E Marketer Online Brand Measurement Report


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E Marketer Online Brand Measurement Report

  1. 1. June 2009 Online Brand Measurement: Connecting the Dots Geoffrey Ramsey, CEO & Co-Founder geoff@emarketer.com Special Report Introduction More Available Online In 2009, US advertisers will spend $4.7 billion on We encourage you to view this special report online display ads, and another $3.1 billion on other at www.emarketer.com/brandmeasurement for branding-oriented ads, including rich media and access to videos, in-depth interviews and full video. But are they getting their money’s worth? survey results (courtesy of InsightExpress). On the Does online brand measurement even work? Do report Website, you can also join the conversation marketers have the metrics they need to connect on this important topic by contributing comments. the dots—both within online platforms and between online and offline media? Authored by eMarketer CEO and co-founder Geoff Ramsey, this special report addresses these questions and many more. A Look Inside Total Access: This report gives you a sample of the premium content that is exclusive to eMarketer Total Access subscribers. For more information on what Total Access can do for your business, day after day, visit www.emarketer.com, or contact us at 212-763-6010 or 800-405-0844 (toll-free). ® Digital Intelligence Copyright ©2009 eMarketer, Inc. All rights reserved.
  2. 2. Geoff Ramsey: Why This Report? Measurement means different things to different This report was made possible by contributions from many individuals, who offered their time, expertise and razor-sharp people—but most can agree that in business, thinking on an incredibly complicated topic, including many of my measurement is vital to long-term success. hard-working colleagues at eMarketer. In particular, I want to thank senior analyst David Hallerman, who shored up my original draft I’ll never forget my first experience with measurement. When I with much-needed improvements; writer/editor Tobi Elkin, who was 12 years old, my family moved to the UK, exposing me to a conducted more than two dozen high-level interviews; and Evelyn new school system and a decidedly different way of measuring Majewski, who analyzed and provided a contextual summary of student performance. Instead of the generalized feedback I was the InsightExpress poll of industry professionals. used to in Michigan, such as “needs to try harder,” the UK students I am also grateful for the commitment and friendship of the were ranked from 1 through n (where n = however-many- industry leaders who agreed to be interviewed or come into students-were-in-the-class). Granted, it was a blunt measure. And our offices for video sessions. I offer special thanks to David at the end of the first marking period, I was ranked last in every Smith of Mediasmith, a legend in online measurement, who single subject, from Latin to mathematics. Ouch. acted as a sounding board and sanity check for many of my Remarkably, though, this measurement system had a profound points and conclusions. effect on me. I started paying attention in class and generally The process of writing this report was like absorbing the worked like a dog. By the end of the last marking period, my rank collective consciousness of the online ad industry, and it had elevated to No. 1 or No. 2 in each class. convinced me to change my views on a number of key issues. I Could the online advertising industry benefit from a similar hope it opens your mind to some new ideas and provides a forum transformation if better brand measurement systems were put in for the industry to move forward on this important subject of place? Does the industry have the right metrics to be able to online brand measurement. connect the dots—both within online platforms and between online Please take the time to share your comments and thoughts. and offline media? That’s what this report was designed to uncover. Collectively, we can begin to connect the dots—and maybe we Online brand measurement has been on my mind for some time can move to an 8 or 9 out of 10 sooner rather than later. now. After moderating industry panels with session titles such as Geoffrey Ramsey “Fixing the Measurement Mess” or “Is Data Friend or Enemy?” it CEO, Co-Founder, eMarketer became clear that we had some major challenges to overcome. That feeling was confirmed when eMarketer commissioned InsightExpress to conduct a poll of industry stakeholders. On a scale of 1 (we’re still in the Dark Ages) to 10 (we’ve got this all figured out), a majority (51%) rated the current state of online brand measurement at 5 or below. Ouch again. ® Online Brand Measurement: Special Report 2
  3. 3. Letter from Our Sponsor, Datran Media When I first heard that eMarketer was publishing Unfortunately the industry is still stuck in a rut over counting methodologies. Yet at the end of the day, the only figures that a study dedicated to online measurement, I got typically matter come from an advertiser’s third party ad server, as excited, because I felt that the timing couldn’t this is what determines the money actually spent on advertising. be any better. Until the debate switches from unique user counting to the accuracy and quality of data about the individuals exposed to and We are witnessing a very interesting period in the industry where interacting with the ad campaign, we will be holding back the advertisers are no longer simply buying media on Web sites to potential of the industry. Not to say that the number of monthly reach a particular audience, but instead are actually targeting visitors isn’t at all relevant to publishers or advertisers, but let’s put users. The explosion of exchanges and behavioral data targeting that challenge into perspective and focus resources on moving has suddenly made the term “remnant” important and sexy. Let’s the market forward with the type of audience measurement that face it, this is not a just a trend, but rather a clear movement today’s marketer truly needs. towards leveraging the plethora of data that differentiates the I trust that this timely report will give us all a lot of food for thought Internet from any other form of media. Even when advertisers buy and we are delighted to be sponsoring it. No one knows exactly from an individual site, they are now expecting to target specific what measurement will consist of in five years, but I guarantee it users with relevant demographics or behavior. Although this will evolve greatly from what exists today. This study should appears to be a subtle switch, it actually has a profound effect on provide us with not only the current challenges, but also a hint of the industry, especially when it comes to measurement. Think things to come. Enjoy the report and let the debates begin! about it. The measurement tools that exist on the Web today were created to address the desire to determine the most popular sites Sincerely, by attempting to count the number of unique visits to individual Scott C. Knoll sites on a monthly basis. These tools were not really developed to SVP Display and GM Aperture Product Group, Datran Media provide valid insights into the user behind the browser. Perhaps in the early days of the Internet when people were focused on buying homepages or sponsorships, knowing the most popular sports-related Web site was actually relevant. But let me ask you a question, if you are only buying four million unique impressions, does it really matter whether the site reaches 20 or 30 million visitors a month? Although instinctively most of us want to say yes, chances are the answer is no. Advertisers should be shifting from asking what site is the most popular to wondering “who specifically am I reaching?”, “is this who I am intending to reach?” and “what is the impact on my brand?” ® Online Brand Measurement: Special Report 3
