P&G gets the measure of online advertising

In the current way of thinking, internet advertising is worth nothing unless there’s a click. At last week’s Engage conference, Internet Advertising Bureau (IAB) chairman Richard Eyre pointed out that brand advertising online only accounts for about 5% of the total. The rest is various forms of direct response.

There are a number of reasons for this imbalance. Partly it’s a result of the pre-internet view of advertising that says it’s either about brand building or direct response. It’s also because online advertising can drive response; in the early part of the decade the marketing industry quite literally lumped it in with DM. After the dotcom crash, when advertisers’ interest in online slumped, most of the big above-the-line agencies shoved their fledgling digital operations down in the basement with their direct marketing arms.

The discrepancy between direct and brand building spend online is also due to the massive success of search, which still accounts for two-thirds of online advertising spend, and which powers the channels that attract much of the rest. And the result is an abiding belief that you can’t build brands online.

To most people in the online advertising industry, this is palpable nonsense. For a start, they disagree with the idea that brand and direct response advertising can be so neatly separated. As Eyre also observed, no one would send out a DM campaign that wasn’t on-brand. And the point of all brand advertising is ultimately to drive a response in the form of greater sales. So for online media owners and agencies alike, the great opportunity for the future has been to bring brand spend online.

The problem is that online as a medium is brilliant at handling information. This is why financial services companies, for example, have embraced interactive media so enthusiastically. Propositions that are complex and hard to explain in print or in broadcast media can be simplified online with charts, calculators and examples. But if your product isn’t heavy with information, you can run out of things to say pretty quickly. Hence the rash of online campaigns for FMCG brands that don’t talk about the product, but about something associated with the product. This can work brilliantly, as Johnson & Johnson’s BabyCentre or Persil’s school holiday information service for mums did. But when it doesn’t, not only is it cringingly embarrassing, its failure is obvious.

As a result, we’ve seen more brands starting to emphasise engagement as a key metric for their online advertising. The idea of monitoring how involved consumers are with a brand is not new, but what’s changed is the way it’s being done. In the past, one of the key measures of online engagement was dwell time on a brand’s site. But does a long dwell time indicate that potential customers find your site engrossing, or that the navigation is so bad that it takes them ages to find what they want?

So now new approaches to engagement are appearing. Brands are moving away from simple CPM deals and click-through rates. Indeed, back in September it emerged that Procter & Gamble was briefing media owners about a new payment model that would see publishers paid more for users that go beyond simply seeing the ads and sign up for newsletters, play games or watch videos, for example. And last month record label Polydor launched a cost-per-engagement model to help launch new artists. The label will pay publishers if viewers roll over an MPU and watch the video, which plays in an expanded window.

In addition to brands’ desire to get more out of online advertising, these approaches are recognition of the increased richness of the online medium, the fact that 95% of internet-connected homes in the UK now have broadband. But they are also changing the nature of the relationship between advertisers and media owners. P&G’s briefing got a mixed response from online publishers and media agencies, most of which question what engagement actually means. They worry that the nebulous nature of the term allows brands to define the success of an ad in their own terms, rather than using the unambiguous click as the metric.

It also means media owners having to work harder on the relationship between content and advertising, an idea that was flagged up by Alison Reay, digital and multimedia director of Telegraph Media Group. She sees P&G trying to reward publishers rather than punishing them. And she believes the greater partnerships implicit in engagement deals will be the way of the future for online publishers.

But in the end what online publishers think won’t much matter. As publishers continue to struggle, the possibility of bringing significant brand money online is too compelling to argue about the conditions attached.