10 Myths of online advertising

Late in 2004, I attended the Interactive Advertising Bureau of Canada’s presentation in Calgary. After all the years of Internet advertising, we are finally evolving to have such organizations of the IAB whose job it is to promote our industry.

The following 5-part series on 10 myths of online advertising are a combination of what the IAB has identified along with my own observations.

Myth #1 – Online is not a branding medium

Is newspaper? radio? television? Of course they are, because the conventional definition of branding is repetition of a message, response to ads, recall of ads and familiarity with brand attributes all designed to put your product or service top of mind.

In fact, in the US Interactive Advertising Bureau’s XMOS study conducted on behalf of Ford for the launch of the 2004 F-150 series truck, response to online ads outscored both television and magazines in terms of the above mentioned factors.

I think the real point is that many business owners either don’t believe that you can capture the bang for the dollar or they simply don’t understand what a branding campaign on the Internet is really about. In large part this is because the people that business owners rely on for advice regarding the Internet are technology people and not marketing people.

Myth #2 – Online is not a mass reach vehicle

Fact is, a study in May 2004 of syndicated media studies in Canada showed the Internet was ranked #3 in terms of media only behind television and radio. Canadians now spend more time using the Internet than reading newspapers or magazines. Canada wide, in August 2004 the Internet reached 18.4 million Canadians. And Canadians lead the US in terms of proportion of Internet users who have broadband connections (60% of Canadians online compared to 35% of Americans) which means they stay online longer and view more web pages.

In Calgary, for example, we represent products that reach almost 200,000 Calgarians every month. Think about that? Is this comparable to the Calgary Herald or the Calgary Sun? What about CFCN, Global or CBC? We reach more people than Calgary’s #1 radio station. Don’t believe me, ask them for a media kit and compare their reach of audience to the Media Metrix numbers for the Internet properties in Calgary.

The results of these numbers should not surprise you, the only surprise may be the results generated per dollar spent on advertising.

Myth #3 – Online does not generate offline sales

If the web is incapable of generating offline sales, then why does TV, radio or newspapers generate offline sales? If you asked most businesses, can an ad on TV or a coupon in the newspaper make people call or stop by, the answer would probably be yes. This is also true for the Internet.

Remember in our first Myth about online not being a branding medium we talked about the XMOS study conducted by Ford. Ford itself identified that 6% of the total 2003 sales of its F-150 trucks, about 1/2 million units, were a direct result from the brand impact of its online advertising. In retail terms that is about US $750 million in offline sales generated by web branding.

The point is this. If you have a good offer, a compelling reason why somebody should do business with you, or any of the reasons you are thinking in your head by TV or newspaper will work, Internet will do the same thing. Just like TV or newspaper, nobody uses the Internet to look at ads, but sometimes we are compelled to act by the simply process of introduction.

Myth #4 – We need to get the job done in our primary media

Modern media planners would say that media mix is important when trying to establish brand loyalty, I fully agree. Some people subscribe to newspapers, some are heavy TV watches and some are heavy Internet users. If you don’t fully understand the prospects you are targeting, by focusing solely on one primary media you could be decreasing your overall reach in the marketplace.

A great example is the McDonald’s XMOS study in 2002 with the launch of the grilled chicken flatbread sandwich in the US, where they identified 20% of the campaign’s target audience – or 28 million consumers in the 18-49 age group were light TV watches but heavy Internet users.

Firms such as McDonalds are going so far as to move advertising money from Television into the internet. McDonalds Chief Marketing Officer Bill Lamar has said that his company will be shifting $716 million more from television advertising to internet ads.

The reason for the company’s announcement? The XMOS studies conducted with McDonald’s, Kleenex maker Kimberly-Clark, Colgate-Palmolive’s Colgate toothpaste and Unilever’s Dove soap that found statistically significant evidence that an increased investment in online ads boosted consumers’ brand awareness and their intent to purchase. Colgate, for instance, saw purchase intent jump 9% when it boosted its online ad spending to 7% of its media budget.

The point is this, if your business currently advertisers in TV, print or radio or at least 2 of those mediums and you have not incorporated Internet into that mix, your business is losing valuable branding and sales opportunity.

Myth #5 – Online is less efficient than TV

I would ask the person who makes this statement to clearly define what that means. In my school of business though, efficiency comes down to one thing; return on investment. The fact is if a person in a monkey suit standing in the middle of a freeway would generate a positive return on investment, I would recommend it to my clients.

The other major problem with this type of statement is that we are pitting one medium against another. This will come in a later series, but I don’t believe that one medium is better than another, just how you plan to implement it.

With respect to online being less efficient than TV, it is simply not true. In the case of the 12 XMOS studies conducted by the U.S. IAB, online had the lowest cost-per-thousand (CPM). More importantly in 9 of those 12 cases, online produced the most cost-efficient results based on dollars spent per person affected.

The final point here is this, if you have a proper tracking method in place, you don’t need to have this debate, it will simply come down to ROI.