  4. 4. ADVERTISEMENT Verified consumer data is the key to accurate reporting What are Analytics Really Current methodologies are outdated Telling You about Your Audience Most research sample sizes are statistically insignificant Audiences need to be measured at the campaign and creative level, not just site level Advertisers and marketers have long searched, with mixed results, for proof that their campaigns are e ective. For the interactive industry, integrity in audience measurement is a fundamental necessity. After all, accurate reporting and transpar- ency is critical when planning future media buys, segmenting audiences, and optimizing marketing mixes. 19,312,785 41,228 2, impressions clicks conv How crucial do you feel analytics can be in dictating future ad campaigns? (% of respondents) INFLUENCE (share of impressions) DEMOGRAPHICS FINANCE HOUS College Grad $250k (Net Worth) 1-2 36-45 yrs (Adult Age) Bank Card 1 Females 35-44 yrs $100k (Income) Very 69.2% Males 35-44 yrs pressions indexed to internet Somewhat 30% Not at All .8% Source: Datran Media, “Third Annual Marketing & Media Survey,” January 2009 Adult Age (all) Sampling Percent 62% The methodologies that most media is measured by today are 86-99 yrs over 70 years old! Panel-based research was initially developed to 76-85 yrs help radio advertisers understand how many listeners were 66-75 yrs exposed to their campaign. Ironically, not much has changed in the world of media measurement. Although in recent years, 56-65 yrs ISP-based measurement has made some attempts to improve the 46-55 yrs way audiences are quanti ed. 36-45 yrs Clearly, online advertisers need deeper insights into who they're Aperture measures 26-35 yrs reaching. In today’s competitive atmosphere, where targeting household- level 18-25 yrs very speci c audiences is increasingly important, the old-world demographics across the entire 0 2 4 6 8 10 12 14 16 18 20 media chain – from impressions methodologies are becoming less relevant. to clicks to conversions. Do you currently leverage audience analytics? (% of respondents) Aperture answers the questions every digital marketer is asking: Yes 76% Am I reaching the right audience? No 26% Who is responding to my campaign? Source: Datran Media, “Third Annual Marketing & Media Survey,” January 2009 Should I be targeting new audiences? To understand who your audience truly is, you need a reporting tool With more and more marketers relying on analytics to shape their that is designed for the 21st century digital marketer. To learn more campaigns, new tools are being developed for today’s online about Aperture, please visit datranmedia.com/insight advertiser, as evidenced by the recent launch of Datran Media’s Aperture. Aperture is the rst and only audience reporting tool that delivers consumer pro les across all digital media, based on third-party veri ed household-level data. Anonymously combining veri ed o ine data with the online activity of over 100 million consumers, this rich data provides unprecedented insights into the audience that is exposed to, has responded to, and is converting on an advertiser’s campaign. A Datran Media Solution
  5. 5. Table of Contents Introduction 1 Building New Measurement Models for Social and Video Environments 44 More Available Online 1 Unraveling Consumer Engagement Metrics 46 Geoff Ramsey: Why This Report? 2 Next Steps: A Seven-Point Plan 47 Letter from Our Sponsor, Datran Media 3 Endnotes 49 Table of Contents 5 Related Information and Links 52 Background: Factors that Contribute to the Contact 55 Measurement Issue 5 Report Contributors 55 What Does ‘Measurement’ Mean? 5 eMarketer Total Access: How to Make Better Putting Measurement into Perspective 6 Digital Business Decisions 55 The Accountability Factor 7 What Spending Trends Say About Online Brand Measurement 10 Total Online Spending—Slow but Positive Growth Ahead 10 Search versus Display Trends 11 Dollar Trends Don’t Tell the Whole Story 14 Beyond Banners: Other Online Formats Will Boost Overall Branding Dollars 15 Drill Down: What Are the Problems? 16 A General Apathy Toward Branding 16 A Preoccupation with Search, at the Expense of Branding 18 An Addiction to Clicks 21 Do Traditional Measurement Techniques Work for New Media? 22 Integration Is Hard When Data Is Locked in Silos 23 Too Much Information, Too Much Complexity 24 Current Measurement Models Have Limitations 25 Measurement of Social and Video Are Even Further Behind 26 Data Spotlight: How Online Brand Advertising Can Influence Every Step Along the Consumer Purchase Funnel 27 How Display Ads Impact Brand Metrics 28 Integrating Search and Display Ad Measurements 29 How Display Ads Drive Site Traffic 30 How Display Ads Impact Online Sales 30 How Display Ads Influence Offline Purchases 31 Three Factors for Online Branding Success 33 Working Toward the Solutions for Online Brand Measurement 35 Big Picture: Five Broad Approaches 35 It All Starts with Marketing Objectives 36 The Need for Uniform Standards 36 Integrate Online and Offline Measurement and Metrics 39 Embrace Traditional Media Metrics 39 Get Smart About Attribution Modeling 42 ® Online Brand Measurement: Special Report 5
