Getting the measure of the digital future

The need for an industry-wide standard of measurement for online advertising grows more pressing as its share of as spend increases, says Nathalie Kilby.

The future is bright for online advertising, but it could be even better if only the industry could develop a standard way of measuring its impact.

Online adspend in the UK rose by more than 40% in the first half of this year to £917.2m, according to the Internet Advertising Bureau. Digital’s share of the overall advertising pie has passed 10%, but new research from Atlas Solutions in the 2006 Agency Attitudes Report, which surveyed 150 respondents across various agency disciplines, sounds a warning bell and throws up some worrying findings.

Most importantly, it underlines the urgency of agreeing an industry standard of measurement. For instance, agencies might extol the virtues of the digital medium in terms of reaching customers, yet they remain uncertain about online and how best to promote their own capabilities within it. The research shows that 57% of respondents think that they do not make the most of data and evaluation tools to differentiate themselves from competitors and add value for clients.

Atlas Solutions managing director Richard Dunmall says: “With resources stretched, agencies are inclined to stick to what they know, preferring to keep control of insights themselves in order to avoid clients misinterpreting data: 32% say lack of resources is a barrier to using available data and evaluation tools.”

As digital channels proliferate, the need for accurate measurement and evaluation tools becomes an imperative, a fact recognised by respondents says Dunmall, with 41% citing the lack of effective measurements as the most serious threat to digital marketing over the next 12 months.

“This reflects the difficulty of comparing online with existing offline measurements and the lack of effective digital insight to justify client spend,” he says. “Agencies need customer insights, provided by an improved approach to measurement. The delay in finding a de facto standard of measurement means it is impossible to effectively change habits.”

In the Atlas report, 63% of respondents say clients’ understanding of campaign management and evaluation is not sophisticated enough to reap the best return. Dunmall argues that, if the sector is to develop, it is essential that technology providers and agencies overcome this lack of understanding by working together.

“By taking a more active approach to campaign measurement, agencies can put themselves in a much stronger position with clients and ensure campaigns are more effectively managed,” he says.

Unsurprisingly, respondents see search engine marketing as a growth area in 2007, but other new areas are also attracting their interest. When asked to judge which three aspects of digital marketing were likely to grow the most over the next year, the majority of respondents chose search (22%), followed by social networking communities (16%) and rich media (12%).

Dunmall believes that “as online marketing matures, there are greater opportunities to benefit from the ‘halo effect’ created by the combination of online media, such as display ads, search and affiliates”. But the report suggests this is yet to be widely adopted, as advertisers do not fully understand the crossover and relationship between different channels. More than three-quarters (77%) of respondents say advertisers do not fully understand consumer interplay between different online channels and the effect of multiple cross-channel campaigns that lead to conversion.

He says brands must be given a clearer direction on how the “halo effect” boosts conversion rates. “With an expected move towards digital-only channels over the coming 18 months, the requirement to use unified tools which can assess the impact of different media as part of integrated campaigns is only likely to increase further,” concludes Dunmall.

Online advertising is undoubtedly enjoying a boom, but if fears of the current climate being little more than “Bubble 2.0” are to be assuaged, traditional ad agencies, their new media cousins and clients must all work together to prove the value of the medium and its effectiveness.

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