Jun 29, 2010

Online Advertising: A Challenge to Marketing Directors

This article is my war cry to you, fellow marketer. I live in a country where engineering skills are more appreciated than salesmanship. It is a common joke in Finnish universities that those who spent their first year partying go study marketing, and later to work in marketing.

In Finland people who are fascinated by facts and measurable sciences usually study finance or engineering – but not marketing. In my experience marketing subject appeals to those who like big ideas, theories and intangibles. I want to change that.

Before the year 2000 things were different. Earlier marketing managers and their advertising agencies celebrated their TV and print ad campaigns. When sales grew, the clever campaign earned advertising awards.

When sales came down during the ad campaign, agencies invented new ways to measure success: brand familiarity and awareness. “Brand is feeling, and it cannot be measured in money” was the new mantra. And again, marketing directors and agencies popped bubbling wine to celebrate as the new metrics grew. But then something happened...

...A new comer started to gain ground – the internet took off. Unlike any other media in the history, the reason why the internet was invented – was not to make money, but to connect people and make information sharing easier. I don’t have to tell you that it didn’t take long for companies to spot its potential. It makes sense to advertise where lots of people spend time. And soon online services financed by advertising like Google and Facebook started to flourish. Popularity of the web wasn’t the only change that threw marketers and agencies off balance.

The internet and three major changes facing marketers

Online you can measure the results of your advertising per every cent you spend: who saw your ad, how many clicked the ad, who bought your product after they clicked, and who bought it two weeks later? This changed three things in marketing and media:

One, your return on marketing investment (ROMI / ROI) can be measured more accurately than ever before.

Two, your advertising needs to make people act now – not after 18 month multi-million brand advertising circus.

Three, the business model of media changed. Instead of media coverage, online medias sell you clicks i.e. visitors to your web site, or you only pay for the results your advertising gets. That’s result-based advertising where media coverage is free and you only pay for results you get, such as orders or inquiries.

Publisher’s confession

Against common belief, the result based advertising model is not new. For decades newspaper and magazine publishers around the world have sold their media space to mail-order advertisers, who could prove that the order was made because of the coupon on the paper. The same model can be seen on music television where ring-tone advertisers pay for the orders that their TV ad gets. These companies get the coverage and media time for free.

With online advertising networks, the advertiser only pays for the results which the ad network brings in. The online ad networks – such as AdEffie, to whom I work for – have collected hundreds, sometimes thousands of popular web sites together to aim automatically your advertising to right people, in relevant content, at the right time, to produce you maximum amount of sales, inquiries, visitors or coverage for you. All the advertiser needs is a set of banners, and the online ad network does the rest.

Risk-free advertising?

You think that the concept of results based advertising would be easy to sell for marketers, but so far my experience in Finland has been opposite. Sure, there are savvy marketers who get the it at once (thank God for those clients) but the majority of companies are still living somewhere in 1990’s where accountability and marketing is not mentioned in the same sentence. Unfortunately, the socially skilled Chief Marketing Officer who spent their youth partying in college may be unable to handle the challenge of scientific advertising.

Perhaps that is one of the reasons why TV and print still gets the biggest part of the marketing director’s budget. It’s old and familiar – and without any guarantees of concrete results such sales. Albert Einstein put it well, “Insanity: doing the same thing over and over again and expecting different results.”

To managers it’s useful information that advertising and media buying has become a risk-free investment which can be a powerful weapon in right hands. Here is my question to you: what should the marketer do in this changing world?

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