching a certain target audience with a certain    the same title might deliver only 5 million to
    frequency within a defined time period. In the       10 million unique visitors a month. And a

8
In search of a premium alternative: an action plan for online brand advertising




Figure 6: Media sales teams need to reorient from a platform-centric structure to a
category-based approach

                               Typical legacy                                                          Example of future
                            salesforce approach                                                       salesforce approach


                                Media company                                                          Media company



                                                                                             Multi platform
                      Online                  Offline                                        “engagement”           Transactional
                     salesforce              salesforce                                        salesforce          online salesforce
                                                                                            CPG Auto    Etc.




              Mostly response               Engagement                                       Engagement            Reach/response
                   needs                       needs                                           needs                   needs


• Separate online and offline salesforces, impractical for                      • Category focused integrated offline/online salesforces with
  cross platform campaigns                                                        high touch and innovation focus
• One size fits all approach                                                    • Separate reach/response salesforce
• Limited category expertise                                                    • Ability to meet the reach requirements of brand marketers
                                                                                  as necessary
Note: Illustrative




Figure 7: Brand marketers want traditional brand-impact metrics to gauge online
ad effectiveness

                                    Which metrics are most valuable for brand building campaigns?

Percent of respondents

60%
            What brand marketers want                                                         What brand marketers get


           #3


 40
           #2




 20
           #1




   0
         Brand              Likelihood to       Conversion              Click            Message          Time spent               View
       awareness            recommend             rates               through           association        on page               through
                     Purchase         Favorability           Recall              Unique              Ad            Interaction        Engagement
                      intent                                                     visitors     impressions/views        rate              time

Source: Bain/IAB 2009 Marketer survey; N=700


                                                                                                                                                   9
In search of a premium alternative: an action plan for online brand advertising




                     marketer would need to place numerous ads on           double-down on serving their base of “natural-
Scale represents     that website to reach any significant number           fit” advertisers and at the other, forge links with
                     of those unique users. Marketers and agencies          compatible media companies to gain scale and
a major advan-
                     therefore often find it inefficient to try to reach    broaden the base of advertisers they can attract.
tage for large       a large number of consumers across many                One such approach is to create premium “mini-
media compa-         small websites.                                        networks” with exclusive membership. Another
nies and online                                                             is to establish a relationship with a larger media
                     If you’ve got scale, use it. Scale represents a        company for sales representation. As an exam-
pure-plays. But      major advantage for large media companies              ple, the Rubicon Project helps smaller content
it is surprising     and online pure-plays. But it is surprising how        publishers gain scale and better monetize their
how few online       few online content companies utilize their full        unsold inventory.
                     potential to offer scale. We believe many online
content compa-       publishers can offer more consumer insight,            Online advertising as we know it is long over-
nies utilize their   creative services and innovation/experimentation       due for change. As direct-response advertising
full potential to    than they currently do. That will require them         continues to commoditize inventory and erode
                     to bring their existing capabilities closer together   pricing, media companies are under pressure
offer scale.
                     when pitching to marketers and be involved             to provide more value and transform the sales
                     much earlier in the campaign planning process.         model. Those who are first to deliver more
                     Recognizing this, larger players are increasingly      compelling and integrated brand campaigns,
                     bringing smaller sites together to create branded      offering the full “triple play,” are likely to build
                     “networks.” In some cases, publishers are              premium portfolios and pull away from the
                     integrating their own sub-brands into packages         rest of the industry. The change won’t be
                     that offer marketers more scale. MTV Generation        easy or quick. But for those who lead in online
                     Tribe, for example, targets young adult con-           marketing innovation, there are billions of brand
                     sumers. Similarly, Meredith’s online BHG               advertising dollars waiting to move online.
                     Network integrates cooking, home improve-
                     ment, gardening and beauty content from
                     Better Homes and Gardens and other related
                     Meredith brands.

