Online advertising seems tailor-made for direct response marketing, given its measurability and ability to land an immediate sale. But now online channels are growing up in their capability to deliver media content and audiences, and the majority of online marketers in 2013 are fairly evenly splitting their digital spending between brand and direct response advertising -- even though there’s still a lack of consistency in effectively measuring ROI across platforms. That picture of the evolution of online advertising emerges from a new survey report by Vizu, a Nielsen company.
In fact, the 2013 Online Advertising Performance Outlook report found that brand ad spending is expected to grow more quickly than direct response advertising. Sixty-three percent of marketers project their online brand ad spending will increase this year, and one in five expect the increase to be more than 20 percent. The report said this continues the momentum detected in the 2012 report.
More Channels, Rich Media
In addition, sixty-one percent of marketers are re-allocating online ad money from direct response to brand advertising, nearly identical to the 60 percent who so indicated last year.
Funds will also be coming from offline budgets, with 48 percent of respondents expecting to move budgets from TV to online video this year. However, the report noted that online video advertising is often “repurposed television creative,” so this shift may primarily reflect only a difference in delivery.
From Vizu's 2013 Online Advertising Performance Outlook
Vizu found two main drivers for the increase in brand ad spending. One is the continued diversity and increasing use of multiple channels, such as tablet, mobile, Web or connected TV. The other is the increasing availability of rich media on devices supporting these channels, giving marketers sufficient tools to influence consumer perceptions about brands.
Editor's Note: Also check out Looking for Sales in All the Wrong Places: When Online Ads Hurt More Than Help
Sales, Brand Lift
But clarity about ROI metrics is holding back even further growth. Sixty-nine percent of marketers said that “improved clarity around the actual return on brand advertising investment” would lead them to increase their spending on online brand advertising. The most popular metrics for determining the effectiveness of digital brand advertising: sales generated from ads (78 percent) and its precursor, brand lift (55 percent).
For years, the measurability of interactive media has been pitched as a key strength for marketers, but the report noted that, interestingly, many of the respondents now feel that measurability is the “Achilles heel” of the digital medium, particularly in regards to ROI.
The reason? “No one is exactly sure what’s working as everyone is using a different language when it comes to describing the data,” the report said.
For instance, click-through rates. Vizu said that CTRs are “irrelevant to brand advertising,” and few respondents identified CTRs as useful in measuring brand advertising effectiveness. Nevertheless, the vast majority of brand marketers, agencies and media sellers still think CTRs have some relevance to online brand ads. Hence, a “metrics morass.”
Maturing and Evolving
The report suggests that agencies and publishers need to work out marketing objectives and metrics with brand advertisers, brand marketers might invest in systems that can help generate agreed-upon campaign performance results, and there should be a new emphasis on real-time brand data instead of post-campaign results.
What comes across most in the report is how clearly online advertising is maturing and evolving, with the increased emphasis on online brand advertising and on across-all-channels consistent metrics being indicators of increased expectations.
The online survey was fielded by the CMO Council, with findings developed by Vizu. Respondents were 287 senior brand leaders, 176 agency executives and 152 publishing representatives.