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Under false impressions?

Online campaigns can be hugely efficient in delivering value and the right number of clicks to the right sort of people, but are they necessarily effective and engaging, asks Federica Aperio.

As online advertising investment grows, so does the demand for auditing and benchmarking. But advertisers are in danger of answering the wrong questions.

Throughout the global recession the digital advertising industry seems to be bucking the trend; in the UK last year, total marketing spend in Q4 fell for the ninth consecutive quarter, while internet budgets rose for the second quarter in a row. But when every pound has to be increasingly justified, the pressure is on to better quantify how digital media budgets should be allocated.

People now need to consider how much media spend should search be allocated compared to display or video, and, more importantly, how to attribute performance across these digital channels and balance efficiency with effectiveness to ensure improved return on investment.

The year of the pitch

With advertisers tightening their belts, greater emphasis has been placed on finding efficiencies in marketing spend. Digital has gone a long way in proving itself as an integral part of many a media strategy: digital media takes 23% of media budgets while TV takes 24% according to a recent PWC/IAB report in the UK. However, agencies are being put to task to find cheaper ways of managing that spend and delivering better ROI.

The challenge for any agency has been to balance resource (and its associated costs) and tech investment, with delivering market leading media strategies, market beating rates and unparalleled performance and service. But the ability for advertisers to segment their audience to a granular level, track performance all the way to a sale and then optimise that campaign on an hourly basis requires an infrastructure and costs base that is somewhat unwieldy.

Growing reliance on benchmarking

To aggravate the situation, procurement teams are now commonplace with a remit to deliver greater efficiency. Trading directors are focused on managing KPIs, which have historically been rate focused, to retain clients. But the reality is that in the digital market, rate deflation (Billetts estimates 8% for 2009 in the UK) has been mainly polarised and not necessarily as a consequence of the recession or negotiation. Free inventory has become a way for media owners to maintain rates by delivering ‘value’.

Efficiency versus effectiveness

Billetts’ reviews have found that delivering media ‘value’ doesn’t necessarily make for a more effective campaign. Focus on best in market rates has clouded perception of what‘s really important – that efficiency should come hand in hand with effectiveness.

As the digital market develops, trading will become more automated with the evolution of exchanges, demand side platforms (DSPs) and real-time bidding (RTB). All these facilitate the trading of media at a granular level, allowing individual impressions to be bought in a dynamic way, rather than bulk buying at manually negotiated rates. Performance budgets will be traded similarly to the stock exchange with data becoming the most valuable commodity, not the impression.

The DoubleClick Ad Exchange, Invite Media and AppNexus are all examples of next generation media trading. Although at least a year away from becoming mass market, the implication is that much of what is now benchmarked for efficiency will be traded in an automated fashion where traditional supply and demand principles will set the price. And with price set by market value, understanding effectiveness becomes fundamental to media evaluation.

From micro to macro

What constitutes effectiveness will differ but at a micro level there is a plethora of data points that can be considered, often making it a job in itself to figure out what’s important to measure before working out how to measure it.

One thing is clear, it is no longer about the click. This was the founding metric used to quantify online ad performance when the medium was in its infancy. Some 15 years later, the metric is still heralded as a key indicator of performance. But more important to any advertiser is how people engage with the brand.

Not beholden to the confines of an advertiser’s site, engagement mapping can be applied to many touch points, be it in the safety of the advertiser’s own site, or through the creative treatment or conversations in other environments like social media. This requires joined up thinking when it comes to the planning phase of a campaign and the communication tools used.

Integrated campaign management

Understanding the relationship between all digital disciplines, from display advertising to search, from social media to mobile, is core to developing a consistent and impactful message. Digital marketing strategies run the risk of being planned in a disparate fashion as specialist agencies are entrusted with the planning of their own individual elements.

The benefits of a joined-up approach were highlighted by recent Comscore research which examines the incremental benefit that search, display and video advertising have on one another and how this can improve brand engagement and campaign performance.

The news that Yahoo! and UK loyalty card Nectar have entered into a deal to establish a clear relationship between online advertising activity and offline purchase is a considered step to understand the value of digital in the purchase funnel. Yahoo! seems well placed with both display and search advertising functionality on site to deliver a well-rounded case study, but the reality is that it will still only show part of the bigger picture.

The key is to understand how all marketing facets work together and establish how the real performance attribution model should appear. Benchmarking in online is increasingly important, but focus needs to shift from efficiency to effectiveness to build a more complete picture of overall performance.

Federica Aperio, managing partner, digital, Billetts