Myth #6 – Our target audience segment is not online

This is absolutely my favorite one of all-time. My target market is not online, yet these are the same businesses advertising in the newspapers and radio. Consider the following two stats:

1) More than 2/3 of Canadian households have at least one regular Internet user according to Stats Can 2003 HH Internet user survey and

2) In September 2004, the total Internet audience in Canada surpassed 18.5 million users according to comScore Media Metrix

In terms of monthly usage, the Internet is up there with the rest of the mass medium products. The only demographic that I will concede on, at this point, is the group 65+. In May 2004, on the YellowPages.ca network of sites, according to comScore Media Metrix, the demographic breakdown, in terms of age group were as follows:

18+ – 3.2 million
35+ – 1.8 million
50+ – 534,000
55+ – 339,000

Of the 55+, the breakdown is as follows:

55-64 – 295,000
65+ – 44,000

However, the fastest growing demographic segment on the Internet is seniors, growing at 50% over the past 4-years according to Pew Internet & American Life Project.

The point of all the numbers and stats, etc. is simple. No business can make the argument that their target audience segment is not online. Statistically it is impossible. Basically, if you plan to use TV, radio or newspaper to reach your target audience, Internet will reach them as well, ultimately it will come down to proper tracking techniques and return on investment.

Myth #7 – We are already online – we have a web site?

Just because a company has a website does not mean they are making money from it or it is an effective marketing tool. Having a web site is just the first part of the equation; how you plan to market it is where the real money is made for businesses.

I remember during the Dot Com boom, the saying, “if you build it, they will come”. Then millions of people dumped a whole bunch of money into this thinking and then lost in all when it crashed. Why is that?

Here is a good working example I use when speaking to my clients:

Step #1: Call Telus and get a business phone number

Step #2: Call your business phone number to make sure it works

Step #3: Sit by the phone and wait for it to ring

But wait, you say, “I will have to put my phone number on my business cards, brochures, my company sign, in my print directory ad, in the newspaper ad, etc. Any business owner knows you can’t simply get a telephone number and it magically rings.”

So why do businesses approach the Internet this way? Just like a telephone number you need to let people know your business exists.

I know that many businesses believe the first thing you have to do when starting is to get an ad in the local phone book. What about online directories, like YellowPages.ca? We know that 30% of people no longer pick up and the book and that directory usage is over 5 million in Canada per month.

When it comes to your website, if you build it – they will not come. With a solid offline and online marketing strategy, they will come, they will call and they will spend money with you.

Myth #8 – The sales channel won’t let us use online

Businesses that make this claim need to educate their sales channel. Major marketing companies such as Unilever, Colgate-Palmolive, Nestle, Kraft, Ford and MacDonald’s has laid the groundwork through their XMOS research programs to convince them and their sales channels that interactive deserves a place in the ad mix.

Think about MacDonald’s, (they sell hamburgers, how can the Internet drive more sales), is now in a position where it has doubled its spending on online advertising for the past two years.

As discussed in previous myths, the Internet is one of the 4 mass media products, it drives offline sales, and it is one of the most cost-effective brand building mediums in the marketplace. It is critical for businesses with sales channels to educate them on the Internet and how to use it to drive more sales.

Myth #9 – We don’t know how to compare online and offline

First, don’t worry, many businesses fall into this category. The most important thing to keep in mind is the way impressions are counted offline versus online.

For example, in TV and print, ads are sold on the basis of the audience’s opportunity to be exposed to an ad. However, there is a percentage of that potential audience that will never turn to the page in the magazine or newspaper with your ad on it, or will be out of the room when your TV ad airs.

In the online world, a business will typically pay a CPM or cost per thousand impressions of an ad delivered to their target audience. If a business purchased 1000 impressions on a financial web site, with online advertising you don’t have to worry about the person skipping over the page, as can happen in newspaper or magazine, or leaving the room as could happen with TV. Your business will receive 1000 impressions of your ad based on where you choose to deliver it. Because of this guarantee, online media is more cost-effective because you are not losing a potential of your audience based on flipped pages or people leaving the room or changing the channel.

However, as we have been discussing throughout, for some reasons businesses rely on marketing experts to help plan television and newspaper, yet they rely on a web designer or search engine marketing expert for their online advertising. The problem with this group is they usually don’t understand branding or marketing, and they have given banners a bad rap because the click through rate was between 1-2%, which is actually pretty good in compared to traditional media.

Interactive media is more accountable and measured online impressions are closer to the real viewing habits of consumers compared to ad exposures measured in the offline media.

Myth #10 – The client or boss just does not like online

Ten years after the advent of the banner ad, leading marketers and companies throughout the world are not increasing their online ad budgets because it is new, cool or fun. The marketers and companies are increasing their online budgets because it works and creates a positive return on investment for their business. With literally tens of thousands of completed campaigns the proof already exists.

At some point, online was up and coming. Online has arrived, it is moving fast and is going to make small businesses grow and is going to put some businesses our of business. Remember, marketing is not just about one medium, rather it is about the use of a media mix,

Ultimately businesses in Calgary have a choice. Keep doing what you are doing with TV, radio or newspaper and forget online; chances are the results you get will start to decrease steadily. Alternately, incorporate online in your media mix and establish your brand and business in the fastest growing segment in the advertising world today, the Internet.