using online advertising to build brands

Presentation Notes • 7/30/2012

Good morning, I am delighted to be back in Mexico City once more

and would like to thank IAB Mexico for its kind invitation to speak

today.

I am Chief Global Analyst at Millward Brown and, as such, come from

a somewhat different world from many in this room. Millward Brown

works with many of the world’s largest brands, helping them to build

their brand, drive sales and improve brand value. For us, online and

digital is an important means for companies to build their brands, but it

is not the only one. We devote considerable time and resource to

ensure that we can measure the full effect of digital media spend and

understand how it fits with other more traditional media.

In my presentation today, I wish to review some learning on what

works to build brands online. Not to drive direct response, but to build

affection and the predisposition to buy a brand at a later date.

1


In the first section of my presentation I want to consider the metric that

continues to dominate the lives of online marketers: click-through.

What it is, what it is not, and how much it might really be worth.

Click-though has been referred to as “the core of our digital nervous

system, and the key to the online economic system,” by Ted

McConnell, exec VP-digital for the Advertising Research Foundation

(more from Ted later). But do we really understand what it is and how

important it might be?

2


It is largely as a result of click-through (and other behavioral metrics

like expansion rate and video completion rate) that many people

believe that online advertising is the most measurable media.

Unfortunately, it is a belief I do not share. We can measure a limited

number of metrics with complete accuracy online, but these metrics

only give us a partial, and in some cases misleading, view of our

advertising’s effectiveness. The fundamental issue is that even though

much of the advertising online is designed to affect awareness and

attitudes, we still measure its effectiveness as if it were a direct mail

campaign.

In a recent survey by Vizu of more than 450 advertising executives,

marketers said that they will be allocating nearly 60% of their online

budgets to brand advertising in 2012, indicating that spending on

online branding may surpass spending on direct response advertising

for the first time in the coming year.

http://www.prweb.com/releases/2012/1/prweb9084906.htm

As Millward Brown’s Chief Global Analyst, it is my job to make sense

of trends and numbers. So here is a number for you.

3


The number is 16. 16 years ago Millward Brown helped demonstrate

the brand building power of online advertising for the first time. In 1996,

we teamed up with a company called HotWired to measure the brand

building effect of online advertising. The research was conducted as a

response to a growing fixation in the Internet industry with a behavioral

metric called click-through: the proportion of people who click on an

online ad. Our research, the first of its type, proved that online

advertising could build brands just like any other medium.

http://www.nytimes.com/1996/12/03/business/banner-ads-on-internet-

attract-users.html

Since then much has changed. We have sophisticated ad tracking and

targeting systems. We have online video and rich media. We have

social networking. But not everything has changed. The majority of the

online advertising industry is still fixated with that simplistic behavioral

metric of click-through. My belief is that most digital advertising today is

conducted without recognizing the bigger picture of how brands really

make more money. So let me lay out my case by sharing a few more

numbers.

4


In a recent survey, 64% of advertising and agency executives claimed to use

click-through rates (CTR) to evaluate performance and optimize their online

spend. http://www.collective.com/sites/default/files/Collective-2010-Display-

Study.pdf

A further 61% use Cost per Click and 48% Cost per Acquisition. In spite of

the fact that the majority of online marketers claim to be using the medium

for brand building, only a minority used brand awareness or brand

favorability to optimize spend. Why is the click so dominant? Because it is

easy. Because it is universal. Because it is free. Unfortunately, simple

metrics win every time. Yory Wurmser of the Direct Marketers Association

gives us another reason: “Transactional data tends to be more accurate,

since it takes the human element out of the assessment and shows exactly

what happened.”

Except, of course, it doesn’t give the whole picture. The problem with

transactional data like clicks and likes is that it tells you what the minority of

people did. It does not tell you why those people did something. And it does

not tell you what the majority of people exposed to the ad did. Worse still,

there is plenty of evidence to suggest that click-through is not accurate. But

setting these points aside, I still find this statement bizarre. What on earth

are we doing as brand or direct response marketers if not dealing with “the

human element”? Brands would not exist and certainly would not help

businesses make more money without the human element.

5


I suggested that clicks represented a minority behavior. These days

the number of people who respond to online advertising is very small

indeed.

According to DoubleClick, one in a 1,000 people actually clicked on the

average ad in 2010.

http://doubleclickadvertisers.blogspot.com/2011/08/latest-display-

benchmarks-now-available.html

That’s less than 5% of how many people clicked in 1998 when it was 1

in 50 people. It may be less than reported click-through rates in

Mexico, but maybe it gives you a glimpse of the future.

