What is really interesting, however, is the growing acknowledgement by larger traditional companies of the Internet's potential as a medium for cultivating awareness of their brands among consumers.
Over the past two or three years, we've seen two Internet advertising camps emerge: one that argues that the Web is best used as a direct response marketing medium, and another that says Internet advertising is most powerful as a branding tool.
Direct marketing is about short-term, quantifiable returns, measured in terms of click-throughs and sales conversions. When done ineptly is characterised by attempts to grab the user's attention in any way possible, without thought to the brand strategy or positioning.
In contrast, online brand building is all about initiating and strengthening the relationship between your brand and the consumer. The two goals of online brand building are to convert new customers to your brand and to build brand loyalty among existing customers.
It follows that branding is a very a different game to direct response marketing. It has long-term objectives and the results cannot be measured using metrics such as click-throughs and immediate sales.
Instead of merely aiming to increase the number of direct responses to the ad, the Internet is a highly effective medium for getting a message across or increasing the awareness of a company's offerings. Up until now, many observers have questioned the effectiveness of the internet in meeting these objectives.
That is starting to change as advertisers and media planners alike are starting to recognise that online advertising can't exist solely as a response medium. Studies are increasingly showing that well thought out and executed online campaigns are highly effective in terms of branding.
According to the report, nearly half the responses to online adverts are indirect and generated by the branding effect. Interestingly enough, the indirect respondents are more likely to return to the Web site than the direct respondents are and thus represent a higher quality of traffic.
If the success of advertising campaigns in the research were analysed purely on click-throughs and conversions, the actual results would have been dramatically under-reported. According to the study, accumulating the direct and indirect responses to a banner ad reveals that the acquisition cost per customer is half of what they would appear to be if only direct responses were considered.
The growing appreciation of the Web as a branding medium has prompted portals such as Expedia.com, the travel site, to ditch the practice of reporting click-throughs to their customers, on the basis that click-through statistics do not tell the full story.
That approach is a little extreme; the click-through stats and data may not represent the full picture of an ad campaign's success, but they can yield some valuable insights into the effectiveness of the campaign across a number of Web sites. The real measure of success of a campaign is how people respond to it directly and how it affects their behaviour into the future.
The message from recent research is that advertising works when it uses the medium in a creative way and conveys a clear message. The imperative for marketing managers is to work closely with media planners and Web site owners to craft campaigns that engage the user, this can be done not merely by using banners but integrating the message into the entertainment and content provided by the site. The success of the campaign should ideally be measured across the metrics of direct and indirect response.
Major portals such as Yahoo! have come to market with flexible and innovative ways for advertisers to grab the attention of their users. That means opportunities abound for advertisers to come up with more clever and effective campaigns than their competitors for the consumer's attention.
Steve Morris is joint MD at Digital Gear.
