Rich Media Rocks 2010: "Clicks are the wrong metric to measure online advertising" -- Joe Nguyen

Speakers also discussed the increase in online ad spends and the rapid growth of online video ad viewing in the South East Asian markets

At the annual event, Rich Media Rocks 2010, organised by Microsoft Advertising, eminent speakers discussed rich media and video, and how these are rapidly becoming essential components in online campaigns.

Kicking off the event, Neville Taraporewalla, director, Microsoft Advertising, India presented a keynote address on online video. He started off his presentation by sharing comments made by researchers and industry bigwigs.

Quoting September 2010 figures from internet market research company, eMarketer, he pointed out that by 2014, online ad spending in the Asia-Pacific region would hit $22 billion, that is, 22 per cent of the worldwide total. Also, online ad spends would increase as a proportion of total spending in Asia-Pacific, from 9 per cent in 2009 to 13 per cent in 2014.

Taraporewalla then quoted NielsenWire, stating that consumers in all regions are proving their insatiable appetite for video information and entertainment -- thus far adding screens to their media mix and not replacing them.

Taraporewalla said that video advertising is becoming immensely successful -- he quoted David Hallerman, senior analyst, eMarketer, who states that video ad spending growth will far outpace any other online format, running in the 35-45 per cent range from 2009 through 2014.

comScore's (an Internet marketing research company) CEO, Gian Fulgoni says that brands using online video ads have seen lifts of 20-40 percent over other ad forms.

Taraporewalla posed a question many brands might ask: "Why online if I'm already on TV?" "Simply because online video improves the effectiveness of your TV buy," he stated.

Sharing MSN Video's data, he said that MSN Video in Australia sees 16 million streams per month and is witnessing an 80 per cent year-on-year (YOY) growth; while Singapore and Thailand are both seeing about 4 million streams per month, with Singapore's YOY growth at 135 per cent and Thailand's at 90 per cent.

In comparison to these markets, MSN Video's reach in India is over 2 million streams per month and the YOY growth is 22 per cent.

Taraporewalla also discussed MSN's offerings - such as like pre-rolls, skins, companion ads and Hero Players -- for prospective advertisers. Also, Bollywood and fashion shows such as the Lakmé India Fashion Week (LIFW) have come on-board in a big way -- the grand finale of LIFW was streamed live on MSN.

He also cited the example of how Nokia, which launched its N8 model of the N Series through a live global podcast on MSN. This was the first time, he claimed, that a brand launched its flagship product online.

The second speaker of the day, Joe Nguyen, vice-president, sales, comScore - South East Asia, focused on Indian data. He pointed out that while AdEx states that internet spends account for only 1.6 per cent of the total ad spends; the PWC E&M report pegs this at 3 per cent of overall ad expenditure. He added that this should touch 5 per cent in 2011-12. Oddly, almost 70 per cent of this money is spent on direct response.

Also sharing 2010's digital ad spends by category, online publishers contribute the highest with 26 per cent; auto contributes 16 per cent and the banking and financial sector makes up 15 per cent. IT/telecom contribute another 11 per cent; while FMCG, consumer durables and education are at 8 per cent. Print and electronic are at 3 per cent each; while the remaining 3 per cent consists of other categories.

Discussing India's internet population, Nguyen shared that in September 2009, this was at 52 million active internet users, up from 42 million users from September 2008. In India, online takes up 20-23 per cent -- usually behind TV -- of media consumption across key segments.

Heavy users of the internet in India spend up to 93 minutes a day and consumption of traditional media online is on the rise, along with that of television. "However, for digital, the share of ad spends (3 per cent) does not correspond with consumption (more than 20 per cent). So, why does the share of digital advertising still fall behind the share of media consumption?" he questioned.

Nguyen also pointed out that the internet is disproportionately used for direct response advertising. Measured media spends for other media vehicles is $186 billion, he cited. Of this, 63 per cent is spent on brand marketing; while 37 per cent of the total dollars are spent on direct response marketing.

In comparison, when it comes to online media spends, which are at about $ 26 billion, only 23 per cent online dollars are spent on brand marketing; while 77 per cent are spent on direct response marketing.

"One of the key metrics advertisers/media agencies ask for when planning advertising in mainstream media, be it radio, TV, print or outdoor is 'reach and frequency'. But when it comes to 'the most measurable medium', as it is known, advertisers and media planners are shown click-through rate (CTR), cost-per-click (CPC), pay per click (PPC) or impressions," he said. He suggested that online media should start speaking a language similar to that of mainstream media.

Another point Nguyen made was that clicks understate a campaign's return on investment (ROI). In fact, there has been a steady decline in online ad click-through rates. In 2002, this was 2.5 per cent; by 2006, it fell to 0.4 per cent; and in 2008, comScore measured click rates as less than 0.1 per cent.

A comScore report on the Clickers on Display Ads measuring the total US online population in July 2007 showed that there were only 32 per cent clickers, as against 68 per cent non-clickers. This further decreased to 16 per cent clickers by March 2009. "Therefore, optimizing against clicks means ignoring 84 per cent of internet users. We now know that clicks are the wrong metric to assess adverting effectiveness," he said.

Clicks on display ads are a misleading metric, and one should only use clicks for direct response ad campaigns (or search). These don't measure all of a campaign's sales impact nor the cumulative (latent) impact of ads. They also don't tell you anything about brand building effects, Nguyen explained.

Discussing a little about video ads, he shared that according to comScore Video Metrix India, August 2010, the total internet audience is 30.5 million (of which 70 per cent is male); and each viewer watches an average of close to 57 videos. "Video is an effective format for driving brand-building behaviours," he said.

In summary, Nguyen made these points. Digital media is another media channel for brand advertising; but it has been undervalued in Asia Pacific and in India. Also, digital advertising will not get its fair share of branding dollars until cross-media metrics are utilized for planning. Moreover, clicks are not the right metric to use for online branding campaigns. "We need to create better ones for branding," he concluded.