  6. 6. Background: Factors that Contribute to the Measurement Issue Putting Measurement into Perspective In April 2009, eMarketer used online survey company US advertisers will spend $4.7 billion on display InsightExpress to poll 37 high-level, highly knowledgeable marketing professionals with expertise in the field of media ads in 2009, and another $3.1 billion on other measurement. The purpose was to gauge their opinions on the branding-oriented ads, including rich media and state of online brand measurement. video. But are they getting their money’s worth? To get a level set on the degree to which measurement is seen Do they have the right metrics, and are they able as a significant barrier to the growth of online advertising, the respondents were asked whether they agreed with the to connect the dots, both within online platforms following statement: and between online and offline media? Is online “Other than the economy, brand measurement is the brand measurement even a problem that needs single biggest obstacle holding back the growth of to be fixed? online advertising.” A little under one-half of respondents, or 43.2%, agreed that This special report will seek answers to these questions, and measurement is the major obstacle aside from the overall economy. many more. US Marketing Executives Who Agree that Brand Measurement Is Holding Back the Growth of Online “It’s time for digital media to grow up and for Advertising, April 2009 (% of respondents) clients who are running full-on marketing campaigns to really understand how their Disagree campaigns are performing if they spend $5 56.8% million or $1 million or $800,000 online, across various sites and fragmented Agree audiences.” —Curt Hecht, president, Publicis Groupe’s 43.2% VivaKi Nerve Center, in an interview with eMarketer, April 22, 2009 Note: n=37 Source: eMarketer, "Online Brand Measurement Survey" conducted by What Does ‘Measurement’ Mean? InsightExpress, June 2009 104486 www.eMarketer.com In exploring online brand measurement today, marketers need to 104486 be careful to separate out its two basic components: But while 56.8% of respondents disagreed with the statement, ■ How successfully and efficiently did I reach my intended their answers for alternative obstacles varied. In general, they target consumer? centered around three broad themes. But as this report makes clear, each of these obstacles is, in fact, an integral part of the core ■ Did my advertising campaign influence the consumer’s measurement problem. Taken together, they pinpoint the key attitudes, perceptions or behaviors associated with the brand? challenges facing the industry. The following quotations provide “One question is about ad effectiveness, and the other is the some elaboration. currency that is bought and sold,” said Young-Bean Song, senior director of analytics and the Atlas Institute for Microsoft Obstacle: Too much focus on direct response Advertising, in an interview with eMarketer. “In an ideal world, ■ “Overinfluence of direct response metrics. Perhaps these are those would be the same thing. That’s one of the good things two sides of the same coin but still, today, there is a large about direct response advertising, where you’re paying somebody school of thought that direct response is the basic benefit of for a sale that occurs on their network or you’re paying for a click. online advertising.” Both the currency and the measure of effectiveness are the same ■ “A myopic focus on direct response ads and immediate thing. But in the world of branding, things get a lot more abstract. You still have to pay for something, but you’re not going to pay for gratification.” branding ad effectiveness.” ® Online Brand Measurement: Special Report 6
  7. 7. Background: Factors that Contribute to the Measurement Issue Obstacle: Lack of creativity If there is any solace, it’s in the slight improvement over the years. ■ “A lack of CMO and marketing creative focus on online efforts, When asked how they would have rated online measurement five and true measurement of buying influences.” years ago, a whopping 78% of respondents said they would have rated it a 4 or lower, with nearly one-third (29.7%) rating it a ■ “Brand measurement is certainly one area that needs to pathetic 2. improve, but also improved creative and CMOs’ understanding of the platform are also a priority.” US Marketing Executives' Ratings* of the State of Online Advertising Measurement Five Years Ago, April 2009 (% of respondents) Obstacle: Lack of understanding about how 10 0.0% digital works 9 0.0% ■ “Understanding how online fits in with other media.” 8 0.0% ■ “Vision, imagination, ideas, experience. We are still in an early 7 0.0% stage of adoption for many companies, where many marketers 6 8.1% just don’t have the bandwidth or experience to make digital work, let alone sync with the rest of their marketing programs.” 5 13.5% 4 24.3% ■ “The problem is subjective, not quantitative: It is about 3 18.9% experience with the medium and belief in its virtues.” 2 29.7% To further quantify where the online ad industry is with 1 5.4% measurement today, the InsightExpress poll also asked respondents to rate the measurement issue on a continuum from Note: n=37; numbers may not add up to 100% due to rounding; *on a scale of 1-10, where 1="We are in the Dark Ages" and 10="We've got this thing 1 to 10, where 1 is “We are in the Dark Ages,” and 10 is “We’ve got totally figured out" Source: eMarketer, "Online Brand Measurement Survey" conducted by this thing totally figured out.” Not a single one of the 37 InsightExpress, June 2009 respondents rated online ad measurement a 9 or 10. Only 16.2% 104492 www.eMarketer.com of respondents rated measurement a 7 or higher, and just under 104492 one-half rated it at least a 6. Looking to the future, respondents gave the industry an average of three to five years before online measurement would attain a The bottom line: A slight majority (51.3%) believed online score of 8 or above. measurement is at a grade of 5 or below. Clearly, the interactive ad industry has a problem on its hands. In One Word, Describe Online Measurement US Marketing Executives' Ratings* of the State of Today Online Advertising Measurement, April 2009 (% of respondents) In the informal poll eMarketer conducted among industry 10 0.0% insiders, we asked them, “What single word or phrase would you use to describe the current state of online 9 0.0% advertising measurement?” The answers were telling— 8 2.7% strongly reinforcing the idea that the online ad industry 7 13.5% has a long road ahead. 6 32.4% 5 18.9% 4 13.5% 3 16.2% 2 2.7% 1 0.0% Note: n=37; numbers may not add up to 100% due to rounding; *on a scale of 1-10, where 1="We are in the Dark Ages" and 10="We've got this thing totally figured out" Source: eMarketer, "Online Brand Measurement Survey" conducted by InsightExpress, June 2009 104488 www.eMarketer.com 104488 ® Online Brand Measurement: Special Report 7