And wait, there’s worse news ahead. If you think that click-through is

an accurate measure of response to an ad, think again.

6


Ted McConnell, exec VP-digital for the Advertising Research

Foundation, recently reported a little experiment he conducted in

AdAge: http://adage.com/article/digital/incredible-click-rate/236233/

He and some associates ran six blank ads in three IAB standard sizes,

and two colors, white and orange. The average click-through rate

across half a million ads served was 0.08%, which would be good for a

brand campaign, and so-so for a direct response campaign. When

asked, half the clickers said they were curious, the other half admitted

to a mistaken click. As McConnell admits, the experiment is not

realistic, after all it was a blank ad, but he states:

“At a minimum, the data suggest that if you think a click-through rate of

0.04% is an indication of anything in particular, you might be stone-

cold wrong.”

So if half the people who click on an ad do so by mistake, what does

that imply about the value of online advertising? ROI calculations

based on click-through start to look even more dubious than they do

now. And yet we know that the overall effect of an online ad is far

greater than immediate behavior would imply.

7


In research conducted by Dynamic Logic, over the last three years an

additional 1.3% of people claim they will buy a brand as a result of

being exposed to an online ad (compared to those exposed to a

control ad). (Source: MarketNorms database) That’s a lot higher than

the click-through rate.

Ah, you say, but that is intent it is not a purchase (but then neither is a

click). It is behavior that matters. We need someone to buy the brand.

So what proportion of these people with positive predisposition go on

to buy the advertised brand? The answer is anywhere between 10%

and 70%.

There is a good relationship between overall purchase intent and sales

in most categories at an overall level. The same is true when we look

at the response to online ads specifically. Our research estimates that

somewhere between 50-70% of people follow through on their

purchase intent for consumer packaged goods after seeing an online

ad. That’s a similar conversion to click-through, but the absolute

number is much bigger. Estimates for automotive and entertainment

are lower, and in part, depend on the purchase frequency. For CPG

brands measured by SymphonyIRI, the overall average ROI was $1.50

for every dollar spent.

The truth is that few people are at all interested in thinking about

brands when exposed to an online ad. Instead they want to get the

news, find recipes, check out information on celebrities and connect

with their friends. To think that the few that do click are in any way

representative of the total is naïve. 8


Unfortunately all the evidence suggests that click-through and

purchase intent are not correlated.

http://www.dynamiclogic.com/docs/presentations/2012/03/14/ARF2009

_Behavioral_Branding_Correlation.pdf

You cannot assume that the total response to an ad is reflected in the

click-through rate. This was true of the ads we tested in the HotWired

Ad Effectiveness Study, and it still is. We just have far more proof. For

instance, auto ads tend to get clicked on more than others, but that

does not mean that more people want to buy the advertised brand.

Automotive ads tend to attract high click-through rates, but only

average increases in purchase intent. Reason? There are plenty of

people who are just interested in cars and want to know the latest

about them, even if they are not in the market to buy one.

Financial services on the other hand score low on both click-through

and purchase shift. Reason? Few people are interested in banks and

are unwilling to consider switching unless forced to do so or the offer is

very attractive.The research from which this finding was taken was

conducted in conjunction with Google in 2009, but recent work

conducted by a start-up called Pretarget using ComScore data finds

the same thing for clicks and conversion. Pretarget found that the

correlation between clicks and a conversion was 0.01.

http://adage.com/article/digital/click-rates-matter-thought/234330/

So if you are optimizing your media buy against click-through, there is

a good chance that you are either overestimating or underestimating

the impact of the campaign…by a lot. Why does this matter? 9


It matters because almost 2 in 5 online ads measured by Dynamic

Logic have a negative effect on purchase intent. (Source:

MarketNorms database) Did you really think that ads that pop-up or get

in the way of people looking for content was really a good idea?

Now what if people follow through on negative purchase intent as

much as they do positive purchase intent? The implications of this

finding are scary. Could a lot of online advertising actually be eroding

brand value by undermining people’s predisposition to buy the

advertised brand?

I can’t answer that question today, but what I can tell you is that by

focusing on click-through to the exception of other metrics, we risk

undermining the value of the very brands that pay online advertising’s

bills. Let’s leave the numbers for a minute and ask ourselves what we

are really measuring with click-through.

10


What is a click? What does it actually measure? I would like to propose

this definition.

A click is an impulse expression of interest in a brand or offer. It is an

action that implies that people not only find your ad of interest, but that

they have enough time and interest to check it out right now. More

people may find your brand relevant but they just don’t have any time

to follow up right now, and other things are more interesting.