                     If you don’t have scale, get it. As online advertis-
                     ing continues to mature, brand marketers and
                     ad agencies are becoming more selective—
                     and ad networks allow them to efficiently place
                     their ad on many sites with a single buy. Large
                     brand marketers therefore have a diminishing
                     interest in dealing directly with small content
                     sites—unless these sites bring a distinctive
                     audience or are truly a perfect fit for their
                     brands. This does not mean, however, that
                     smaller sites are running out of options. Instead,
                     we believe that at the one end, they should




10
In search of a premium alternative: an action plan for online brand advertising




The role marketers can play


Advertisers also have a significant stake in cracking the code for building brands online.

Brands such as Apple and Unilever’s Axe are beginning to point the way forward. Their

experience, and that of other progressive online brand advertisers, suggests some prac-

tical steps for marketers:


Develop and utilize more innovative ad formats

Marketers who have been successful in driving online brand engagement challenge the

constraints imposed by “standard” display advertising formats and instead push for larger,

innovative formats that incorporate video and sound. The goal: mirror the attention-grabbing

potential of traditional television advertising.


Cast a wider net for creative ideas

The most progressive online marketers actively collaborate with media companies to

create custom ads that best utilize the layout and capabilities of their specific media

properties—and resonate closely with the site’s target audience. Clearly, there are limits

to how many online media companies a marketer can deal with directly, but these are

increasingly valuable endeavors to pursue with their most important media suppliers.


Drive cross-platform campaign integration

Marketers are increasingly aspiring to integrate campaigns across different media plat-

forms in order to create “surround sound” effects for the consumer, stretch more expen-

sive advertising investments in certain platforms such as network TV across multiple plat-

forms, and better maintain brand consistency regardless of the platform being utilized.

Further, pointing to the importance of cross-platform integration, we found that brand

marketers who use the same creative agency for online and offline work were 40 percent

more likely to be satisfied with the results than those using separate agencies for online

and offline. Whether through a single agency or coordinating efforts through an inter-

agency team (IAT), cross-platform integration is increasingly becoming the norm for effective

brand advertising campaigns.




                                                                                                11
In search of a premium alternative: an action plan for online brand advertising




     Bain’s business is helping make companies more valuable.
     Founded in 1973 on the principle that consultants must measure their success in terms
     of their clients’ financial results, Bain works with top management teams to beat competitors
     and generate substantial, lasting financial impact. Our clients have historically outperformed
     the stock market by 4:1.

     Who we work with
     Our clients are typically bold, ambitious business leaders. They have the talent, the will
     and the open-mindedness required to succeed. They are not satisfied with the status quo.

     What we do
     We help companies find where to make their money, make more of it faster and sustain
     its growth longer. We help management make the big decisions: on strategy, operations,
     technology, mergers and acquisitions and organization. Where appropriate, we work with
     them to make it happen.

     How we do it
     We realize that helping an organization change requires more than just a recommendation.
     So we try to put ourselves in our clients’ shoes and focus on practical actions.




12
For more information, please visit www.bain.com

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Iab in search of a premium alternative

