Why is online display advertising spend so ineffective?
They say you should never kick a man when he’s down, but sometimes it is too tempting when the man on the floor has been lashing out indiscriminately for the best part of two decades…
I frequently talk about media effectiveness studies these days. On the one hand, they have become so prevalent nowadays they run the risk of cancelling each other out; but, on the other hand, they have given us some fantastic insights into how advertising spend pays back, and how different media channels contribute, which has (I believe) had a great deal of influence on the stability of advertising spend across those same two decades since the internet came to town.
I still fondly remember those days back in the 1990’s, when online distribution of digital content was going to wreck the prevailing business models of the established media owners and it was all going to be funded by advertising; relevant, targeted, interactive, contextual advertising that was going to bypass the need for most offline channels altogether.
Well, here we are in 2014 and that particular narrative is a long time coming. In fact, there has been something of a turnaround in recent months, as online’s dirty little secrets in terms of reported exposure and interaction of online display campaigns have been laid bare.
I’ve been somewhat amazed by the silence of the IAB on these issues; if it had been any of the legacy media I am pretty certain these significant concerns regarding transparency and trading currency limitations would have been addressed far more quickly. After all, a great deal of money is at stake.
Which brings me on to my topic for this month; the consistently dismal performance of online as a display advertising medium, when the investment is compared directly with other media channels.
The most consistent aspect of all of the major effectiveness studies published recently – from IPA’s Marketing in the Era of Accountability all the way through to Thinkbox’s Payback 1-4 Series (the Think-boxed set, perhaps) to the RAB’s recent study – has not been who provides the most effective advertising channel (they differ, often depending on who has commissioned the study) but who provides the least effective return on advertising investment.
Step forward, online display, for your moment in the spotlight!
When, at Thinkbox, I commissioned the first three Payback studies, I was somewhat taken aback by the consistently poor performance of online as an advertising channel. In the original PWC ‘Payback 1’ Study, online display barely got a look in, and only TV and print were seen to provide significant returns on investment over the long term.
Thinkbox’s recent Payback 4 Study, based on analysis of Ebiquity’s extensive effectiveness database, shows online trailing well below the main legacy media – TV, print and radio – in terms of its contribution to profit.
Similarly, the RAB study had online lagging significantly behind its legacy media competitors, and in the IPA study, online advertising was noticeable by its absence from the main headlines, the biggest of which was the resilience of TV advertising and its increasing effectiveness over the years (often boosted by online channels).
It has been remarkable how little attention these results have drawn. Admittedly, the focus has to be on the media channel with the highest ROI or payback returns, rather than the lowest, but surely the continued poor performance of online when measured side by side with other media investments should have generated some sort of debate.
I must admit a sense of mea culpa here. At Thinkbox, we had a philosophy of never dissing the competition, but I think that was only part of the reason why we didn’t use the findings to place the focus more on online display’s inability to generate comparable returns to TV, radio or print media.
I think there was also a reluctance to point at the emperor’s new clothes; a sense that we would simply be shouted down for daring to suggest digital wasn’t always all it was cracked up to be. So, we just put the numbers out there and hoped people would draw their own conclusions.
How times have changed. We are now only just beginning to see the scale of the hype that sustained much of the digital advertising juggernaut, even while studies such as those mentioned above provided much more solid evidence regarding the channel’s inability to pay back on the investment at comparable rates to the legacy media.
There are a number of potential reasons why this should be, beyond the obvious one that most of the audience numbers being quoted by online have been a gross overestimate of the actual audiences being reached;
1. Much of that investment in online display over the years has been more likely to be under the ‘R&D’ banner rather than the ‘media’ one. There has been a prevailing sense – still in existence in many advertiser organisations – that, in order to ‘get’ digital, the advertiser first needs to be there.
Although two decades into the online revolution we might have been expected to have moved on from the experimental phase, there is still a tendency to believe online investment has additional R&D benefits over and above payback or ROI.
2. Too many advertisers – often in collaboration with their media agencies – have been much more influenced by the myriad of small-scale, short-term, online-only studies of payback, rather than the more robust and comprehensive studies mentioned above, despite many of the former being based on limited numbers of campaigns, self-selecting and biased online samples and questionable analysis techniques.
I have seen many examples of studies purporting to ‘prove’ online display was 8, 10 or 12 times more effective than the equivalent TV spend, and being unquestionably accepted despite the obvious methodological flaws.
3. Online has been used far more as a ‘frequency booster’ or as a low-cost attempt to stay visible outside of traditional campaign periods; as such, online may not be coinciding with the big marketing pushes that accompany many big campaigns.
4. Online is a far less effective environment for display advertising, as people are usually in a task-oriented mind-set and often have to complete said tasks without the interruptive nature of much online display placement.
5. Online creative is far less impressive and effective than the creative prepared for many legacy media campaigns; this might have something to do with the creative community still struggling to get their heads around online OR the fact that online is relatively cheap and therefore doesn’t justify the creative investment of other media channels.
Certainly there is strong evidence that the loud, flashing advertising creative within much online advertising not only doesn’t work, bot can also have a strongly negative effect on brand perceptions.
There have been many more hypotheses expounded in recent years. Whatever the reason, payback is a fraction per £ spent, compared to the more established media channels and, two decades since the beginning of the digital revolution, that is simply not good enough. Surely we should have mastered it by now…
And another thing…
A great deal has been written about the predicted decline in advertising, much of it from the USA. Having spent a very enjoyable couple of weeks on holiday in California, I have to say that much of the sentiment may come about due to the appalling state of advertising over there; especially TV advertising.
Despite having a teenage boy in tow, we watched very little TV whilst we were there. We tried to, but watching the networks became almost unbearable, even when we found programming we could all enjoy. The sheer volume of advertising, mixed with a creative style that seems to be based on shouting out the product benefits in the most patronising way, made the commercial breaks unwatchable after a while.
So, it is no surprise that companies such as Netflix are making massive inroads into the audience.
I know this is a theme that has been repeated many times over the decades, but we are now in 2014 and if the US advertising industry cannot see the benefits of investing in high quality, emotionally-rooted creative, and if the networks continue to fill the advertising breaks with such dross, it is doomed to failure over the longer term.
The same sentiment does not apply nearly so much to the UK (although several European markets find themselves in a similar state for much the same reasons).
David Brennan is the founder of Media Native.