The online measurement quandary

Impatient for profits, the Internet advertising industry is thrashing out what it can do to prove to marketers - constantly seeking more and more accountability - the medium's ability to effectively deliver advertising messages.
Because of declining click-through rates - and therefore declining revenues - last summer many large publishers in the U.S. including CBS MarketWatch.com, abandoned the click-through metric, announcing they would no longer automatically provide CTRs to advertisers.
The alternative is to focus on campaign reach, post impression analysis and brand/product offering awareness as measures of ad performance - including many traditional offline measures such as Gross Ratings Points (GRPs). To that end, the Interactive Advertising Bureau in New York recently released a set of voluntary guidelines for measuring online advertising campaigns that it hopes will provide 'the building blocks to do rating points and reach frequency.'

Impatient for profits, the Internet advertising industry is thrashing out what it can do to prove to marketers – constantly seeking more and more accountability – the medium’s ability to effectively deliver advertising messages.

Because of declining click-through rates – and therefore declining revenues – last summer many large publishers in the U.S. including CBS MarketWatch.com, abandoned the click-through metric, announcing they would no longer automatically provide CTRs to advertisers.

The alternative is to focus on campaign reach, post impression analysis and brand/product offering awareness as measures of ad performance – including many traditional offline measures such as Gross Ratings Points (GRPs). To that end, the Interactive Advertising Bureau in New York recently released a set of voluntary guidelines for measuring online advertising campaigns that it hopes will provide ‘the building blocks to do rating points and reach frequency.’

IAB Canada, for its part, is also hoping to come up with some best practices and case studies to help the industry wrap its head around the various measurement metrics for different types of interactive marketing, says Daintry Springer, IAB’s executive director. IAB also expects to produce some ad effectiveness research for the Canadian online industry, which will be conducted in the 4th quarter of this year.

Average online ad budgets (currently estimated at $223,000 in 2001 among the 43% of companies who advertised online) are increasing, and more Canadian companies are trying online advertising for the first time this year, according to results from the IAB’s Advertiser’s Executive Report 2002 released last week, conducted by ComQUEST Research (The sample included a list of 141 advertiser respondents, culled from various sources including the National List of Advertisers.). Spending is expected to increase faster than any other medium in 2002.

But there’s still plenty of room to grow, say insiders, and one of the core developments that must occur to encourage that growth, is to curtail the confusion around online measurement.

‘Everyone is struggling with establishing metrics for measuring performance – whether it’s the site or the ad,’ says Howard Firestone, director of marketing and communications at Montreal-based iPerceptions, which helps clients evaluate their Web sites by capturing actual user feedback.

Last month, a panel discussion on online measurement drew nearly 70 people to the IAB’s Town Hall meeting – mostly Web publishers, digital service providers and agency types, but few, if any client marketers.

‘I think it’s clear-cut direction they are looking for: What should I be measuring and how do I interpret those results?’ says Springer. ‘There’s a lot of confusion. I don’t think everything we are lumping in under measurement is necessarily measurement.’

There are various types of measurement solutions currently available in Canada: panel or survey, which some would prefer to call ‘research’ – to avoid further misunderstanding – that speaks to the audience of the overall channel, and of individual sites within a category within the channel; Web site – usually conducted by the site publishers themselves; and campaign measurement.

It’s the area of online advertising/campaign measurement that tends to stir up the most debate. Measurement is most often conducted by the publishers of sites where the ad or ads appear, by ad networks and by advertisers or agencies using their own proprietary campaign management systems. Whichever the case, the metrics of online advertising (banners, interstitials, pop-ups) today include: visit counts, click-through rates (CTRs) and conversion rates (sales after a click-through).

‘It’s a successful medium – with more than 15 million Canadians on the Internet last month, according to Jupiter Media Metrix – and everyone is flailing around trying to figure out what to do about advertising measurement models. Frankly, it’s staring everyone in the face,’ says Miles Faulkner, VP business development and alliances at Toronto-based digital solutions company, Bluespark. ‘The traditional measure for creating brand awareness and buyer behaviour should be used on the Internet.’

The Web’s initial triumph was that it was 100% trackable – offering marketers an effective direct response channel. While hard to track, the Internet has since proven effective at lifting brand and message awareness – a few studies support ad effectiveness beyond the click: brand awareness and lift, and latent click activity, for example, making the CTR irrelevant.

‘The strength of the click-through is that it can take you to the depth of information and response that nobody else can. However, once someone’s gone through that click-through process once, that’s all there is – people likely won’t ever click on that ad again,’ says Jeff Osborne, president of client research firm ComQUEST Research, of Toronto.

‘Another weakness of the click-through is that I’m not sure the people building the ads [the creative and offer] are doing a good job. People click-through an ad and they get sent to the homepage of Toyota or wherever – that doesn’t answer the immediate question. I want something directly related to the teaser on the ad – a microsite, for example, dedicated to the offer, not a corporate site. It’s not being used very well so CTRs are declining.’

Firestone says ad publishers have the opportunity to arm advertisers with the info they need to determine where their ad may be most successful. He cites a May 2002 white paper from the Online Publishers Association of New York, which shows that new uses of existing data are required – total reach (or monthly unique visitors) is not a helpful measure when evaluating a site’s advertising potential. Understanding the demographic composition of the site’s traffic, or that of its loyal users, is far more helpful in insuring advertising potential.

He suggests advertisers use market research and audience stats, from the likes of Jupiter Media Metrix, in combination with site stats around attitude.

‘It’s critical for advertisers to understand what’s going on inside a Web visitor’s head. If publishers can quantitatively show a potential advertiser that the user is coming on the site – that 40% are return users and they rate the site as an 8.2, and the industry average is 4.3, for example – then I think you’ve got part of the puzzle solved,’ says Firestone.

Many advertisers have been shooting in the dark when it comes to online advertising, says Faulkner – not knowing who is responding, or best responding to their messages online.

‘If you’re a brand marketer, treat it [the Internet] like every other medium – look and understand how many consumers are visiting, where they’re going, what they’re doing, at a general level, and then have a close think about how your brand can be best portrayed on that medium, as well as how it relates to your overall marketing campaign in different media,’ says Faulkner. ‘Then, based on your experience and success rate with that, start to look at the types of people who are responding the best to your message online – based on research – and build even better relationships with them by increasing the sophistication of those campaigns.’

It’s also fundamental that those objectives are very clear, he adds – is it an awareness campaign or a lead/sale-generating one? CTRs do allow advertisers to glean valuable data when the objective is a response within a specified time frame. If the objective is awareness, online tracking, like a pop-up survey to track attitude changes, can be used.

Brent Bernie, president of Toronto-based Jupiter Media Metrix (JMM) Canada says one of the other current challenges is that there is no industry-wide system that allows advertisers to compare the performance of their online strategy with their offline strategy in terms of the overall performance of the business.

‘How do all the channels work together, and what does the digital channel add to what I’m already doing?’ he asks. (ComScore Networks, of Reston, Va. recently acquired JMM Canada to become part of its Media Metrix Division, which will sell and service ComScore’s portfolio of audience measurement services in Canada and the U.S.).

Bluespark’s Faulkner agrees with Bernie. ‘The online advertising industry is just growing up and is realizing it’s in the same game as a lot of other media,’ says Faulkner. ‘It’s a matter of the industry aligning itself to how it operates within the broader advertising mix and sending a signal that it’s a massively successful medium.’