Online advertising expert says industry must reform

Australian online advertising must reform itself in order to compete with other mediums as discounting and “cost per click” metrics are continuing to de-value the industry, an expert has warned.

The comments come as figures from Nielsen, the Interactive Advertising Bureau and PriceWaterhouseCoopers show while the number of advertisers grew by 6% during the September quarter, revenues actually fell.

Nielsen online Asia-Pacific research director Stuart Pike says the online advertising industry is “missing the boat”, and says agencies must treat the internet like other mediums by considering their target audiences.

“The easiest thing that comes into my mind is that online really reaches the ‘at-work’ audience more than any other medium. I’d argue that between the house of nine to five, for every person who works for a living, television cannot reach those people.”

“However, they can be reached in the online space and agencies aren’t thinking about that, and aren’t thinking about what the internet can do that other mediums can’t replicate. What is our unique proposition? We need to do that better, rather than just copying the same old tired stuff.”

Pike says rather than judging a brand’s effectiveness through traditional means, such as brand recognition, online advertising agencies instead use “cost per click” metrics, which he claims are often inaccurate and don’t measure overall effectiveness.

He points to Nielsen figures which show 33% of Australians are able to recall online advertisements regardless of whether they clicked on them or not. As a result, he believes online advertisements will eventually become “clickless” and agencies must catch on to the trend by emphasising tradition metrics.

“These metrics lower the value of advertising, because if you measured the effectiveness of the ad as a whole it would be a lot higher. It’s similar to a light night infomercial, and saying that you would charge by the number of phone calls recorded to order the product – it’s not very effective.”

Instead of using these methods, Pike recommends valuing ads based on their ability to build brand awareness, and features unique to the internet.

“Practically every online advertising effectiveness project undertaken by Nielsen has demonstrated the ability of the online medium to generate significant changes in brand and purchase intention metrics, yet as an industry we are failing to communicate this value as effectively as our counterparts in television.”

“I don’t think online will ever displace television, because people will have their preferences. But online is going to have to do a lot better to keep up, because the big companies of the world aren’t being given enough compelling reasons to plunge their dollars into online when you’ve got solid statistics regarding brand recognition elsewhere on television.”