“Tell me when Budweiser only pays NBC if somebody gets off the couch, turns off the Super Bowl, goes to the liquor store, and opens the beer cooler, and I’ll sell you per-click advertising.”

I have probably said this fifty times since starting The Palate Press Advertising Network. Unfortunately, Google has created an expectation among on-line advertisers that they should only have to pay for viewers that look at their ads, then click on them to go to the advertiser’s website. It works for Google because it can pump out a tremendous volume of advertisements, some percentage of which get clicked. That volume also allows them to offer low rates and a definable and verifiable result for their clients. It appears  to work for the advertisers, many of whom are new to on-line advertising. Wondering what it’s all about, they can at least see what they imagine to be their Return on Investment (“ROI”), measured as click-throughs.

Is this the right model for on-line advertising? No, likely it is not. It is visible and measurable, but is not how advertising works. Advertising is about branding: creating familiarity with a brand name or a label. Wine advertising should be less about direct sales, a tiny percentage of the real wine market, and more about branding. It should be about teaching the customer to recognize your label; when the customer walks into a wine store, they are likely to buy wine with a label they’ve seen in a positive light on the websites they visit. This model works for print ad sales, but for reasons that have far more to do with Google’s (and now Facebook’s) business model than the interests of the advertiser, it is not the expectation for on-line advertising.

Simon Owns of the Nieman Journalism Lab, a project of the Nieman Foundation at Harvard University, has a very interesting article on this subject, The Geico Gecko meets the AOL Way: Are display advertisers too obsessed with click-through rates?

It begins (after an introduction about AOL’s changes in its ad sizes) with the observation:

“According to several studies, click-through rates — the number of people who actually click on an ad — run well below 1 percent on most sites, and each year these rates get lower and lower.”

Advertisers find these studies depressing, an indication that on-line advertising is a failure. I run into this with every conversation, always hearing some version of, “we tried on-line advertising but just didn’t get the results we expected.” When digging deeper, it always turns out that when they “tried on-line advertising,” they ran an ad for a month and did not see a leap in click-throughs and on-line sales.

The study goes on to compare traditional advertising to on-line advertising using a familiar avatar, the Geico Gecko:

“The Geico Gecko is not successful because he inspires people to jump up from their couches and purchase car insurance; he’s successful because when a person decides months later to shop around for car insurance, his image springs to mind.”

This is completely contrary to the thought behind on-line advertising. Indeed, the on-line advertisers are working harder every day to create measurable evidence of the immediate effect of on-line ads. One company, MediaMind, is adding a new measure to the mix — a “dwell” measure — that determines not just how many times people click, but how long they spend with the cursor over the ad. This is added to the click-through rate to identify a measure of “user engagement.” Of even greater concern, they then determined that user engagement goes down significantly after a reader sees the ad for the first time, indicating that the ROI on anything other than the very first ad has a value diminishing to zero.

This is contrary to everything we think we know about advertising. We see the same beer ad on every football game, every basketball game, for the entire run of a campaign. Is it really possible that giant corporations with enormous research and marketing budgets are completely missing the point? Are they wasting their money on ABC, NBC, and CBS? Would they be better off running an ad just one time, say at halftime of the Super Bowl, and then never again?

No. Of course not.

Why not? For one reason, and a darned important reason at that. As Owens pointed out, citing a comScore study in 2009, 4 percent of Internet users drive a whopping 67 percent of all advertising clicks. The Palate Press Advertising Network had more than a million unique visitors in January, 2011. A click-through campaign would only be targeted at 40,000 of those readers, while a branding campaign would be aimed at every single one of them.

Advertisers are missing the point of advertising when they attempt to focus their results on click-throughs rather than branding. They are far better off getting their label in front of consumers, telling their story, creating interest, and making the viewer a buyer when the viewer is in a store. Advertisers need to recognize that on-line advertising is not a new product with new rules. It is the same product, using the same rules, on a different platform.

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