  8. 8. Background: Factors that Contribute to the Measurement Issue The Accountability Factor A study by Heidrick & Struggles of 111 US senior executives found Even before the recession, marketers were under tremendous that return on marketing investment was the highest-ranked pressure to better account for their advertising outlays. The marketing tactic in terms of importance to the company’s growth downturn only reinforced and accelerated the need to set specific objectives, rating a 4.05 on a scale of 1 to 5. Notably, online display marketing goals and carefully measure results from ad campaigns. ads were way down on the priority list, rating a paltry 2.86 out of 5. Executives’ satisfaction with online display ads was similarly poor, “Marketers have been challenged to be more accountable by at 3.07. However, satisfaction levels with social networking tools CEOs who are looking for shareholder return and value,” said Bob (2.75) and video ads (2.65) were far worse. Liodice, the president and CEO of the Association of National Advertisers, in an interview with eMarketer. “The challenge for Satisfaction Level of US* Senior Executives Regarding marketing is: ‘Prove to me that marketing works. Prove to me that Their Company's Effectiveness at Developing Select Marketing Tactics, November-December 2008 (scale of 1-5**) no matter how you slice it, the investments are paying back in Publishing tools–Webinars both short- and long-term deliverables.’” 3.96 Many studies underscore the accountability mandate for Research and analysis–online surveys 3.25 marketing, including a 2009 survey by the Lenskold Group and Research and analysis–Website activity analysis MarketSphere in which 65% of marketers worldwide said that 3.14 CEOs and CFOs are demanding to see ROI as a part of securing Promotions–contests/sweepstakes budgets for marketing initiatives. Seventy-nine percent of the 3.11 marketers felt that the need to measure, analyze and report Publishing tools–e-mail newsletters 3.11 marketing effectiveness was greater in 2009 than in previous years. Websites/applications–microsites Another 2009 survey, from JupiterResearch and Verse Group, found 3.07 that achieving measurable ROI on marketing efforts was the No. 1 Advertising–online display ads 3.07 priority of US marketers for 2009. Second on their list was developing Research and analysis–return on marketing investment (ROMI) marketing programs that integrate online and traditional media. analysis 3.07 Leading Priorities for US Marketers in 2009 (% of SEO–pay-per-click search ads respondents) 3.05 Achieving measurable ROI on my marketing efforts Collaboration and process tools–project management/marketing 50% process tools 3.00 Developing marketing programs that integrate online and traditional media SEO 43% 3.00 SEO–search-related landing pages Translating the brand experience across different touchpoints 2.96 32% Promotions–gaming Cutting marketing budgets without cutting performance 2.96 31% Partner tools–supplier/customer intranets Optimizing our portfolio of brands 2.93 26% Publishing tools–blogs 2.75 Selecting better methods to uncover relevant consumer insights Websites/applications–social networking tools 23% 2.75 Measuring brand effectiveness Websites/applications–e-commerce sites 20% 2.69 Refreshing our brand's image Collaboration and process tools–customer relationship 19% management (CRM) (sales process) 2.68 Evolving our brand as the company's business strategy evolves Advertising–video ads (e.g., on YouTube) 18% 2.65 Building a corporate culture rooted in our brand Advertising–mobile ads 17% 2.58 Note: n=101 Note: n=111; *90% of respondents are US-based; **1=not satisfied and Source: JupiterResearch and Verse Group, "CMO Priorities for 2009," 5=very satisfied February 2009 Source: Heidrick & Struggles, "The Digital Marketing Standard," provided to 102141 www.eMarketer.com eMarketer, April 20, 2009 emarketer_2000584_102141 103679 www.eMarketer.com emarketer_2000584_103679 ® Online Brand Measurement: Special Report 8
  9. 9. Background: Factors that Contribute to the Measurement Issue Again, the growing pull toward more accountability in marketing is “I think if we came to an agreement on how a only reinforced by the severe economic climate. In the CMO Council’s brand campaign influences a direct annual “Marketing Outlook 2009” report among 650 marketing response campaign and understood how professionals worldwide, fully one-half said they were cutting their display advertising impacts search, that marketing budgets this year.As Liz Miller,VP of programs and would be a game-changer. It would change operations at the CMO Council, said in the April 6, 2009, issue of BtoB the way our clients buy online media.” magazine,“Everything we have seen and possibly predicted was that —Jeff Lanctot, chief strategy officer, Razorfish, in an a typical knee-jerk reaction to the recession would happen—budgets would be slashed across the board and companies would look at interview with eMarketer, April 28, 2009 marketing as if it were a line item that must be removed immediately.” “This recession is having a dislocation When marketers in the CMO Council survey were asked which impact. It is causing advertisers to look media elements would see their budgets increased by more than more closely at the Internet because of the 5%, 33% of respondents cited interactive/Web, 25% indicated cost savings they might have [versus] if search marketing and 23% named social media. everything economically was fine. [The Internet’s] growth is slowing, [but] it’s “There is an increase in those programs and gaining share.” —Gian Fulgoni, chairman and co- media options that will have an ROI that can founder, comScore, in an interview with eMarketer, April be measured and provide direct engagement 15, 2009 with customers.” —Liz Miller,VP of programs and operations, CMO Council, in BtoB magazine,April 6, 2009 Consulting firm McKinsey & Co. conducted a study in June 2008 and found that only 20% of marketing executives worldwide claimed to use quantitative analytical techniques to optimize their online Where Is Digital on the Accountability Front? marketing efforts. Most used subjective—or gut—measures. The marketing accountability mandate extends to every form of media, including the Internet. But while the Web, in general, is In a more recent November 2008 survey by integrated marketing perceived as highly accountable, the actual usage and success of solutions provider Alterian, 47% of the 1,545 marketers and measurement programs depends heavily on marketers’ objectives. agencies polled said they used analytics to measure their online campaigns. Despite the obvious vested interest here, the Alterian Most marketers have a handle on measuring and calculating ROI survey suggests a positive trend for marketer adoption of analytics. for their search campaigns, which tend to be focused on short- term, direct response results. Far fewer have mastered the art More evidence that progress is being made for measuring the ROI (and science) of assessing the impact of their branding efforts, of online advertising comes from a series of surveys among which tend to have a longer-term focus and are much harder and marketers conducted by PROMO magazine between 2007 and more complex to measure. 2009. In 2009, the Internet was deemed more profitable on an ROI basis than traditional media by 34% of respondents—up from But the industry is gradually waking up to the fact that marketers and 21.6% in 2008 and 25.9% in 2007; only 7.4% felt the Internet was their agencies have been overemphasizing search while less profitable than traditional media in 2009. simultaneously devaluing their online branding efforts—largely because of inadequate measurement tools and platforms. In the aggregate, branding-oriented ads today account for slightly less than one-third (31.5%) of total online advertising dollars spent in the US. ® Online Brand Measurement: Special Report 9
