Online Advertising Really Works - Just Read This

It's another Monday morning in the world of Online Advertising, and not a particularly good Monday. The article Greg was referring to was a special section in the Journal devoted to "fixing" online advertising.The article went as far as to assert that "Online ads have failed to either spur sales or support content." Unfortunately, this type of unsubstantiated malign of Online advertising is far too typical and is symptomatic of a general uninformed opinion related to online advertising effectiveness.

The article went as far as to assert that "Online ads have failed to either spur sales or support content."

The better informed know that Online advertising generates sales, and using the groundbreaking new research from MSN, IAB and the ARF for a packaged goods and an automotive brands as an indicator, Online advertising can perform better than Television and Magazines. In fact, Online's share of the total advertising budget should be increased from the current range of two to a four percent to a ten to twenty percent range.

So why did the reporter from the Wall Street Journal and I draw such different conclusions this Monday morning about the fate and success of Online advertising?

We both draw our conclusions from talking with others. The Wall Street Journal author asked five people from diverse walks of life for their creative ideas to "fix" online advertising. The reporter interviewed a magician, performance artist, author, cartoonist and a puppet maker. Yes, indeed, that's who the Journal interviewed for this story. I am not exaggerating.

I too interview people from diverse walks of life. I interview projectable samples of thousands of consumers and measure their brand attitudes and purchase intentions through surveys. I interview leaders in advertising agencies, and leading research firms and analyze the findings of the research they've performed. I engage with marketers and review results of their research efforts.

I suppose we draw different conclusions because we talk to different people and ask different questions. I do not pre-suppose that Online marketing (or any marketing for that matter) works or fails. Instead, I objectively establish a benchmark for success and ask quantitative marketing questions to measure against the benchmark.

Online advertising is generally more cost efficient than Television and Magazine advertising in terms of producing branding increases.

Take the MSN/IAB/ARF cross-media advertising study for example. Our benchmark of success: Three key branding metrics (1) brand awareness, (2) brand image, and (3) purchase intent.

The people we asked: US adult women - 12,990 of them.

The objective: Measure how well Television, Magazine and Online advertising moved the needle on the key branding metrics.

Our findings: Online advertising is an important part of the marketing mix. It works synergistically with Television and Magazine advertising. However, Online advertising is generally more cost efficient than Television and Magazine advertising in terms of producing increases in branding. Therefore, marketers should consider increasing Online's share in the marketing mix. Making more budget available for Online advertising will allow markets to increase Online's reach, frequency or both, and by doing so, achieve better overall branding results.

The implications of this research are far reaching and critical to marketers. If you haven't had a chance to review this study, check out http://advantage.msn.com.
The point is, quantitative measurement like this ground breaking study provides real-world evidence that Online advertising is not only effective, in many cases it may be more cost efficient that Television or Magazine advertising.

Direct research measuring the actual performance of advertising is one way we can understand whether online advertising works. But it can be expensive and time consuming. A reporter at the Wall Street Journal is not likely to commission one of these studies on their own. And in fairness to the Journal, their Online property has done some fine advertising effectiveness work on behalf of their advertisers, which has demonstrated that Online advertising can be effective at achieving marketing goals.

And, I listen to the experts. I ask them about the research they've done, and what it tells them. I encourage reporters to ask the same question. Ask the two largest package goods firms and one of the world's leading sales tracking research firms IRI (Information Resources Inc.). Through research they conducted, they found that in a carefully controlled study of in-market sales effects, even the humble online advertising banner could increase sales for a new Laundry detergent product (for Unilever) and a snack food product (P&G) in the grocery store.

Simply put, in most cases, online advertising was the most efficient vehicle in driving e-commerce sales.

Ask Grey Advertising. Their Beyond Interactive unit has done fine work comparing the sales effects generated by Television, Radio, Print and Online advertisements. Michele Madansky, Ph.D., the SVP of Marketing Intelligence could share with you the dozen marketing mix studies conducted that led her clients to devote a greater proportion of their budgets to online advertising. Simply put, in most cases, online advertising was the most efficient vehicle in driving e-commerce sales.

Ask the ad serving companies that track actual ad exposure and sales. They found that not only could online achieve their conversion goals, it often does so without the consumer clicking on the ads. Instead the consumer remembers the message and returns to the site on their own accord. According to the Avenue A study, 80% of the new registrations generated by the advertising on one of the top 10 travel websites were driven by people who didn't click on the ad, but came to the site because they got the message from the advertisement (much the same way conventional advertising works to generate sales).

Ask Pepsi's John Vail. When it comes to thinking outside the box, we see IAB members and innovative marketers breaking new ground. Through innovative online promotions, Pepsi expanded their volume sales by more than 5 percent while their peers in their category barely grew at 0.06% according to Nielsen sales data.

Ask Radio Shack. Through their innovative racing games on MSN's Gamezone they've expanded their market share in the radio control category. Radio Shack reported record toy sales and they attribute this success largely to their online advertising efforts on MSN.

Ask Morgan Stanley Dean Witter. They conducted an exhaustive study of the relative effectiveness and cost efficiency of online and offline advertising and concluded that online is not only effective, it is often more cost efficient than TV, Magazines, and Radio in achieving advertisers' branding goals.

In fact, if we look at all the advertisements measured, we could find over 1000 measurements of online ads - the majority of which demonstrate that online advertising is effective in building brand and spurring sales. Could a puppet maker, magician, author, cartoonist and performance artist be right about Online advertising and all these studies be mistaken?

Can we make it better? Indeed the IAB members, leading advertising agencies, marketers and researchers are working every day to improve the medium for advertisers.

I applaud the industry for coming together and launching new larger formats, embracing rich media standards thereby encouraging the adoption of more interactive advertising and eye catching content, streamlining measurement standards, supporting research like the cross-media advertising study and constantly encouraging new research to surface new ideas that can make online, an already effective advertising vehicle, work even better.

It's the Monday after the press conference announcing the results of the MSN/IAB/ARF cross media advertising effectiveness study. I check my voice mail. It is Greg Stuart again. His message: "Got another call from a marketer and they want to be part of the next round of cross-media research. They want to see where Online should fit into their mix. They're very excited about this study. Call me." Some Mondays are better than others.