What I believe most online advertising does is act as an accelerant. A

call to action that gets some people to do something now that they

would have done anyway, given time. I believe that all too often the

great ROI reported for online advertising, paid search and social

advertising represents the penultimate step in a chain of events –

including exposure to other forms of media – that leads to purchase.

The question is, would these people have bought anyway even without

the call to action? But, of course, online advertising need not be limited

to a call to action.

11


Last week my colleague John Svendsen, Global Brand Director for

Media at Millward Brown, said this in conversation: “All media are

capable of doing all things on a per person basis.”

What he means is that with the right strategy and creativity, any media

can build awareness, create an emotional response or drive behavioral

response. The only real difference between media channels is reach.

All else is down to the advertiser’s mindset.

There is absolutely no reason why online advertising cannot build

brands just as effectively as other media. We proved that it has the

capability to do this for 16 years. And given the dramatic fall in click-

through since then, one could argue that online needs to justify its

existence by demonstrating that it can build value beyond being an

accelerant of response.

12


So what do we need to ensure that online advertising builds brands

effectively?

We have seen a lot of change in the last 16 years and learned a lot of

new things. But not everything has changed. In the remainder of the

presentation I want to consider what remains true today and what is

new.

13


The first thing that has stayed the same is that online advertising still

has the capability to build brands.

14


Data from Ad Index studies conducted in Latin America prove this

point.

Exposure to online advertising still has the potential to raise ad and

brand awareness and improve brand favorability and purchase intent.

MarketNorms Q2/11 (Category: LATAM, N= 18 campaigns; n=19,060,

last three years)

15


Importantly, we still find that creativity matters to online advertising, just

as it does with other media.

The problem is that we often find that simple things that could improve

the effectiveness of online are ignored. Online media is different from

other, less actively consumed media. This means there are several

things unique to the medium.

16


This data was for a display ad campaign tested here in Mexico.

As you can see, the campaign delivered strong results. Ad awareness,

the precursor to attitudinal and sales response, rose nearly 28%

between control and exposed cells. Purchase intent rose nearly 8%,

over five times the average for Latin America.

So why were the results so good? Because the brand followed the

three golden rules of online display advertising.

17


Leverage the brand’s iconic assets and show the brand name

prominently on all frames.

You cannot guarantee that people will see all the frames of an ad. You

can’t even be sure they will see the first one! Reveal ads that assume

people will follow along to get the message are very likely to backfire.

Keep your messaging simple.

If you hope to create a positive response to your advertising, do not

use interruptive advertising. You only set up a negative reaction

making it difficult for people to respond positively to any message.

18


Here is a comparison of three ads for Gillette that were tested in

conjunction with IAB Mexico a couple of years ago. The overall

campaign performed well, but it is clear from this chart that ad 1

performed best in terms of persuasion and ad 3 the worst.

Why?

Because ad 1 obeyed the golden rules of display advertising and ad 3

did not. Ad 3 was confusing and did not show the brand until the last

reveal.

19


In April 2001 I was here in Mexico City to present at another

conference.

That one was hosted by ESOMAR, the international research

organization. The title of my presentation was “Is bigger really better?”

My answer to that question was yes. Bigger was better then and it still

is today.

20


In 2012 we conducted a retrospective analysis of three new and three

established online ad formats using Dynamic Logic’s MarketNorms®

data.

While the results differed depending on the metric looked at, the one

that created the biggest bang for the advertising buck was the

billboard. The large, full width ads that appear at the top of a page.

Wallpaper ads, that essentially take up the full page but sit behind the

content, were next most effective.

And whether sites and users like it, this is the sort of advertising that

we are likely to see more of. Because the first step on the road to

brand and sales success is to get noticed.

Source: Dynamic Logic Global analysis of 770 campaigns for IAB UK

21


Back in 2001 I also reported that streamed ads had a significant impact

on brand metrics compared to the normal ad banner.

22


Streaming and online video have come a long way since then, but our

testing still demonstrates that video has more impact than other

formats.

Standard and rich media ads require substantially more exposures to

match the first exposure impact of video. However, global data shows

that with over-exposure, high impact formats can begin to drive down

attitudes toward a brand, particularly in regards to purchase intent.

http://mediatel.co.uk/newsline/2012/06/07/fast-forwarding-your-brand-

with-online-video/

23


On the whole, we’ve seen that in-stream ads are better for driving awareness

and message association, but non in-stream may be better for driving

favorability and consideration.

