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Poor Display Numbers Fuels Debate At IAB Interact Conference In Barcelona

I missed the Interact conference this year - but the feedback was as usual was very positive. As usual, there was lots of high-level debate on the state of European online advertising industry - with a lot of focus on display's anaemic performance last year in the overall IAB advertising figures. A paltry rise of 0.3% year-on-year is weak compared to search's double digit growth is enough to make you shudder. As you'd imagine a lot of debate focused on display's lacklustre performance - and whether click was the best KPI for display campaigns. My own view is that all online advertising is performance based - but that's for another day's rant. Stephan Noller, nugg.ad CEO and Chairman of the Policy Committee IAB Europe, did an excellent overview for the German-based Adzine magazine on last week's Interact conference.

Whither the click, indeed. Below is an English translation of the piece. Interesting perspective on what C-level types are thinking about the display.

“Why is the click still king?” – That was the main question and focal point of the Interact Congress 2010 which was held over two days in Barcelona. Discussions on branding and its enormous potential were on the agenda.

The event kicked off with the IAB (Interactive Advertising Bureau) Team, under the leadership of President Alain Heureux, presenting the latest insights into the European online market in the form of the Adex study. The core message: Despite the difficult year, online activity grew by 4.5% in 2009 (the figure was 20% in 2008) – however, practically 100% of this figure is derived from search. This was obviously an excellent point to focus on given the event’s theme, “Branding online – the time is now”, because the market cannot enjoy sustainable, profitable expansion stemming from growth through search alone. In addition, much of the Internet’s potential as an advertising medium is simply wasted.

“People are 25 times more likely to engage than click” (Laurent Delaporte, Microsoft Advertising)

You need to sit back for a moment and reflect on what this statement means for the display business. The end result is as simple as it is dramatic: we only utilise 4% of the effect that our campaigns demonstrably create! And why? Because online activity is generally measured solely via the click and most business models are based entirely on this sole KPI (Key Performance Indicator). This is a position that we have manoeuvred ourselves into. This is, incidentally, an awkward situation not only for the content owners, promoters and publishers, but also quite definitely for agencies and advertising clients. By focussing on the click, the possibility of the new medium being used intelligently, for example in brand building, is severely impaired.

Using an impressive presentation focussed on the results of the effect of display advertising, Gian Fulgoni, CEO of Comscore (he looks like Dustin Hoffman, by the way) threw salt into the already gaping wound: “84% of internet users will never click on any ad!” At the same time, Comscore established that there were significant changes in user behaviour in its panel – even those with a very low click rate. Therefore, the click is registering in people’s minds. Or, as Fulgoni put it: “You get great impacts from online advertising, even if there are no clicks.”

“But why is the click still king?” – This logical question was posed at one of the excellent discussion panels after the presentation. An agency representative provided the obvious answer: “We don’t have an alternative measure that can be used across many campaigns!” It’s a statement that was emphasised in many places. One of the main obstacles to growth when transforming the branding effect into a business model is missing KPIs and the lack of standardisation for an adequate measurement model. Because if you really want to get rid of the click, then another equally available, reliable, credible measured value that can be used for reporting, optimisation and the strategic planning of online campaigns needs to be found.

During the discussion panel with the CEO of IAB US, Randall Rothenburg, it quickly became clear that the necessary KPIs don’t need to be reinvented - as it has long been known what goals branding advertisements are normally expected to fulfil: brand-awareness, favourability and purchase intent. The aim of these three KPIs would be to take the brakes off.

Fulgoni rightly highlighted that both ‘reach’ and ‘frequency’ take on a new meaning when it comes to branding campaigns – particularly as far as effective exposure dosage is concerned (one thesis we have been following for a long time).

Moreover, the Comscore CEO announced that they are edging closer to dethroning the click from the Ad-Server, and subsequently its central role in the campaign management, with corresponding functional, available branding KPIs!

Laurent Delaporte argued that it’s beneficial for the industry to take the conference’s motto seriously when he stated that Microsoft had increased the digital percentage of its own advertising from 20% to 50% since 2005. Jef Vandecruys of ABInbev was even more to the point: “We are not focussed on reach but brand impact and engagement. We don’t buy impressions.”

Of course, behind all these thoughts on branding lies a very real aspiration with regard to budget; namely, migrating a percentage of the existing huge TV budget to online. This normally concerns branding campaigns, but Google’s Carlo d’Asaro Biondo went one step further in his keynote speech when he asked us to “use the scale of the internet with a push from TV” – therefore, future campaigns should only receive an initial impetus from TV allowing with its broader effect to unfold on the internet. For Google this is perhaps already a concrete vision – for the market as a whole it still sounds a little bit like science fiction...

Conclusion: There is enormous potential for display advertising in the field of branding campaigns. However, this can only be realised by successfully offering convincing and simple KPIs and measurement methods which can go toe to toe against with the click, thereby finally putting the click in people’s minds where it belongs – at the forefront.