  10. 10. Background: Factors that Contribute to the Measurement Issue What Spending Trends Say About Online Brand Measurement Interactive vs. Traditional Marketing ROI According to US Marketers, 2007-2009 (% of respondents) Spending trends by advertisers tell another side More profitable of the story about the state of online branding 25.9% 21.6% and its measurement. 34.0% Equally profitable Total Online Spending—Slow but Positive 16.0% Growth Ahead 11.5% Like in every other media category, growth in online advertising 13.9% spending is slowing. However, while traditional media—television, Less profitable radio, magazines and (especially) newspapers—are experiencing 8.4% cataclysmic, double-digit declines, Internet spending is slowing 4.7% 7.4% from a growth rate of more than 25% to about 4.5%. In fact, eMarketer sees online spending growth remaining positive Do not measure throughout the duration of this recession. By year-end 2009, online 14.4% 10.1% ad spending will be just under the $25 billion mark. 9.0% US Online Advertising Spending Growth, 2007-2013 (% Do not know change) 27.8% 39.2% 2007 25.6% 28.7% 2008 10.6% Does not apply 2009 4.5% 7.6% 2010 9.4% 10.1% 7.0% 2011 10.8% 2012 13.5% 2007 2008 2009 Note: numbers may not add up to 100% due to rounding 2013 10.4% Source: PROMO magazine, "2009 Promo Interactive Marketing Survey" conducted by Penton Research, April 1, 2009 Source: eMarketer, April 2009 103776 www.eMarketer.com 102197 www.eMarketer.com 102197 103776 Looking specifically at the data analytics side, Forrester Research For additional information on the above chart, see Endnote reported in May 2009 that over the next five years, US companies 102197 | 104363 | 104366 in the Endnotes section. will more than double their aggregate spending on Web analytics, including data analysis of advertising campaign performance. The eMarketer’s projection of 4.5% growth for US online advertising in research firm sees such spending growing from $421 million in 2009 is supported by a wide variety of independent sources, from 2009 to $953 million by 2014. media and research firms to investment banks. Although a few sources point to marginal declines, most predict online ad “It’s sort of a chicken or egg problem in that spending growth will remain positive. measurement is expensive so it’s prudent to measure only big campaigns on major initiatives. So until more money’s spent online for branding, the measurement’s going to lag. If the measurement and metrics lag, how can we expect the offline dollars to pour in?” —Jeff Lanctot, chief strategy officer, Razorfish, in an interview with eMarketer, April 28, 2009 ® Online Brand Measurement: Special Report 10
  11. 11. What Spending Trends Say About Online Brand Measurement As an early indicator of how these full-year 2009 projections are Comparative Estimates: US Online Advertising Spending Growth, 2009 (% change*) playing out, the IAB reported in June that online ad spending was LiveRail, September 2008 down by 5% in Q1. eMarketer benchmarks its future projections 19.4% on IAB reports, which are conducted by accounting firm JupiterResearch, December 2008 PricewaterhouseCoopers (PwC). Notably, eMarketer predicts a 14.8% slight uptick in online ad spending growth during the second half BMO Capital Markets, October 2008 of 2009. 13.0% Surveys among marketers—the ones spending the money— Wachovia, October 2008 confirm this online growth trend. In an Advertiser Perceptions 10.0% study among 1,599 advertisers and agencies, conducted in April ZenithOptimedia, April 2009 2009, just over one-half (51%) said they were increasing their 7.4% online budgets over the next six months. While that is positive, it is Borrell Associates Inc., November 2008 down from 72% just one year ago. 7.2% SNL Kagan, May 2009 Particularly in this harsh economic environment, any increases in 6.2% online advertising spending will likely come at the expense of Collins Stewart LLC, May 2009 traditional media budgets. In a worldwide study by McKinsey in 5.0% June 2008, a majority of marketers (55%) said they were cutting GroupM, March 2009 their traditional media budgets precisely in order to fund more 5.0% digital efforts. Several even more recent surveys corroborate this eMarketer, April 2009 migration from traditional to digital. 4.5% Citi Investment Research, January 2009 But not all ad formats in the online sector are trending in the same 4.3% direction. Spending on display ads, which usually serve a ThinkPanmure LLC, October 2008 marketer’s longer-term branding objectives, is headed downward. 3.0% Conversely, spending on search, which is usually considered a Barclays Capital, May 2009 direct response vehicle designed to achieve immediate results, is 2.3% holding steady. Morgan Stanley, March 2009 2.1% Search versus Display Trends Thomas Weisel Partners, March 2009 By year-end 2008, search had grown to account for fully 45% of all 1.5% online advertising spending in the US. The current economic Jefferies & Company, February 2009 climate will only accelerate this trend, with the result that 1.0% marketers will spend nearly 49% of their online budgets on Credit Suisse, February 2009 search—primarily for its direct response capabilities. Static display 0.1% advertising, on the other hand, will see its share slip from 20.8% of Myers Publishing LLC, May 2009 online ad dollars in 2008 to 19% this year. -0.5% Oppenheimer & Co. Inc., February 2009 US Online Display and Search Advertising Spending -2.0% Share, 2008-2013 (% of total) 2008 2009 2010 2011 2012 2013 UBS, February 2009 -5.0% Search* 45.0% 48.8% 50.5% 50.4% 49.4% 49.3% Display ads** 20.8% 19.0% 18.0% 17.0% 16.1% 14.9% Cowen and Co., May 2009 Note: *paid listings, contextual text links and paid inclusion; **banner ads -6.0% only, excludes rich media and video Source: eMarketer, April 2009 Note: *vs. prior year Source: eMarketer, April 2009; various, as noted, 2008 & 2009 104600 www.eMarketer.com 104394 www.eMarketer.com 104600 104394 For additional information on the above chart, see For additional information on the above chart, see Endnote 104597 | 104600 in the Endnotes section. Endnote 104394 in the Endnotes section. ® Online Brand Measurement: Special Report 11
