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Online Advertising Penetration (Part 2 of 9)

October 23, 2008

Overview

“How many ads should I show my prospects to achieve the effect I want?” For over a half-century advertisers have asked this question and researchers have studied it. You can appreciate the interest—how many people you reach and the number of times you expose your ad to them costs money. Under expose your ad and you risk underperformance. Overexpose an ad and you may be overpaying for performance. Effectiveness does not improve directly as the number of exposures increases. According to a common industry rule of thumb, most brand objectives reach diminishing returns somewhere between 4 and 10 exposures to an individual. For direct response measures, recent thinking places frequency at lower levels.

Online Reach and Frequency Measures

Here is a list defining commonly used concepts and terms that will help you navigate through this chapter and the literature in general.

  1. Percent reach The percentage of individuals who visited a particular website among the total number of individuals using the web during a given time period.
  2. Planned impressions The number of impressions in the media buy for the particular site during a given time period. This is reported at the total site level.
  3. Target impressions The number of impressions in the media buy served to a particular target audience at that site. This number is derived from the total pages viewed at the site by the target audience as a percentage of total pages viewable at the site.
  4. Percent planned/target impressions Number that shows the “demo conversion factor” for each entity (i.e., the factor used to convert planned impressions to target impressions).
  5. Frequency The number of ads the average person could be exposed to in a given time period.
  6. Unique visitors (UVs) delivered The number of people in the target audience who will have the opportunity to see an ad at least once.
  7. Percent reach delivered The percentage of the target audience who will have the opportunity to see the online advertisement at least once.
  8. Average frequency The number of ads the average person in the target audience is exposed to in a given time period.

Strategies for Managing Online Reach and Frequency

Websites’ abilities to reach consumer audiences vary. Some, like MSN or Yahoo! email sites, generate high reach quickly, while others with a narrower, more specialized focus, like Bicycling.com, may reach a sizable audience of interest to certain advertisers (of bikes and gear, for example), but take longer to reach all of them. Reasons why they vary have to do with consumer behavior, consumer interest, website content, and website popularity.

Build Reach by Balancing Heavy and Light Website Users

We Selected “page views” for a measure of internet consumption. Looking first at viewership, they categorized internet users into three groups by the number of days they spent online per month: heavy users (more than 19 days, 39%), medium users (11 to 19 days, 25%), and light users (under 11 days, 36%). They found viewership correlates with page viewing. Heavy users accounted for 73 percent of all page views, while light users tallied just 6 percent. This disparity presents an advertising challenge most marketers face, which is to “reach effectively that third of the audience generating only 6% of all pages, while avoiding having heavy users consume ad impressions at disproportionately high frequencies”

Make a practical, nuanced observation, “Light internet users are heavy users on certain sites”. Usage isn’t monolithic, which makes sense. Most people do what they enjoy or are interested in most often, and other things, like looking up a recipe for a dinner party, when they can or need to do so. The key implication: To increase reach against lighter users, spread the media buy across several properties. Don’t put all your eggs in one basket site.

Keep in mind that not all competing sites in a category can substitute for one another vis-à-vis lighter users. Although the focus may be similar, each site has its unique personality that influences consumer behavior and site use. Given the dynamics of online advertising, sites can be leaders and followers, hot or cold, and can switch places quickly. Continually monitoring the light user index is good practice.
Build Reach by Selecting Websites That Concentrate Brand Target Audiences

Deftly balancing the lighter and heavier usage groups is one consideration in building effective reach. Matching a website’s audience characteristics to those of your target customer is the best way to improve the probability of an ad being viewed by the right person. Websites differ. The large portals draw broadly from all parts of the internet population, while more specialized sites draw narrower segments or concentrate exclusively on one or two segments.

Advertisers wishing to reach sports, movie, and gaming enthusiasts would more likely find their principal target of males aged 18 to 34 on sites whose content attracts and aggregates them. That group makes up 25 percent or more of the audience on sites like ESPN, eBay Motors, Yahoo! Sports, WindowsMedia, Musicmatch.com, and IMDB.com.

Similarly, high-income households (yearly household income above $100,000) are overrepresented on personal finance sites and news sites (CBS MarketWatch, CNN.com home page, NYTimes.com home page), as you might expect. But they also are overrepresented on sports and entertainment sites (SI.com, About Health and Fitness, and E!Online). Look for all the types of sites that attract a brand’s customers; don’t be lulled into thinking that targeted reach limits the variety of sites to advertise on.
Pay Attention to Website Traffic Patterns to Build Reach

Websites don’t attract visitors evenly throughout the day. Website visitors arrive at different times of the day or on different days, apparently when the users have time and inclination. Businesspeople start and end their day with news. You might expect the Wall Street Journal audience to spike at the beginning and end of the workday, and you would be right. Thinking about going to the movies? The Yahoo! Movies audience climbs on weekends during the early evening as people look for reviews, screen times, and tickets. New baby? Caregivers turn to AOL Parenting on Sundays.

Because of different traffic patterns, sites build audiences at different rates, some more quickly or more slowly than others. Audiences for website services (such as web-based email) and portals scale very quickly because of their relevance, name brand recognition, and content variety. Roughly 80% of the monthly accumulated audience to those sites, such as AOL, Yahoo!, and MSN, had already visited by the seventh day of the month. However, even within the sites audiences build at different rates—not every section has the same appeal.