  • 1. What media companies and brand marketers can do to unleash the power of the Web to build brands online In search of a premium alternative: an action plan for online brand advertising By John Frelinghuysen and Aditya Joshi
  • 2. About this study The authors would like to acknowledge the support and collaboration of the Interactive Advertising Bureau (www.iab.net ) and its members in the development of this Bain Brief. The IAB is comprised of more than 460 leading media and technology companies who are responsible for selling 86 percent of online advertising in the United States. John Frelinghuysen is a partner with Bain & Company and a leader in the firm’s Global Media practice. Aditya Joshi is a partner with Bain and a leader in the firm’s Customer Strategy and Marketing practice. The authors would like to thank Jason Wiethe and Chris Sims, managers with Bain & Company, for their contributions to this Bain Brief. Copyright © 2010 Bain & Company, Inc. All rights reserved. Content: Manjari Raman, Elaine Cummings Layout: Global Design
  • 3. In search of a premium alternative: an action plan for online brand advertising What media companies tising revenues fell by just 3 percent in 2009, while print and television advertising saw and brand marketers double-digit declines.1 Moreover, future growth can do to unleash the prospects appear robust: Bain & Company fore- casts that online advertising revenues will grow power of the Web to at an average annual rate of 12 percent between build brands online 2010 and 2014. Spending on online advertising will overtake print in 2010. Dig a little deeper, however, and some worrying trends emerge As online advertising approaches maturity, it (see Figure 1). Consider: faces a major crossroads. The industry can continue down the path of commoditization • Much of the projected growth will come driven by direct response, with its promise of from direct-response advertising—in particu- high volumes but little room for differentiation. lar, search. This suits advertisers seeking an Or it can reinvent itself around brand advertiser immediate, measurable return on invest- needs and deliver more premium offerings. ment (ROI), usually in the form of website Making the right choice will not just ensure traffic and sales transactions. However, sustainable growth—it will redefine the indus- response advertising is not geared to build- try’s future winners. ing long-term brand affinity for marketers and does not fully value the content and On the surface, online advertising appears to “premium environment” of specific sites be in good shape. It has weathered the down- on which ads are placed. For example, two turn better than other media: Online adver- sites offering comparable response rates Figure 1: Brand marketers still rely on traditional media, while increasingly, the leading medium for response marketers is online Brand marketers Response marketers Percent of total advertising spend 100% Other Other 80 Online +5% Online +8% 60 TV, 40 magazines, 3% newspapers TV, magazines, 20 newspapers 6% 0 2008 2011P 2008 2011P Source: Bain/IAB 2009 Marketer survey; N=700 1 1 AB Internet Advertising Revenue Report: 2009 Full-year Results. Pricewaterhouse Coopers (PWC), April 7, 2010.
  • 4. In search of a premium alternative: an action plan for online brand advertising (that is, click-throughs or transactions) generated. Implication: As audiences shift become increasingly interchangeable— online, advertisers and media companies even if one is a top-tier content site such as face serious constraints in their ability to FT.com (Financial Times), and the other deeply engage consumers and build brands. is a relatively unknown financial blog. Implication: Premium rates on “premium” Little wonder that marketers seeking to build publisher sites will be difficult to sustain. brands online have become disappointed with the medium. A recent survey of marketers con- • Display advertising is increasingly commodi- ducted by Bain and the Interactive Advertising tizing due to excess inventory, lack of high- Bureau (IAB) highlighted brand-focused mar- impact creative and the proliferation of keters’ preferences: They spend about 75 percent low-cost ad networks. These developments of their advertising budgets on TV and print have been devastating for online publishers. media, nearly three to four times as much as Their ability to charge for premium display they advertise online. In our survey, marketers advertising, measured in CPMs (cost per recognized that the Web is inherently more thousand impressions), has deteriorated— and shows no sign of a turnaround. Despite interactive and can address a broader set of the potential for lower rates in the short marketing needs (see Figure 2). But despite the term, brand marketers also have cause for immense potential for online advertising, the concern. As sites grow more cluttered, current reality falls short. So, what will it take marketers have less control over placement, in this environment to build brands online? the other advertisers adjacent to their ads, A first step is to recognize the obstacles. and the overall quality of the impressions Figure 2: The online medium is versatile, with the potential to influence the full set of marketing objectives Which marketing objectives are the following media vehicles best suited for? Percent of respondents 100% Promoting loyalty Driving traffic/ 75 purchase intent Promoting 50 consideration Generating Brand familiarity objectives 25 Creating awareness 0 TV Magazine Newspapers Online Total ad spend (2008): $64.4 billion $13.3 billion $34.4 billion $23.1 billion Source: Bain/IAB 2009 Marketer survey; N=700 2