  12. 12. What Spending Trends Say About Online Brand Measurement In terms of dollars spent, search advertising will grow 13.4% in More Evidence that Display Ad Spending Will Shrink 2009, while display ads will shrink by 4.6%. eMarketer is not alone in thinking 2009 will see search budgets continue to ascend while spending growth on display ads US Online Display and Search Advertising Spending goes negative. Growth, 2008-2013 (% change) 2008 2009 2010 2011 2012 2013 In the comparative estimates chart below, every single research Search* 19.8% 13.4% 13.2% 10.6% 11.2% 10.2% firm, investment bank and media house predicts a positive trend Display ads** 9.4% -4.6% 3.6% 4.4% 7.8% 2.2% for search ad dollars this year, with a range of 1% growth (Cowen Note: *paid listings, contextual text links and paid inclusion; **banner ads and Co., Myers Publishing) to 21% (BMO Capital Markets). On the only, excludes rich media and video Source: eMarketer, April 2009 other hand, there is a consensus that display spending will see 104597 www.eMarketer.com negative growth. Investment bank Oppenheimer & Co. is the 104597 most pessimistic, projecting display ad spending will tumble 15% For additional information on the above chart, see this year. Endnote 104597 | 104600 in the Endnotes section. Comparative Estimates: US Online Display and Search Advertising Spending Growth, 2009 (% change*) After the downward blip in 2009, display ad spending growth will Online Search display enter positive territory again in 2010, but at a rate of only 3.6%, Barclays Capital, May 2009 -1.0% 10.0% while search will climb 13.2%. BMO Capital Markets, October 2008 -2.0% 21.0% Over the next several years, display ads as a percent of total Citi Investment Research, November 2008 -5.0% 14.0% online advertising will shrink from 19% in 2009 to just below 15% Collins Stewart, November 2008 3.0% 13.0% in 2013. Other researchers and analyst firms forecast a similar Cowen and Company, May 2009 - 1.0% downward trend. Credit Suisse, January 2009 -5.9% 8.1% eMarketer, April 2009 -4.6% 13.4% Forrester Research, April 2009 1.7% 13.9% JPMorgan, January 2009 6.3% 9.9% Myers Publishing LLC, May 2009 -3.0% 1.0% Oppenheimer & Co., February 2009 -15.0% 10.0% SNL Kagan, May 2009 4.6% 9.1% ThinkPanmure, October 2008 -5.0% 13.0% ZenithOptimedia, April 2009 -1.8% 9.0% Note: *vs. prior year Source: eMarketer, April 2009; various, as noted, 2008 & 2009 104573 www.eMarketer.com 104573 For additional information on the above chart, see Endnote 104573 in the Endnotes section. “It’s time we woke up and faced reality. Online display-ad spending will fall in 2009, probably sharply.” —Henry Blodget, CEO, Silicon Alley Insider, October 20, 2008 Quarterly reports offered by Nielsen and TNS provide an early look at how these display spending projections are coming along. For Q1 2009, however, the sources provide opposite views: Nielsen Co. says display ad spending was down 3.5%, while TNS Media Intelligence reports it was up 8.2%. ® Online Brand Measurement: Special Report 12
  13. 13. What Spending Trends Say About Online Brand Measurement The reason for the disparity is that each firm is measuring a It is also instructive to look at how marketers are using display ads. different thing. Specifically, Nielsen, which reported a 3.5% drop in According to AdRelevance, which measures impressions by display ad spending, only counts CPM-based display spending. objective, advertisers have been slightly increasing their use of TNS Media Intelligence, on the other hand, which reported an 8.2% display ads as a means to achieve direct response objectives, with increase, includes both CPM and cost-per-action/cost-per-click 73% of impressions focused on direct response in Q4 2008. At the deals. We can conclude two things from this data: beginning of 2008, only 68% of display impressions were direct- response-focused. 1. Online display ad spending continues to increase. 2. Advertisers are shifting from CPM deals to pay-for-performance. Surveys of marketers and ad agencies tell the same negative story. For example, in a January 2009 AdMedia Partners survey of marketers worldwide, 76% expected to increase their search spending in 2009, with only 7% planning a decrease. In contrast, only 26% saw increases for display advertising, while 45% were predicting a decline. Change in Online Marketing Spending in 2009 According to Senior Marketing Executives Worldwide (% of respondents) Increase Flat Decrease Word-of-mouth/social media marketing 77% 12% 11% Search marketing 76% 18% 7% Mobile marketing 75% 14% 11% Behavioral/contextual marketing 70% 22% 7% Lead generation 63% 29% 9% CRM/analytics 60% 31% 9% Video advertising 60% 24% 16% E-mail marketing 58% 31% 11% Online gaming/in-game advertising 51% 30% 18% Online media buying/planning 47% 40% 13% Affiliate marketing 46% 35% 19% Web development 39% 38% 23% 104214 Market research 27% 50% 23% Display advertising 26% 29% 45% “So much of the investment that has been Note: numbers may not add up to 100% due to rounding Source: Ad Media Partners, "2009 Merger and Acquisition Prospects for made online has been very much tied to Advertising, Marketing Services and Interactive Firms," January 28, 2009 direct marketing campaigns. The dollar 101734 www.eMarketer.com emarketer_2000584_101734 investment made in search alone is One upside indicator on display ads comes from the world’s representative of that.” —Pam Horan, president, largest spender on advertising, Procter & Gamble. According to Online Publishers Association (OPA), in an interview with the June 8, 2009, issue of Advertising Age, P&G decreased its eMarketer, April 27, 2009 measured media spending by 18% in Q1 2009 but more than doubled its spending on online display ads, as measured by TNS. Similarly, P&G’s rival Johnson & Johnson nearly doubled its spending on Internet display ads in the same quarter. Both increases, though, were from very small bases. Online Brand Measurement: Special Report 13
  14. 14. What Spending Trends Say About Online Brand Measurement Dollar Trends Don’t Tell the Whole Story “Ad networks have driven CPMs down to a Just because the analysts predict negative growth for online terrible level.” —David Verklin, CEO, Canoe Ventures, display advertising and most advertisers give it short shrift in their as quoted in MediaPost’s OnlineMediaDaily, April 29, 2009 marketing efforts does not mean that display ads necessarily deserve the bad rep. At $2.46 in 2008, average online CPMs were less expensive than every form of traditional media, with the exception of outdoor, In fact, a pullback or complete retrenchment from display according to Jefferies & Co. advertising could end up being a big mistake for marketers. US Advertising CPM, by Media, 2008 There are four interrelated factors impeding the growth of online display ad spending: Broadcast TV $10.25 Syndication TV $8.77 ■ A depressed economy, along with severely reduced media budgets overall Magazines $6.98 Cable TV $5.99 ■ Intense pressure on pricing for display units, which, in turn, is a Newspapers $5.50 function of both the economy and the proliferation of ad networks (more than 400 at last count), which tend to Radio $4.54 commoditize pricing Outdoor $2.26 ■ A lack of adequate measurement systems to justify the use of Source: Jefferies & Company, Media Dynamics, InterMedia Dimensions and company reports, "Snapshot of the Global Media Landscape," provided to display ads eMarketer, February 2009 103170 www.eMarketer.com ■ A tendency