The reason is that while we remember events automatically, we do not

necessarily reflect on their importance to us at the time. No one pauses to

reflect on what they have seen in-stream because they are already watching

the content they really wanted to see. Click to play or autoplay ads are different

because attention is given to them in isolation. When the ad ends, the viewer

has time to reflect on how relevant and meaningful the ad was for them. The in-

stream video experience is analogous to watching commercials on TV, and is

better at delivering implicit impressions. Out-of-stream ads are consumed more

like print advertising and are better able to deliver more explicit messages.

Source: Dynamic Logic MarketNorms, Q4/09, Last 3 Years, In Stream Video

N= 42 campaigns, n= 51,781 respondents; Not In Stream Video N= 209

campaigns, n= 234,949 respondents


So many of the basics of online advertising have stayed the same over

the years. But many things have changed. The technology has evolved

and we now have that vast new playground called social media. Over

the years, Millward Brown has sought to measure and understand the

potential of these new opportunities.

25


One major change that marketers here in Mexico will have to come to

terms with is that “viral” needs help.

26


Across over 100 ads on YouTube analyzed by Millward Brown, only

13% achieved more than 5,000 views per week on YouTube.

Even for these ads, although the additional views are worth having,

they cannot really be defined as “viral.” Viral would only really happen

if each person who viewed the ad sends it on to more than one other,

and none of these ads came close.

27


The good news is that based on our research into what makes ads go

viral, we can now predict the viral potential of any ad. The key

ingredients are the ability to create A,B,C,D:

Awareness, which depends on people finding the ad enjoyable,

engaging and well branded.

Buzz, which depends on people finding the content funny, edgy,

gripping or sexy.

Celebrity, which acknowledges that the more interested people are in

the person featured the more likely the ad is to be shared.

Distinctive, the degree to which people believe the ad stands out from

other ads.

Combined, these elements explain a substantial proportion of how

many people view the ads, but not all. This is because viral ads also

depend on mass seeding. People need to be able to find them easily

before they can share them.

28


In order to create good levels of pass along, you need to publicize your

content.

For instance, in work conducted for YouTube, we found that home

page ads are directly or indirectly responsible for 86% of all views, and

improve overall viewership by a factor of 6 compared to unpublicized

ads. Featuring the ad on the home page meant that even the ads with

low viral potential got some views, and only the ads with the best

potential came close to matching the featured ad performance.

29


Back in the early days of online, it was often proposed that the new

medium would supplant all other forms of advertising.

Instead it has created a sort of parallel universe. Online video is the

equivalent of TV advertising. Banners are billboards. And Web sites

extended print ads.

Moreover, it has become apparent that the Internet does not work

alone. It has to be considered in the light of the overall media

campaign.

30


The reason is simple. During the life of a campaign, online advertising

is almost always seen in conjunction with other media.

In this example taken from one of our CrossMedia studies, we found

that less than 2% of respondents were likely to have been exposed to

only the online display advertising. More people had actually seen the

brand on Facebook.

31


But just because there is overlap, it does not mean online is ineffective.

This chart shows that in our analysis all three media channels returned

a positive ROI.

32


And our findings demonstrated that TV alone would not have created

the same impact as the combination of media. TV had the biggest

impact overall (reflecting its stronger reach) but Facebook had the

strongest return on investment.

33


And mention of Facebook brings us to one of the biggest and most

important changes in the last 16 years: the advent of social media.

In 2011, 87% of Mexican Internet users claimed to be registered to a

social network. And most of them – 94% - claimed to be on Facebook

(up from 86% the year before).

Of these, 40% belonged to a fan page. And that seems to be good

enough for many marketers. All they seem to want is people to like

their brand assuming that this will be noticed and encourage others to

buy the brand. Heck, some marketers are even willing to pay for likes

even though they could get them for free with the right strategy.

34


Unfortunately, I believe that likes are very similar to clicks…only less

so.

In most cases they are superficial indications of brand allegiance and

mostly given in response to incentives – offers of freebies and

giveaways – or prior affection for the brand. For some time now, we

have been observing an arms race to get people to “like” brands on

Facebook.

The trouble is, relatively few brands have figured out what to do with

those people once they have liked the brand.

35


The first thing to do is to recognize that fans are important to you. They

already outspend non-fans by over 4x. Source: Millward Brown’s

BrandZ, 2010 global database. The fan page challenge is to deepen

the relationship that you already have, not try to pitch them or get them

to persuade their friends to buy the brand. Given the right

encouragement, they will do that by example.

What influences people to like a brand? Well, to start it depends on the

country. Latin Americans are very positive about brands and tend to

like them more easily than, say, those colder blooded Brits. Then it

depends on the product category. Categories which encourage

conversation; e.g. software/ hardware, diapers, telecomms, mobile

phones and cars, tend to get more likes than others.

