Tuesday, June 26, 2001

Quantifying Online Branding Shows Higher ROI

Jupiter Media Metrix, a global leader in Internet and new technology analysis and measurement, today reports that the actual return on investment (ROI) from online advertising is at least 25 percent to 35 percent higher than most marketers believe. New Jupiter online advertising research reveals that marketers who begin measuring the value of online branding will find a significant increase in the ROI of their digital marketing initiatives. According to a Jupiter Executive Survey, however, only 15 percent of marketers are conducting formal online branding measurement—while the majority continue to favor direct response metrics, including click-rate (60 percent) and cost per conversion (75 percent).

"Jupiter case study data show that the actual number of customers driven to Web sites by online advertising is greatly underestimated by traditional click-rate metrics. Furthermore, when brand advertising programs generate synergy across all marketing channels, that number can grow significantly beyond what can be tracked," said Rudy Grahn, analyst, Jupiter Media Metrix. "At Jupiter's Online Advertising Forum in August, marketers will learn that they must begin quantifying online branding by measuring users' actual experience, instead of gauging only their attitudes. Not everything is intended to be branding, but everything brands."

Key findings and forward-looking analysis from the latest Jupiter online advertising research—which will be discussed in further detail August 7-9 at Jupiter's Online Advertising Forum in New York City—include the following:

- According to Jupiter analysts, marketers who are looking to correlate ad spend with an increase in traffic are taking the wrong approach. In fact, Jupiter case studies show that while online advertising is more effective than marketers believe, it is still secondary to other factors in driving traffic to Web sites. Online advertising only contributes to 17 percent of the traffic to a Web site, while seasonality and an increase in Internet adoption contribute to 46 percent and 37 percent of the growth, respectively.

- Jupiter analysts suggest that marketers can measure branding value by correlating behavioral data (including individual user click-streams, repeated surfing patterns and aggregate user behavior) with the flights of specific ads. While there are not yet standards for determining this correlation, marketers have begun experimenting with calculating the relationship between aggregate spend and the corresponding volume of users' behavior such as hits on store locator pages, information requests and hits on phone-ordering information pages.

- The fractured reach of Internet media is a major reason the Internet has resisted traditional branding practices. For example, Yahoo! is widely considered one of the Web's mass reach vehicles—with a unique user base of over 20 million in the 8 p.m. hour, a near 35 percent share of total Internet unique users for that time, according to Media Metrix audience measurement data. However, Jupiter analysts point out that this aggregated Yahoo! audience actually represents traffic spread across 438 separate domains (including pseudonyms), making it difficult to generate message association online using off-line marketing practices.

"Although much of the talk about the 'new economy' has been debunked, the old dogs still have new tricks to learn," Grahn said. "What is learned in online branding may not set completely new rules for marketers ultimately; but it will offer lessons wise marketers will heed. What marketers learn about building targeting models from observed behavior rather than pre-campaign demographic or psychographic data must be factored into off-line campaign planning, as well."