for marketers, in the context of draconian budget 103170 cutbacks, to focus their marketing efforts on below-the-line, direct response initiatives “Two elements working in online display The last factor represents a familiar pattern for marketers. As advertising’s favor are that its tracking Randall Rothenberg, CEO of the IAB, said on his clog (a cross capabilities have been improved and its between a blog and a column): “It’s an axiom of marketing that pricing made more reasonable.” —Nate Elliott, when the economy gets rough, marketers shift budgets from principal analyst, Forrester Research, as quoted in BtoB above-the-line programs to below-the-line—that is, they trade off magazine, April 6, 2009 longer-term effects of brand-building for the shorter-term need to move product.” CPM pricing for display ads purchased through ad networks is also on the decline. According to the Q4 2008 report from PubMatic, This thinking was echoed by the results of an April 2009 survey display ads sold through ad networks decreased by 48% in that among 129 marketers conducted by the Association of National quarter compared with Q4 2007. More recently, CPMs on ad Advertisers (ANA). In the study, two-thirds of marketers said they networks were estimated to be down by 20% to 30% in Q1 2009 had shifted their focus to more short-term strategies over the past from Q4 2008, as measured by the Rubicon Project. six months in response to the economy. Of course, this downward CPM trend may also create an Pricing Pressures opportunity. Marketers can buy display ads relatively cheaply Online display ads are typically sold on a cost-per-thousand (CPM) now—at a time when budgets are particularly tight. For brand impression basis. According to Credit Suisse, online display ad marketers, this is a buyer’s market. CPMs are headed downward for the next several years, projected Not only are the lower CPMs on display ads creating potential to fall from an average of $2.46 in 2008 to $2.30 by 2013, resulting savings for advertisers, the decreased volume of display ads in the in a cumulative decrease of 6.5%. Note that these prices are aggregate is reducing the clutter of online ads. Many studies, representative of traditional banner ads. Online video ads, for including one by Nielsen, report that having fewer ads per example, typically garner a CPM of $15 or higher. Webpage results in significant increases in unaided recall. ® Online Brand Measurement: Special Report 14
  15. 15. What Spending Trends Say About Online Brand Measurement Beyond Banners: Other Online Formats Will Boost Importantly, when all the branding-related components Overall Branding Dollars are combined, the aggregate dollars show a positive While traditional display ad units—mostly banners—currently growth rate for every year from 2009 though 2013. Total represent the bulk of brand-oriented ad dollars online, other forms online branding dollars will rise 1% in 2009 and 10.4% in 2010, of online brand ads are growing at a much faster rate. In addition to followed by double-digit increases thereafter. banner ads, totaling $4.7 billion in 2009, rich media and video ads US Online Advertising Spending Growth, by Format account for another $2.7 billion. Other forms of brand advertising— and Objective, 2008-2013 (% change) mainly sponsorships—make up an additional $300 million, bringing 2008 2009 2010 2011 2012 2013 total online brand ad spending in 2009 to $7.7 billion. Video 126.5% 43.5% 42.5% 40.5% 48.6% 30.6% Rich media -0.8% 3.0% 9.4% 12.4% 13.5% 12.0% US Online Advertising Spending, by Format and Sponsorships -39.2% -17.7% 9.4% 10.8% 13.5% 10.4% Objective, 2008- 2013 (millions) Display ads 9.4% -4.6% 3.6% 4.4% 7.8% 2.2% 2008 2009 2010 2011 2012 2013 Branding total 8.0% 1.0% 10.4% 12.7% 18.2% 12.4% Display ads $4,877 $4,655 $4,824 $5,034 $5,426 $5,543 E-mail -4.5% -3.2% 2.6% 7.1% 9.6% 10.4% Video $734 $1,054 $1,501 $2,109 $3,134 $4,092 Search 19.8% 13.4% 13.2% 10.6% 11.2% 10.2% Rich media $1,642 $1,691 $1,849 $2,079 $2,359 $2,641 Lead generation 6.3% 4.8% 9.4% 10.8% 11.9% 8.8% Sponsorships $387 $319 $348 $386 $438 $484 Classifieds -4.4% -15.9% -9.7% 5.9% 10.8% 5.1% Branding total $7,640 $7,718 $8,522 $9,608 $11,357 $12,760 Direct response total 11.8% 6.2% 8.9% 9.9% 11.2% 9.4% Search $10,546 $11,956 $13,534 $14,969 $16,648 $18,340 Grand total 10.6% 4.5% 9.4% 10.8% 13.5% 10.4% Classifieds $3,174 $2,671 $2,412 $2,554 $2,831 $2,976 Lead generation $1,683 $1,764 $1,930 $2,138 $2,393 $2,604 Source: eMarketer, April 2009 104366 www.eMarketer.com E-mail $405 $392 $402 $431 $472 $521 104366 Direct response $15,808 $16,783 $18,278 $20,092 $22,343 $24,440 total For additional information on the above chart, see Endnote Grand total $23,448 $24,500 $26,800 $29,700 $33,700 $37,200 102197 | 104363 | 104366 in the Endnotes section. Note: numbers may not add up to total due to rounding Source: eMarketer, April 2009 104363 www.eMarketer.com Video ad spending alone will climb at a 40%-plus growth rate for 104363 the next few years. For additional information on the above chart, see Endnote 102197 | 104363 | 104366 in the Endnotes section. A Special Note on Social Media Dollar Trends While social media spending by US advertisers was on an upward trajectory until the recession hit, eMarketer now predicts the market for social network advertising will actually decrease by 3% in 2009. The lack of measurement standards, or even a clear idea of what and how to measure, is the primary factor inhibiting spending. Surveys can be misleading, particularly if the results are misinterpreted. If you poll advertisers, they will tell you that even in the face of this recession, they are planning to boost their spending on social media. In fact, several recent surveys, including ones from Aberdeen Group, Millward Brown, Forrester and MarketingSherpa, suggest that about one-half of advertisers or more plan to increase their social media spending. But even if these increases happen, they will be from very small bases. According to Forrester, three-quarters of marketers looking to do social media advertising have earmarked only $100,000 or less. ® Online Brand Measurement: Special Report 15
