Advertisers have always wanted justification of their Web ad dollars spent, but with marketing budgets being cut and uncertainty rampant in the business climate, that justification takes on even more significance.
"ROI [return on investment] is probably more important than ever, given the economics," said Karen Breen Vogel, senior VP-strategy for online marketing agency B2BWorks Inc., Chicago.
Advertisers and media buyers agree that because of its ability to track online activity down to specific users that are clicking on ads, buying within a banner or spending a certain amount of time on a particular Web page showing a banner ad, online advertising is held to a higher standard than other media.
And as tracking technology becomes even more sophisticated and advertisers develop a better understanding of what it is they want to measure, ROI is evolving into an exact science—although everyone still has different ways of measuring performance based on campaign goals.
Accountability and results
"There is an increased sensitivity for accountability and results orientation, especially on the Web, which has higher expectations and greater potential for tracking," said Tyler Schaeffer, senior VP-director of brand media planning at Foote, Cone & Belding, New York.
FCB uses a combination of proprietary systems and those from third-party providers to measure not only specific online activity but also traditional brand metrics such as raising awareness.
Beyond tracking common online metrics such as click-through, "you have to measure
those that saw the banner or interstitial but didn’t go to the Web site or click on a link," Schaeffer said, noting there are ways of tracking online ads that eventually lead to sales.
"Those measurements are not only electronic, but involve follow-up surveys, Web site logs and tracking pathing," he added, referring to user activity online.
"Our strategic planning systems understand the DNA of the target audience," Schaeffer said.
ROI varies by campaign
Breen Vogel agreed that measuring ROI will vary based on the campaign, but there are certain things every advertiser or agency should do in the course of measuring online ad performance.
"Everyone has a different business objective," she said. "Is it to acquire customers, generate leads—and if so, what’s a qualified lead—retain customers or get the brand out there?"
Next, advertisers must choose the right tools to help them achieve their objective, whether e-mail marketing, banner ads, superstitials or rich media, then integrate the tools to optimize campaign performance, Breen Vogel said.
"You have to measure actions that are representative of meeting the objectives set. That’s where the click approach fell through," she added.
For example, if the goal of an online ad is to drive users to a Web site to download a white paper, the advertiser must measure not only the number of users that completed the action, but the total number of users that responded to the ad who did not download the white paper and other characteristics of the audience to determine if the leads were qualified. This kind of analysis will help in future campaigns, she said.
B2BWorks, like FCB, also measures more traditional metrics such as lift in brand awareness and "view-through," which is a measure of those users that see an ad but do not go to the advertised Web site until later—possibly as long as months after the ad ran.
B2BWorks accomplishes this research through a proprietary view-through measuring system, as well as through partnerships with third-party ad servers such as DoubleClick Inc. and market research companies such as Dynamic Logic Inc.
New technologies to the rescue
There are many systems, software applications and services designed to help Web advertisers gain a higher ROI. One of the newer ones is Inceptor Inc.’s Excedia service.
Excedia provides real-time measurement of site activity to increase online conversions in direct marketing.
Using Excedia immediately after the terrorist attacks Sept. 11, Tracy Hamilton Inc.’s FundraisingZone.com ran four keyword search campaigns offering American flag pins, angel pins and red, white and blue pins, and generated $50,000 in one week. Tracy Hamilton donated 10% of sales to the American Red Cross.
Joseph Wolpin, president of Tracy Hamilton, said he expected the campaigns to generate a total of between $100,000 and $150,000 for the month.
Wolpin said Inceptor helped him create and post the campaigns within 48 hours. "It was the quickest we’ve been able to take a product, post it and start selling it," he said.
"Our ROI with Excedia was in excess of 275%," before this campaign, Wolpin said, referring to fundraising business done for schools and organizations through leads generated by the software.
Other ROI-driven tools
Several other companies have also developed ROI metric tools, including:MediaPlex Inc.’s Mojo Optimizer, a digital marketing tool it launched Oct. 1. The San Francisco-based company’s product automatically updates banner ads based on real-time campaign performance and marketing goals. BizProLink Corp.’s online "calculators" developed to provide measurement in vertical markets, such as providing color analysis for printers and computers on certain areas of AOL Time Warner Inc.’s NetBusiness.com site.
Because the sites are so highly targeted, they capture a higher CPM and advertisers gain a higher ROI, said Steven Sponder, CEO of BizProLink. The CPM rate starts at $50 for the calculator area of NetBusiness and can go as high as $150.
However, agency buyers say that in light of the economic climate, many publishers are willing to negotiate lower CPM rates, and are doing more cost-per-acquisition deals, which are based strictly on the total amount of costs put into a campaign minus revenues generated.