Should marketers go for those sites that build quickly? I advise against that, and take a more balanced approach: “It’s important to point out that a site’s build rate is not the only measure that should be considered when evaluating performance and formulating best practices for attaining reach. Rather, it should be taken into account when formulating schedules for a campaign: In general, to maximize reach, slower building sites require longer runs, while a short, heavy blast on sites with steep build curves is sufficient to reach the majority of users”.

Expand Total Brand Reach by Combining Online Placements with Traditional Mass Media

Does adding online advertising to the current media plan extend reach? Now that we’ve seen how reach can be built online, let’s look at the more common real-world situation where online advertising is combined with offline media to build total brand reach. Most advertiser media plans combine two or more media types (television, radio, newspaper, online, outdoor, etc.) and specify one or more vehicles (TV or radio show, particular magazine, newspaper, or online site, for example) or times of day in order to reach customers and prospects.

Experience with Frequency of Online Advertising

Could you run just one ad and get business results? Yes, according to a trio of experimental studies that used identical methodologies, measurements, and reporting. Fielded in three countries (Australia, New Zealand, and Hong Kong), a total of 45 online ads for 26 brands across the automobile, financial services, consumer packaged goods, computers, and consumer retail categories were researched. Online internet users were randomly assigned to one of two groups—one saw the test ad, while the other saw a control ad. Surveys gathered responses on brand measures—awareness, recall, brand perception, and intent to buy—before and after exposure. The findings revealed improvements on all measures, and, depending on the brand studied, some significant differences in brand perception were seen.

Study participants saw between 1 and 40 ads. The total lift, expressed as a percentage of change, in awareness was near 90%. But how did it grow? It turns out that by the eighth exposure, 80% of the lift was achieved. A bigger eye-opener is that the largest gains occurred from the first to second exposure (45%). From the second to the third exposure the lift reached 60%. This finding also demonstrates why it is critically important for brands to reach their target audiences broadly with a reasonable number of exposures, rather than reaching a relatively narrow target audience many numbers of times.

Is there a magic frequency number? Little research exists on the subject, and results vary according to the product and campaign objectives. According to the DoubleClick study, for example, the optimal frequency for most campaigns is around four to seven ad exposures, and, much beyond that, results hit a point of diminishing returns for both brand and direct response objectives

Getting a fix on optimal frequency, and balancing that frequency with target consumer reach, is critical because without it some parts of online media plans may overdeliver heavy users who could easily see your ad without acting. Minimization of that waste and increase of the frequency against lighter users, who may respond, contributes to good planning, buying, and effectiveness.

Interplay of Reach and Site Visiting

Now that we have established the basics of online reach and frequency and brought forward a number of strategic approaches for building reach and thinking about frequency, we are ready to tackle a couple of advanced topics. The first we address concerns where a person is reached on a website, and the second looks at the issue of when consumers respond to online ads.

When people visit a website—like WSJ.com or ESPN.com, say— they normally land on a home page, click to another page, then another page, and so on until they leave. We can think of each succeeding page visited as depth; after three clicks, people are four pages deep into the site.

Determining exposure frequency, like reach, should be steered by the understanding of your branding and behavior goals and what it takes to achieve them, all the while balanced by your knowledge of what you’re willing to pay for results. Reaching the right people the right number of times with the right combination of media contributes to advertising effectiveness. Keep in mind, too, that not all ad impressions are equal. Online ads that appear early are noticed and acted upon more quickly, and may have longer-term branding impact. Don’t pin your campaign evaluations entirely on immediate performance, like click-throughs. Take a balanced approach instead and bring additional resources into play that help gauge success, like tracking customers overall, or tying consumers’ online or offline behaviors to the conversion outcomes your brand seeks after reaching them and exposing them to your advertising

Summary

The smart way to use online advertising to achieve broad reach for your brand is to use a combination of online and offline advertising. Research has shown the combination to be superior to either one used alone. The advertising planning skill needed for success in building adequate reach for the brand is the ability to create the best mix or balance of online and offline advertising to achieve your goals. That skill needs to be sharp because traditional and online advertising is not an either/or proposition. Blending media will only increase as marketers shift budgets to exploit the benefits of different media for achieving their advertising goals. Most marketers test their way to winning combinations.

· While television is still considered the most “mass” of media, it does have a concentrated audience of heavy viewers. The same is true for the internet. The key is that in many cases they are different groups of people. Thus, to optimize your total reach, a balanced combination of online and offline, especially TV, is critical.

· There are many situations when online advertising alone may achieve your reach goals, but offline may still be needed to drive a certain number of prospects online to the location where brand advertising appears on your or other websites.

· The principles that apply for gaining reach within any single medium apply to the internet channel. Usually a mix of formats (banners, billboards, text, rich media) and a variety of portals or sites with high concentrations of your best prospects can quickly achieve your reach goals.

· More important to ultimate success, however, is the quality of the idea. A weak idea can achieve a level of reach equal to a strong idea, but the highly motivating idea will create significantly more sales. Thus, before investing time and resources in planning for reach, focus on getting an engaging, motivating idea. Often the idea can influence the selection of certain sites in a campaign as well as be a multiplier for building awareness.

· Finally, remember that the nature and capabilities of online services and advertising are constantly changing and evolving, not only on the internet, but through emerging channels like mobile communications and immersive experiences in massively multiplayer games, such as the extraordinarly popular Second Life. Traditional reach and frequency measures are being supplemented with newer engagement and brand interaction metrics now being studied, developed, and applied. Successful online marketers will be those who embrace online advertising with concepts and metrics that emerge organically from online advertising, and reduce their dependence on ill-fitting reach and frequency measures from an earlier age.

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