  • 5. In search of a premium alternative: an action plan for online brand advertising Barriers to building brands online The typical website is cluttered with too many banner ads, and the placement of low-cost Through our survey, as well as interviews response ads (for example, mortgage ads) with brand marketers, agencies and media alongside image-oriented brand ads is often companies, we identified five major gaps that jarring. Despite the early promise of online hold online back as a medium for premium video and larger-format ads, marketers still brand engagement: perceive a lack of innovative, new creative ideas from agencies and media companies. Many #1: Ad formats and creative execution marketers with whom we spoke believe that are not evolving with the medium agencies are holding online back by not commit- ting their best creative talent to the medium. Brand marketers are disenchanted that the online medium has not lived up to its potential #2: The Internet is awash with undiffer- for storytelling (see Figure 3). Static display entiated, low-cost inventory “banners,” originally inspired by newspaper and magazine ad formats, are still the primary The recent exponential growth in online adver- unit of online inventory, and with surprisingly tising inventory has not been matched by a little innovation over the past 15 years. Banners proportional increase in demand. Without truly are inherently limited for brand advertising, differentiated, premium offerings, the massive with marketers preferring more engaging, oversupply has forced content publishers to even interruptive, ads with sound and motion. aggressively monetize “remnant” inventory Figure 3: Despite its potential, online advertising falls short on meeting the key needs of brand marketers Perceived strength Online Brand marketing needs TV Radio Magazines Online advertising issues • High impact creative, • Clutter customization • Static, small creative Engagement/ • Audience attention, • Creative execution emotional interactivity lacking response • Cross platform • Precision: right customer, • Often hard to target right time at scale Targeting • Ad position, timing • Less placement control • Reach and frequency • Reliance on impressions • Ability to gauge brand • Lack of media awareness, equity comparability Measurement • Link to sales impact • Small scale • Pro active solutions • Less access/relationship, Sales/ and packages too reactive support • Cost and resources to • Often small buys, plan/manage subscale Source: Synthesis of marketer interviews and surveys 3
  • 6. In search of a premium alternative: an action plan for online brand advertising and depend even more on less-premium, #4: Online offers unreliable targeting— Brand marketers response-driven advertising and ad networks. especially on a large scale In fact, Bain’s 2008 digital pricing study, con- struggle to target Brand marketers struggle to target specific ducted with the IAB, highlighted that leading specific consumer publishers were releasing excess inventory to consumer segments online, at a scale that is segments online, ad networks at one-sixth to one-tenth the price comparable to traditional offline brand cam- of direct sales. This behavior further reduces paigns. While network TV can deliver a large at a scale that the attractiveness of the online medium for audience watching a specific show in a specific is comparable premium brand marketers, worsens the supply- time slot, websites have the much harder task to traditional demand imbalance and conditions buyers to of gathering traffic from across their pages and offline brand shift dollars to ad networks. Airlines typically across different points in time. Consequently, create a premium experience for first-class marketers have difficulty accurately assessing campaigns. the unduplicated reach of their ad, the frequency passengers; they don’t place them in the same seats as budget travelers paying a fraction of the with which it is viewed and the gross rating cost. But this is essentially what online media points (GRPs) across multiple sites. Large companies have been doing, with costly results. marketers (such as consumer goods companies) told us that the complexity and uncertainty #3: Too many metrics, too few that associated with targeting at scale on premium brand marketers really need sites actually makes them recognize the value of mass reach with ad networks and portals. Marketers are inundated with online tracking At least, these non-premium options can offer measures, from click-throughs to page views high unduplicated reach and delivery metrics to unique visitors, and many more. These can which can be measured with a single cookie. be valuable metrics for direct response adver- tising, but marketers can’t use them to answer #5: Support from agency and media branding questions, such as: What is the impact partners is underwhelming for premium of the campaign on increasing brand aware- brand campaigns ness in my target audience? Does it influence purchase intent? While various survey-based Marketers indicated in our survey that they alternatives (such as, Dynamic Logic, comScore, want media and agency partners who under- Brand.net) exist to track such measures, mar- stand their industries, develop innovative ideas, keters indicate they are too expensive and don’t and help them