Who’s afraid of the big bad Internet?

It took a while, but our panel of experts finally figured out what it will take to get more ad dollars spent online

Internet marketing has yet to deliver to agencies and marketers the windfall its evangelists – or even the analysts – have prophesied for years. Or has it? It almost depends on how you look at it.

In fact, online advertising is the category showing the strongest growth, with numbers from the Institute of Communications and Advertising indicating Internet spending led the way at about a 20% increase in Q1 of this year. However, it’s the absolute number of dollars invested in the medium that remains relatively low.

Canadian marketers continue to lag behind their American counterparts and spend less than half as much money online. Some say that’s changing (look no further than SC Johnson, ING or even – gasp – the government in the form of Ontario Tourism) and that a little bit of education will open the floodgates. Others say marketers need a swift kick in the butt. Strategy assembled proponents of both philosophies, then dropped in the middle a marketer who has been reluctant to tread online. We can’t show you the pictures from the bloody, WWE-style Battle Royale that ensued, but – OK, that last part isn’t true.

However, with referee Joan McArthur at ringside, they wrestled (even amiably) with topics ranging from integration and the division of ad spend to branding online and the scourge of pop-ups.

Ultimately, they answered the question, ‘What’s it going to take to get marketers to go big online?’

Joan McArthur – moderator,

consultant, Black Bag Creative Recruitment, Toronto

Ian McIntosh – general manager advertising and marketing, Goodyear Canada, Toronto

Andrew Bailey – group account director, FCB Interactive, Toronto

David Chant – executive producer, The Electric Company, Toronto

Jon Finkelstein – creative director, Henderson Bas, Toronto

George Jewell – director, national sales (Western Canada), Bell SympaticoMSN, Montreal

Joan McArthur: [According to a recent survey by Yankelovich Marketing Service Consultancy on behalf of the American Association of Advertising Agencies] 65% of the people polled said they were disgusted with advertising. Over 50% would avoid buying products that overwhelm them with advertising and 33% would be willing to have a slightly lower standard of living if society could be advertising free.

Jon Finkelstein: If we hate advertising so much, then why is everybody watching BMW films?

McArthur: Because they’re good. They’re the 1% of the 1%. Why aren’t 50% of the marketing dollars going into interactive? The other thing we know is that in this country the only really significant change in spending in 2003 was toward interactive. But it was really pretty insignificant overall. The U.S. outspends [Canada 2 to 1 on online marketing spend].

George Jewell: Online was the only medium that grew last year. It’s still small in absolute dollars, but it’s huge in terms of the momentum that’s happening out there. What we’re seeing now is a lot of very large organizations that, two years ago, for lack of knowledge, interest and time, didn’t have the level of confidence they needed to say, ‘Hey, it’s worth putting a million toward online versus some other traditional area.’ If we could see a confidence index out there for clients, I think they would say, ‘We’re seeing a lot more confidence in online.’

Andrew Bailey: Confidence is driven by return on investment. What’s been interesting for someone like me who got into this business in the really early days, was that we went from being one of the most immeasurable mediums to arguably – and sometimes to our detriment – being über measurable. The ingredients for that confidence [are] brand awareness and ROI: what is it doing to the bottom line?

Ian McIntosh: And we’re all scampering to answer that question from our CEOs: what are we getting in return for this kind of money? I think this is one of the huge advantages that Internet advertising has – being able to clearly measure.

Finkelstein: The amount of scrutiny we’re under to deliver a return is almost unfair. TV? ‘Yeah, we want to do a spot where they’re landing on the moon. Let’s spend $1.5 million to reproduce the moon. We’ll spend $5 million to buy some media.’ And then they can’t actually tell you what it did. Which drives me absolutely insane because we’ll get, ‘Hey, we’ve got five grand and we need to drive incremental dollars of $50,000. What can you do for us?’ It’s really hard, especially in Canada. It’s becoming an absolute devaluation of the creative process.

David Chant: The fact is that a lot of other mass advertising now isn’t getting the budgets either. Large global brands that used to spend $2 million on a spot are now saying, ‘Make it happen for $60,000.’ And that’s becoming more and more commonplace. So I’m not sure we’re going to be able to climb back.

McArthur: But it seems to me that lately there’s been a new flurry of talk about branding. People are coming out and saying that a lot of interactive activity is starting to suck the life out of this notion of brands. That it’s too tactical.