  16. 16. Drill Down: What Are the Problems? What are the fundamental problems with online Joe Laszlo brand measurement today? Ask a few dozen Director of Research Interactive Advertising Bureau, experts—from agency executives and marketers trade association to representatives from the various trade associations and research firms—and you will “There are two big problems: I’m hearing from our publisher members that there is a kind of panel fatigue among people who likely get a few dozen answers. are asked to take online surveys that are quantifying brand impact. Panel recruitment and response rates are issues. The eMarketer posed the question directly to experts in the field of second is an assumption that the Internet is not good for online measurement, and the responses were, predictably, all over branding—there is a continued lack of awareness on the part of the map. And that fact alone—that the players can’t even agree on marketers and agencies.” Full Interview where to begin—is the overarching problem. Fortunately, though, a closer analysis reveals several common themes that indicate the Michael Mendenhall problems are so highly interrelated that solving one can solve Chief Marketing Officer others at the same time. Hewlett-Packard, marketer Q&A: What is the single biggest problem with online brand measurement today? “Marketers monitor the front end and the back end so they see clickstreams and commerce.The difficult part is the qualitative part Bob Liodice in between, which is the level of engagement.The challenge is to President and Chief Executive Officer begin to build technological capabilities that allow them to see the Association of National Advertisers, complete digital footprint that a consumer leaves when they engage trade association with the brand and then be able to address that consumer in a relevant way—behaviorally, contextually or both.” Full Interview “In our marketing accountability survey, only about 33% of marketers were satisfied with their marketing accountability and measurement Young-Bean Song programs.We don’t have enough standardization or enough useful Senior Director of Analytics & Atlas Institute marketing media mix intelligence and understanding. Studies and Microsoft Advertising, research offer guidance, but marketers complain that by the time Microsoft Corp.’s digital marketing and media solutions provider they get the answers back, the media world has shifted and the mix or model is no longer relevant.” Full Interview “I think it’s not having those foundational reach, frequency and GRP metrics. You will never see P&G and Unilever spend more than Curt Hecht single digits (millions) unless we give them reach, frequency and President GRPs. Their entire business model is based on media mix models Publicis Groupe’s VivaKi Nerve Center where those are the inputs and the outputs.” Full Interview (includes Digitas, Starcom MediaVest Group, ZenithOptimedia and Denuo) A General Apathy Toward Branding “I think it’s really hard to create a panel of size and scale and a In this harsh economic environment, does branding even matter technique to do surveys that aren’t interruptive. You can do to marketers? custom one-offs with one of the research companies that don’t scale or are very focused on individual campaigns, but they don’t “Branding is the hardest thing to justify, and everybody looks to tell the whole story.” Full Interview that budget first,” as Bob Thacker, the senior vice president for marketing at OfficeMax, told Advertising Age in May 2009. Any progress or advancements made in the field of online brand measurement will be heavily dependent on the overall demand for brand-oriented advertising. Due to the economy and resultant short-term sales pressures today, it appears branding will be taking a bit of a backseat to other business priorities, at least according to most of the studies and surveys eMarketer evaluated for this report. ® Online Brand Measurement: Special Report 16
  17. 17. Drill Down: What Are the Problems? “However strongly you believe in your brand, Similar results were found by Heidrick & Struggles in a December you have to do your bit to reduce spending 2008 survey of US senior executives. Branding took sixth place at tough times like these.” —Marty Ordman, vice among their top priorities over the next 12 to 18 months. president, marketing and communications, Dole Food Co., Top Priorities in the Next 12-18 Months According to speaking at the ANA Brand Conference, as cited in US* Senior Executives, November-December 2008 (scale of 1-5**) Advertising Age, May 13, 2009 Acquire new customers 4.22 In the one clear exception to the rule, the ANA released results Increase customer retention 3.90 from a “Brand Building in Tough Times and Beyond” study at its Increase customer lifetime value 3.74 May 2009 conference of the same name. In close alignment with the theme of the conference, 74% of senior marketers responded Improve marketing ROI 3.64 that “brand equity” is very important to their company’s success. Launch new products/services 3.59 Increase brand awareness 3.46 Yet a wealth of other survey data suggests otherwise—namely, that brand-building will remain a low priority during the recession. Improve marketing's impact on shareholder value 3.36 The ANA survey provides the first case in point. In its sampling of Acquire, develop and retain talent 3.31 129 marketers, two-thirds admitted that the recession had shifted Expand to new geographies 2.62 the focus of their companies to short-term results, as opposed to Note: n=111; *90% of respondents are US-based; **1=not important and the longer-term results associated with branding. 5=extremely important Source: Heidrick & Struggles, "The Digital Marketing Standard," provided to According to a recent MarketingProfs survey conducted among eMarketer, April 20, 2009 103672 www.eMarketer.com 670 marketers in October 2008, while more than one-quarter of emarketer_2000584_103672 respondents identified customer acquisition (29.9%) and customer Another survey, from Datran Media, shows that the marketers’ retention (26.6%) as top goals, only 15.4% cited “creating current focus on driving customer acquisition and retention at the awareness for long-term brand-building” as a top priority. expense of brand-building goals (such as increasing brand awareness or favorability) is not just a US trend. The survey, Most Important Marketing Objective According to US Marketers, October 2008 (% of respondents) conducted among 3,000 marketers worldwide, found that while increased customer acquisition and retention were rated most Acquire new customers not currently in the category 29.9% important by 63.2% and 43.7% of respondents, respectively, only 14.1% rated branding measures as highly. Customer retention (upsell, encourage repeat purchase) 26.6% Advertising Goals for 2009 According to Marketers Lead generation to support sales Worldwide, by Level of Importance (% of respondents) 21.3% Most Important Less Least important important important Creating awareness for long-term brand building New customer 63.2% 32.7% 2.2% 2.6% 15.4% acquisition Taking customers away from competitors Increased brand 14.0% 48.7% 26.0% 11.3% awareness 7.0% Increased brand 14.1% 48.7% 26.6% 11.4% Note: n=670; numbers may not add up to 100% due to rounding favorability Source: MarketingProfs, "Impact of Economic Crisis," provided to Increased 43.7% 43.7% 7.8% 5.6% eMarketer, October 20, 2008 customer 098997 www.eMarketer.com retention emarketer_2000584_098997 Note: n=3,000+; numbers may not add up to 100% due to rounding Source: Datran Media, "3rd Annual Marketing & Media Survey," January 27, 2009 101242 www.eMarketer.com 101242 ® Online Brand Measurement: Special Report 17