execute consistent and integrated allow for effective comparison across media. campaigns across media platforms. Instead, Also, as different vendors are often used, there agencies are hindered by silos, both within is no standard “currency” on which buyers and individual agencies and among different agen- sellers can agree. This limits marketers from cies serving the same account. Online media comparing online with other media, and thus companies also fall short in brand marketers’ from making the decision online media com- perceptions. Today, many sales teams use a panies want most: shifting more brand spend- selling approach that, unintentionally, further ing to the Web. A leading consumer packaged commoditizes their inventory: They focus on goods marketer summed up the problem: buying agencies, respond almost solely to “What we need to see is: If we move 10 percent requests for proposals (RFPs) and provide of our TV dollars to online, are we better off? limited customization or innovation in offer- There’s no way to measure that today.” ings. In addition, online sales teams often lack 4
  • 7. In search of a premium alternative: an action plan for online brand advertising industry vertical expertise, interact with mar- service models that address different marketer keters too late in the media planning process objectives (see Figure 4). At the same time, they and do not have the caliber of talent required need to determine which model, out of the to advise senior decision makers. Media com- three, will be their “core” business. panies with both online and offline operations often struggle to deliver integrated cross-platform Strengthen direct-response offerings. This is ad campaigns; their respective sales teams tend the proven “killer app” of online marketing today. It focuses on specific customer actions to work in silos, too. and satisfies a marketer’s critical need for Making brand marketing immediate “transactions” and “traffic,” both on work online the Web and in the bricks-and-mortar world. The Web as a medium for direct-response In the battle for advertising dollars, online pub- marketing is becoming more cost-effective than lishers, portals and other sellers of premium- ever before, and continues to grow rapidly. priced inventory face the most significant While search captures the majority of this spend- challenges. To better meet the needs of brand ing, billions of dollars are still up for grabs in marketers and enhance the prospects for premi- direct-response display and other formats. um CPMs, we suggest the following action plan: Determine the right “brand reach” strategy. 1. Develop “triple play” capabilities Recently, brand marketers have seen the oppor- tunity to “scale up” investments in high-cost Online media companies must develop and campaigns on premium content sites, as well as effectively deliver three distinct product and increase impressions through a broader swath of Figure 4: “Triple play” offerings will help media companies serve three distinct marketer needs Response Brand reach Brand engagement Marketer • Drive customers to site • Supplement buys in other media • Build brand awareness and objectives • Generate transactions and • Generate wide exposure at purchase intent immediate ROI low cost • Deliver custom, high impact campaigns Online • Banners, rich media • Banners, rich media • Digital video, rich media product • Mix of premium and • Mix of premium and • Premium position banners offerings non premium positions non premium positions • Social/UGC applications • Content/placement control • Cross platform integration Key decision • Buying agency (downstream) • Brand marketing team • Brand marketing team maker • Creative agency • Creative agency (upstream) • Creative agency (upstream) (large clients only) • Buying agency • Buying agency Larger scale, Larger scale, High touch, more automated, reduced service, higher priced, efficiency model efficiency model premium model 5
  • 8. In search of a premium alternative: an action plan for online brand advertising lower-priced online advertising opportunities. their full-priced ads alongside heavily discounted The third leg Mercedes-Benz, for example, supported its remnant ads. Sites must clearly designate their premium ads in top-tier newspaper websites premium placements, limit the clutter around of the triple with low-cost placement through ad networks them and restrict access solely to brand-oriented play—and the to expand the reach of its E-Class launch cam- ads. Bottom line: premium means offering one with the paign. The difference from direct-response fewer, but better, inventory units. most growth ads is that brand reach advertising still values the brand “environment” and is focused on Manage “non-premium” inventory better. potential—is impressions as opposed to click-throughs. It’s While not all ad placements offer the equivalent to create an opportunity for online publishers to extend of NBC TV’s Thursday primetime position, the emotionally their offerings, but can be a double-edged sword key is having a clear definition for what isn’t if not managed carefully. Online publishers premium and creating disciplined processes to compelling manage that inventory. One online publisher can sell less desirable inventory at $3–$5 CPMs online brand for brand-reach applications, but if they canni- we interviewed created packages of second-tier advertising that balize other brand sales, they can quickly erode “run-of-site” ad inventory that sells at a 30 percent