When Will Brand Dollars Move Online? Maybe Never.

Each Medium Has Its Own Value Proposition, and the Internet's is Direct Response Advertising

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It's time to face the reality that the Internet sucks as a branding medium. I know that statement will rile up a few people, but I am starting to believe that the Internet may not be the right medium for brand development, at least in its current form. Trust me, it doesn't help my business if TV dollars don't come online, but it appears that online advertising is destined to become the greatest direct response medium in history and the greatest branding disappointment ever. This shouldn't come as a surprise to anyone.

One of the first things anyone ever learns about media buying and marketing is that each medium has its own value proposition, which make each medium more effective at certain marketing disciplines. TV commercials help brands create an emotional impact with an audience, while magazines provide an environment for stunning images in large formats. When it comes to direct response marketing, direct mail, directory advertising (Yellow Pages) and telemarketing all connect advertises with an audience in cost effective fashion while generating immediate demand for a product or service. It's true that many of these mediums are effective for both brands and direct response marketers on some level, but each medium is usually much better at one or the other.

So where does online marketing fit? We know it's an awesome medium for direct response. Google AdWords has replaced the Yellow Pages and lead generation has shifted from direct mail and telemarketing to ad network banners and email. Online is decimating old media when it comes to direct response.

But why isn't the same thing happening for brand builders? The answer is that the current online ad formats are nowhere near as effective as TV at making an emotional connection with an audience. And if it's not as effective, why should brands move dollars away from TV? Should the ad dollars flow to the Internet simply because people spend more time online? At this point, that is the primary reason why any brand dollars are online.

A recent survey by the World Federation of Advertisers and Millward Brown found that the majority of marketers predict they will spend more on social media, but only 23 percent think it is effective. If they are right, and I think they are, then the increased spend won't last long. Ad dollars are a zero sum game, with only so much to go around, and TV still has lots of inventory to sell. Following the eyeballs is a weak argument for shifting significant budget online.

So what can the online publishing and technology companies do to turn the tide? Start by recognizing that online is effective at building name recognition because of the low cost of inventory. If a CPG brand wants to supplement a campaign with reach, frequency and targeting specific audiences, then display ads are highly effective.

Another benefit of online is the potential interaction that marketers can leverage to create a connection with users. The industry should continue to leverage these benefits. But online still falls short when compared to the impact of a television commercial. Online ad formats don't come close to a 30-second spot in delivering a brand's message and generating an emotional response. If online is going to compete for these ad dollars, publishers need to focus on improving ad formats by making them larger, more interactive and more engaging. Additionally, publishers need to decrease the number of ads on their pages to increase the value of each impression to the advertiser.

Still, the truth is that while these suggestions will help, we need to accept the reality that no advertising medium has proven to be equally effective at both branding and direct response, and online is no exception. Brand dollars will move online when the Internet and television merge and the 30-second spot is available online. But will it really be an online ad at that point, or just a slightly enhanced television commercial?

Alan Pearlstein is president-CEO of Cross Pixel Media.
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