Bailey: How you battle that balance between branding versus getting too tactical [is to] look at it as an integrated approach. It’s not that TV is ever going to go away. It’ll change. It’s going to change dramatically over the next five years or so, especially as we get more view on demand. Some of [our clients such as Columbia House] who were primarily direct driven have come more into the interactive space, merely as a function of the cost of contact. We can do it a lot more efficiently and in some cases, arguably, we can be a bit or a lot more targeted, than direct.

Jewell: The agency world today is much more critical to clients than it might have been five or 10 years ago when there wasn’t as much turmoil…. Now it’s going to be up to the agencies to come in and say, ‘Look, it’s even tougher for you guys. I understand, Mr. CEO, that you’ve got less money to put on the table, that you’ve got a shorter timeline to deliver results, that you’ve got new competing media out there that your competitors may be using very effectively, so let us show you how to put together that bundle. Let us show you how we can execute online effectively.’ What scares me is when clients come in and they don’t really have an understanding of how to execute and that’s when they’re going to start hurting their overall brand.

Chant: We’re getting closer to having brand messages online. But I don’t think we’re necessarily getting the emotional clang that really drags the dollars with it.

Finkelstein: What it’s going to take is to get some seriously talented, smart people doing the good work…. We’re still getting over marketing managers considering the Internet to be a dumping ground for all the shit that they can shoehorn into a site. So few people are fighting the good fight and being brave enough to go out there and say, ‘Don’t fuckin’ do that. It’s a waste of your money. Don’t put all your goddamn product on your site. No one cares, no one wants it.’ Instead, let’s build something that we think people want and come up with a reason for it being there.

McIntosh: I’ll beg to differ a little bit because what our customers are telling us they want is access to finding a store – ‘What tires will fit my vehicle and how much are they?’ That’s what a site should deliver. And we just modified our site. It has been very, very bad for a number of years. We’ve gone in and put in a dealer locator and a tire selector as the key buttons on the opening screen.

Finkelstein: And that makes sense. And how many years did you have a site and how long did it take you to get there?

McIntosh: Well, we’ve had a site for a number of years and it has simply been idle with nobody championing it whatsoever. I just hired somebody a few months ago and just two weeks ago launched a revised Goodyear site and today launched a brand new tire site.

McArthur: But up until recently, Ian, you basically didn’t see the value in devoting [time and resources to this].

McIntosh: No, it was a stone that we just hadn’t turned over yet. I don’t disagree that online advertising, and certainly Web sites, have their place. I think most of the people around this room will agree that we’re debating degrees, that there is X number of dollars going in. We’re all keepers of brands and, as a manufacturer with several brands in the stable, I will insist on maintaining that opportunity of using multi-media for multi reasons.

I’m not going to put all of my eggs into one basket. It doesn’t matter what the medium is because there is segmentation in market segments, in consumers and users and in distribution channels. There are different messages that have to go out. I believe there’s an image message that has to go out, a product message that has to go out, a retail ‘buy it here’ message that has to go out, and each medium allows you to do that individual thing. And if I try and send that whole message out in one medium, it would be a mess, it would be cluttered and nothing would get through….

As a skeptical marketer on this, I will not argue nor debate the pros and cons of Web sites or e-mail. I think they’re very valuable tools. My skepticism lies with pop-ups and banner advertising.

Jewell: The pop-up is dead. But in terms of banners and everything else what you really have to do as a skeptic is say, ‘OK, how would I base my decision that this has more value than that?’ … For $15,000 large advertisers can run dynamic logic-type studies that are a pretty good gauge as to whether or not people have a more positive view of the brand or greater increased intent. Fifteen thousand is not a lot of money depending on how you want to break it out. You’re the kind of guy who needs some facts. You’ve got to let someone on your staff do some research.

McIntosh: That’s part of the problem. I do have some facts. I look at things like ’90% of Web users looking for ad blocking devices. Fifty-three percent already signed up to do that for pop-ups. Eighty-three percent of adults rarely or never click on online ads. Seventy-seven percent of Web users are getting virtually no exposure to advertising because it’s e-mail or it’s online banking.’ Despite being measured in Canada for over four years [by Statistics Canada], online advertising represents only 1% of ad spending and only a half a percent of business revenues. If it’s working so well why isn’t the other 99% of the spending going [online]?

Jewell: What we would say to a guy like you is to integrate yourself into an automotive site where there are auto enthusiasts, and let them go in and compare speed ratings on certain tires versus others. That’s just good, smart advertising.