a publisher’s ability to charge $8–$12 CPMs to 50 percent discount compared to the CPMs builds long-term for premium units and services. of higher-end inventory on the site. These less brand affinity. expensive packages are clearly separated from Develop premium engagement skills. The third more premium placements and are sold with leg of the triple play—and the one with the minimal sales support. Net result: the publisher most growth potential—is to create emotion- cost-effectively monetizes less premium inven- ally compelling online brand advertising that tory, minimizes cannibalization and maintains builds long-term brand affinity. Today, that the premium positioning of the website. remains largely the domain of television and magazines. But it’s a huge untapped opportunity Invest in ad-format innovation. Protecting for online media companies, as the vast majority premium ad inventory is good, but rejuvenat- of national advertising dollars reside with large, ing the ad units themselves is even better. In brand-oriented advertisers seeking deeper our survey, brand-oriented marketers identified engagement with consumers. To make that formats utilizing video, sponsorship and social happen, online media must recognize that a media as exciting options that go far beyond transformation of their current offerings and typical display ads. Apple’s “Mac vs. PC” cam- sales approach will be required. paign on the New York Times, Yahoo! and Wall Street Journal sites showed a willingness to 2. Re-commit to delivering a experiment with new formats—using video as “premium” offer well as custom ad units that interact across the page. Similarly, the creative for Nintendo’s Online publishers who want to increase their “Wario’s Land: Shake It!” on YouTube was a share of premium-priced brand advertising sophisticated execution that appeared to break dollars must put their house in order and build apart the actual page. The ad hooked visitors a truly premium value proposition for brand and eventually generated several millions of marketers. They must: views through word-of-mouth publicity. Today, such custom efforts are expensive, but by devel- “Wall off” premium ad inventory. In our sur- oping more standards and tools in the future, vey, marketers consistently expressed frustra- the online ad industry can increase this type tion with clutter, unreliable context and seeing of business. 6
  • 9. In search of a premium alternative: an action plan for online brand advertising 3. Become a strategic partner media partners and hear their best thinking for marketers on how to improve what we do. But we’ll only have time to do that with a handful of partners.” Brand marketers are accustomed to receiving a high level of support from television and While this raises significant change manage- other offline media providers. In the future, ment challenges, we believe change is critical. online media sales teams too will feel the pres- Developing “category-focused” sales teams will sure to meet and exceed the emerging needs help media companies in several ways. Sales of brand marketers for “partnership” and con- teams with higher-caliber talent and category sultative selling. But this will require different expertise interact directly with marketers earlier selling and serving models—ones that offer in the planning process, are able to offer more more senior client contact and more value-added custom solutions and influence the creative support throughout the media planning process. aspects of the campaign. For these reasons, Key requirements include: Google invested in a multi-year effort to develop category expertise in selling and services, and Delivering new ideas and category expertise. hired from the ranks of traditional marketers. The number one capability marketers want Similarly, the New York Times integrated its in a partner is category-specific knowledge online and offline sales organizations to offer (see Figure 5). Just as with their agencies, advertisers a category-focused, custom and cross- marketers expect media companies to under- platform approach. Such efforts have raised stand their businesses and bring innovative the bar for media sellers and are delivering ideas to the table. Says one CMO, “We want substantial benefits for brand marketers. to sit down once or twice a year with our key Figure 5: Brand marketers seek category expertise, customization and a relationship mindset from online media companies Which capabilities are most important in supporting your online advertising? Percent of respondents 40% 30 #2 20 10 #1 0 Deep Strong Customized Digital advertising Cross platform Streamlined knowledge relationship options success metrics campaign options purchasing of marketer with marketer options and industry Effective High impact Digital advertising Best contextual Full ad targeting online creative knowledge fit for ads placement transparency Source: Bain/IAB 2009 Marketer survey; N=700 7