And then brands which are particularly creative and desirable, and

justify their premium, are likely to be liked. There is a strong correlation

between brand equity and the number of likes on Facebook, with the

strongest brand getting the most likes. Challenger brands often pick up

more than their fair share, but otherwise most brands are liked by

relatively few people.

36


In order to help advertisers maximize the impact of their Facebook

page, we provide a service called FanIndex. Exposed respondents are

recruited directly from the fan page and one of the questions we ask is

For each of the following attributes, has your opinion of BRAND

changed since you became a fan and visited the fan page?

In this case study for a brand here in Mexico, we find that the

Facebook page had a strong influence on perceptions that the brand

offers something different from others. This is a really important finding

because this perception helps define whether a brand can command a

price premium or not. So what sorts of things help a brand to achieve

this type of response?

37


In our analysis of effective Facebook pages, four things stood out as

differentiators: variety, interaction, useful information and community.

http://millwardbrown.com/Libraries/MB_Articles_Downloads/2011_Fan

Z_Social_Media_and_Brand_Fans.sflb.ashx

Here in Mexico…

79% want news about the brand.

51% want promotions (look out, it’s a trap!).

50% relevant information.

44% to know other users opinions.

And 31% to communicate directly with the brand.

(Digital Media Consumption Study of Mexican Internet Users 2011

conducted by Millward Brown in conjunction with Televisa and IAB

Mexico).

38


One of the major roles of advertising is to make a brand salient and

vital.

Salient in that the brand comes to mind easily and quickly when

relevant. Vital in that people are drawn to brands that seem successful,

growing, popular and contemporary.

And increasingly people judge how vital a brand is by its presence in

social media. This is why one of Millward Brown’s latest innovation

projects has been to develop a methodology for measuring the online

social vitality of brands.

39


To monitor the social vitality of a brand, we use Twitter. In 2011, 45%

of Mexican Internet users claimed to be on Twitter (up from 39% the

previous year).

Twitter is a very useful tool for marketers and market researchers

because it acts as a portal into all sorts of different content shared

online. And it is an open platform which means we can analyze that

content as much as we like.

To understand social vitality, we parse the entire Twitter stream to

identify people who are talking about a specific brand.

40


The Twitter data gives us the raw material to create the VerveIndex: a

one-number social impact score.

To do so, we calculate Verve for everyone who talks about the brand

or its competitors in a certain way, and we weight the scores for

sharing and influence. Unlike many other monitoring systems, we have

leveraged our understanding of brands to create an in-depth measure

of social vitality, and have dealt with the substantial biases that need to

be taken into account with this type of listening.

41


The end result is a metric that allows marketers to understand just how

vital their brand is when it comes to the online domain. Here we see

the vScore tracked over time. As with search and viral advertising, the

level of social commentary is very dependent on other advertising and

events. As TV advertising drops away, so too does commentary from

fans. A FourSquare special boosts comments but fails to sustain that

lift. Moreover, in a competitive context, Brand X’s lower frequency of

mentions counterbalanced out the impact of its positive sentiment in its

vScore.

The Foursquare promotion was double-edged in that it promoted more

mentions and check-ins, but many of those who tweeted about it were

not discussing the brand beyond that. In future, the brand needs to

implement mechanisms to sustain the discussion beyond the initial

tweet.

Source: Millward Brown’s Emerging Media Lab

42


That was a whistle stop tour of the last 16 years of online advertising

as seen by a market researcher.

For me, the scary thing is the degree to which a very simplistic metric

had dominated our approach to online advertising. If we stick to using

click-through as the primary metric by which to evaluate advertising

response, I can’t help wondering if there is a threshold at which

marketers suddenly come to believe that their investment in online is

wasted.

43


And yet the silly thing is, there are 16 years of evidence that online can

have just as much brand building impact on a per person basis as any

traditional medium. Whether it is a static display ad, online video or a

Facebook page, the right research methodology can tease out its

brand building effects. And after all, that is what people really buy –

brands – not advertising.

44


To end on a positive note, I am glad to be able to tell you that some of

the largest and smartest online advertisers are now beginning to take a

more integrated approach to evaluating and optimizing their online

advertising. Instead of relying on one metric or another, we work with

the client and their media agency to help optimize their campaigns

based on both behavioral and attitudinal data. The end result is a more

effective and efficient approach to managing online marketing spend.

Hopefully developments like this will mean that in future online

marketing will no longer be hostage to a single behavioral metric and

assume its rightful role as a brand building medium.

45


Thank you for listening.

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using online advertising to build brands

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