McArthur: But now there is this contextual search engine marketing where you can actually get to people who are halfway coming to you. If somebody’s floating around the Net and Googling about tires, there are ways for you to find those guys and direct them toward you instead of some lame random pop-up that’s just annoying.

Finkelstein: I’ll be honest with you. I hate banners. But I do a lot of them. We’re fortunate to have [ING] as a client and they do a lot of online advertising. They like to test and push the envelope and matrix of offers. [Banners] do work. I would never suggest a banner ad being an awareness piece. But you know when you have certain types of targeted offers that are contextual and relevant and strategically placed…. We opened up [about] 1,000 or 2,000 accounts in a week with a 468×60 animated gif. That was a record for these guys.

McArthur: It’s all about how you do it. It’s all about respecting the consumer. Certainly, [a lot of times] I’m looking at junk, which is basically pollution.

Finkelstein: Because there are an infinite number of channels of junk, the whole thing gets a bad rep. I want to go back to point one – what’s it going to take? Resources on the client side. Ian, I don’t know how many people work in your department who are responsible for the Internet besides yourself.

McIntosh: Two.

Finkelstein: The number-one seller of tires on the continent has two people in its Canadian Internet department. That’s a systemic problem.

McIntosh: OK, let me back that up just for a moment. A lot of what we do emanates from the U.S. There are walls that we can’t get through. In any other medium, any other marketing decision – whether it’s pricing, advertising or distribution – we make those decisions here. But for some reason – because of the globalization of the Internet, I guess – they’re saying, ‘Only we can make this decision in Akron, Ohio.’

Finkelstein: That’s a very interesting point and you’re right, but you know what? Even still, there’s a resource problem.

McArthur: So in terms of what the stumbling block is to get more money into online initiatives, is it resources on the part of the client? Or is it a lack of education on the part of the client, or a combo?

Chant: We’re doing it to ourselves. The fact that we can track and can get those efficiencies marginalizes what we do and it becomes cyclical. And it’s not necessarily a bad thing because it means getting the right thing in front of the right person, but it also makes it very quantifiable and very commoditized. Therefore, if I want to hit this person, it’s only going to cost me a buck ninety-five. I’m not going to pay more than a buck ninety-five.

McIntosh: Part of what you’re saying is it’s the image people have of Web advertising. And I think that image is haloed against a brand. That may not be right, but a lot of people say there’s clutter and the believability of that brand message is probably reduced because it’s in that environment. Same as telemarketing. Same as direct mail. Same as spam on the windshield.

Jewell: Cross media optimization (CMO) studies show that not to be true, though…. They show that online advertising can bring an improvement in purchase intent and brand favourability.

McIntosh: Generally speaking to all brands [that's true]. I’m not convinced that that’s necessarily so for a premium brand.

Jewell: Look at the premium brands that are doing CMO studies. It’s RBC, it’s Molson…. The last time your agency came to you either with a strategic outline or a plan of any type, were they pushing forward the merits of online more, less or equally so than they had in the past? Because we talk about how ‘clients need resources’ – well, clients will find resources like everyone will when they believe. Did your agency present a compelling reason to go online?

McIntosh: No, they haven’t and I wonder if what it’s going to take for us moving forward on that isn’t somebody within the pecking order of the user group saying, ‘Hey, when are you going to get your act together?’

McArthur: There are a couple of things about the Internet. One is there are the business reasons to use it as a marketing tool and the other is the entertainment value of it, [for example] the Jerry Seinfeld [American Express ad online]. It is the ultimate use of the Internet because it’s as entertaining as a TV commercial, but a TV commercial [won't include] an application and put a pen in your hand [like the online spot did].

McIntosh: Before I came in, I wrote a couple of things down that I was hoping you guys would prove to me: Internet advertising depends on which product you’re supporting, which audiences you’re searching for, how big your budget is, what the message is and how much time you have to deliver the results…. I came in here with a preconceived notion about what we were going to talk about tonight and that was expanded very quickly…. We have a site. I just didn’t think of it in that same vein. I’ve got signage and pylons on my buildings. It sure is advertising, but I don’t think about it in that frame.

McArthur: So now we know what’s in the way.

Jewell: It takes one Unilever to leap in and other people are going to point and say, ‘We’ve got to catch up here.’ So I think you’re going to see an amazing year in 2004 and 2005 for involvement. And when I say involvement, I don’t always mean just writing a cheque. I mean involvement in terms of sitting down and really looking strategically and tactically at how these businesses are going to leverage the Net. So I feel really positive about that and I think by the end of 2019 Ian’s going to be online.