  • 10. In search of a premium alternative: an action plan for online brand advertising Make cross-platform the norm, not the exception. online world, that audience is typically shared Over the next three years, brand marketers across multiple sites, making measurement expect nearly 40 percent of their ad budget to even more challenging. At the non-premium be spent on integrated, cross-platform cam- end of the online advertising market, ad net- paigns—with another 25 percent on advertising works are able to track overall consumer reach that is at least coordinated across platforms. by using common cookies. For premium sites, Media companies that have both online and however, the challenge is complex: their offline properties can develop fully-integrated approach of a separate cookie for each site packages with online and offline components, complicates the evaluation of the reach and often providing customization of inventory frequency of an ad served to consumers across units and creative input. For pure-play online multiple sites. “De-duplicating” the audience media companies such as portals, cross-platform across multiple sites is difficult and will likely can involve developing ways to extend offline require new industry standards and publisher campaigns to online and link them to their collaboration. Larger online publishers and sites. While such cross-platform solutions are the IAB can use their influence to lead this still far from the norm, they are growing in industry-level collaboration. popularity among all the publishers we spoke to. And while online might represent as little Measure what matters. Marketers are clear that as 5 percent to 10 percent of the overall deal traditional brand metrics—especially brand value with brand marketers, it might account awareness, favorability and purchase intent— for half of the sales discussion and most of the will help guide their decision to shift dollars customization and creative support. In other online from other channels (see Figure 7). words, online capabilities are increasingly the Today, these metrics are delivered in part by key differentiator in gaining share of offline custom service providers like Dynamic Logic brand ad dollars. and Nielsen IAG. But the lack of an ongoing, syndicated common “currency” and standards How might the typical sales structure change means that marketers are unable to compare to make all this a reality? We believe it requires across campaigns and across media platforms; a fundamental shift from an online-versus- nor can they assess impact over extended offline model to one organized around the periods of time. Industry forums such as the customer’s needs, offering brand-focused and Association of National Advertisers and the IAB direct response-focused sales teams with deeper have a leading role to play in defining specifi- category expertise (see Figure 6). cations for such metrics—and helping move existing players toward a more comprehensive, 4. Speak the marketer’s language cross-platform offering. For online advertising to mesh seamlessly into 5. Gain scale the brand planning process, content sites need to go beyond “hits,” “clicks” and “gross impres- Traditional brand campaigns often need to reach sions” as the primary means to measure impact. what are, by online standards, very large audi- ences. For example, a leading women’s mag- Talk GRPs. Brand marketers plan their adver- azine might reach 30 million to 40 million tising around gross rating points (GRPs)— readers monthly. In contrast, the website for reaching a certain target audience with a certain the same title might deliver only 5 million to frequency within a defined time period. In the 10 million unique visitors a month. And a 8
  • 11. In search of a premium alternative: an action plan for online brand advertising Figure 6: Media sales teams need to reorient from a platform-centric structure to a category-based approach Typical legacy Example of future salesforce approach salesforce approach Media company Media company Multi platform Online Offline “engagement” Transactional salesforce salesforce salesforce online salesforce CPG Auto Etc. Mostly response Engagement Engagement Reach/response needs needs needs needs • Separate online and offline salesforces, impractical for • Category focused integrated offline/online salesforces with cross platform campaigns high touch and innovation focus • One size fits all approach • Separate reach/response salesforce • Limited category expertise • Ability to meet the reach requirements of brand marketers as necessary Note: Illustrative Figure 7: Brand marketers want traditional brand-impact metrics to gauge online ad effectiveness Which metrics are most valuable for brand building campaigns? Percent of respondents 60% What brand marketers want What brand marketers get #3 40 #2 20 #1 0 Brand Likelihood to Conversion Click Message Time spent View awareness recommend rates through association on page through Purchase Favorability Recall Unique Ad Interaction Engagement intent visitors impressions/views rate time Source: Bain/IAB 2009 Marketer survey; N=700 9
  • 12. In search of a premium alternative: an action plan for online brand advertising marketer would need to place numerous ads on double-down on serving their base of “natural- Scale represents that website to reach any significant number fit” advertisers and at the other, forge links with of those unique users. Marketers and agencies compatible media companies to gain scale and a major advan- therefore often find it inefficient to try to reach broaden the base of advertisers they can attract. tage for large a large number of consumers across many One such approach is to create premium “mini- media compa- small websites. networks” with exclusive membership. Another nies and online is to establish a relationship with a larger media If you’ve got scale, use it. Scale represents a company for sales representation. As an exam- pure-plays. But major advantage for large media companies ple, the Rubicon Project helps smaller content it is surprising and online pure-plays. But it is surprising how publishers gain scale and better monetize their how few online few online content companies utilize their full unsold inventory. potential to offer scale. We believe many online content compa- publishers can offer more consumer insight, Online advertising as we know it is long over- nies utilize their creative services and innovation/experimentation due for change. As direct-response advertising full potential to than they currently do. That will require them continues to commoditize inventory and erode to bring their existing capabilities closer together pricing, media companies are under pressure offer scale. when pitching to marketers and be involved to provide more value and transform the sales much earlier in the campaign planning process. model. Those who are first to deliver more Recognizing this, larger players are increasingly compelling and integrated brand campaigns, bringing smaller sites together to create branded offering the full “triple play,” are likely to build “networks.” In some cases, publishers are premium portfolios and pull away from the integrating their own sub-brands into packages rest of the industry. The change won’t be that offer marketers more scale. MTV Generation easy or quick. But for those who lead in online Tribe, for example, targets young adult con- marketing innovation, there are billions of brand sumers. Similarly, Meredith’s online BHG advertising dollars waiting to move online. Network integrates cooking, home improve- ment, gardening and beauty content from Better Homes and Gardens and other related Meredith brands. If you don’t have scale, get it. As online advertis- ing continues to mature, brand marketers and ad agencies are becoming more selective— and ad networks allow them to efficiently place their ad on many sites with a single buy. Large brand marketers therefore have a diminishing interest in dealing directly with small content sites—unless these sites bring a distinctive audience or are truly a perfect fit for their brands. This does not mean, however, that smaller sites are running out of options. Instead, we believe that at the one end, they should 10
  • 13. In search of a premium alternative: an action plan for online brand advertising The role marketers can play Advertisers also have a significant stake in cracking the code for building brands online. Brands such as Apple and Unilever’s Axe are beginning to point the way forward. Their experience, and that of other progressive online brand advertisers, suggests some prac- tical steps for marketers: Develop and utilize more innovative ad formats Marketers who have been successful in driving online brand engagement challenge the constraints imposed by “standard” display advertising formats and instead push for larger, innovative formats that incorporate video and sound. The goal: mirror the attention-grabbing potential of traditional television advertising. Cast a wider net for creative ideas The most progressive online marketers actively collaborate with media companies to create custom ads that best utilize the layout and capabilities of their specific media properties—and resonate closely with the site’s target audience. Clearly, there are limits to how many online media companies a marketer can deal with directly, but these are increasingly valuable endeavors to pursue with their most important media suppliers. Drive cross-platform campaign integration Marketers are increasingly aspiring to integrate campaigns across different media plat- forms in order to create “surround sound” effects for the consumer, stretch more expen- sive advertising investments in certain platforms such as network TV across multiple plat- forms, and better maintain brand consistency regardless of the platform being utilized. Further, pointing to the importance of cross-platform integration, we found that brand marketers who use the same creative agency for online and offline work were 40 percent more likely to be satisfied with the results than those using separate agencies for online and offline. Whether through a single agency or coordinating efforts through an inter- agency team (IAT), cross-platform integration is increasingly becoming the norm for effective brand advertising campaigns. 11
  • 14. In search of a premium alternative: an action plan for online brand advertising Bain’s business is helping make companies more valuable. Founded in 1973 on the principle that consultants must measure their success in terms of their clients’ financial results, Bain works with top management teams to beat competitors and generate substantial, lasting financial impact. Our clients have historically outperformed the stock market by 4:1. Who we work with Our clients are typically bold, ambitious business leaders. They have the talent, the will and the open-mindedness required to succeed. They are not satisfied with the status quo. What we do We help companies find where to make their money, make more of it faster and sustain its growth longer. We help management make the big decisions: on strategy, operations, technology, mergers and acquisitions and organization. Where appropriate, we work with them to make it happen. How we do it We realize that helping an organization change requires more than just a recommendation. So we try to put ourselves in our clients’ shoes and focus on practical actions. 12
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  • 16. For more information, please visit www.bain.com