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AUGUST 20, 2004
By Sarah Lacy On the Web, Branding Is Back [Page 2 of 2] JELL-O BOUNCE. Still, branding ads are a trickier sell for even the big portals because it's harder to measure their impact. Forget about counting clicks, says analyst Gary Stein of Jupiter Research. The only real way to measure the effect is through pre- and post-campaign surveys, detailing whether people exposed to the ads were more likely to buy the product. In an effort to lure ad dollars, portals Yahoo and MSN have invested heavily in research, particularly in the area of consumer packaged goods, where ad budgets are huge, yet less than 1% of that money is spent online. MSN undertook a research project with Nestle, Kraft Foods (KFT ), and Proctor & Gamble (PG ), measuring whether exposure to online ads resulted in more Coffemate, Jell-o, and Oil of Olay sales. The results were positive, says Joanne Bradford, vice-president for sales at MSN, and all three are now advertising on the site. "We've seen a huge lift in that category," she says. "We expect it to double in the next few years." Similarly, Yahoo has a partnership with ACNielsen, in which 19,000 Yahoo users have agreed to allow their groceries to be scanned every week. That data is matched up with info on what ads they're seeing online to figure out whether or not the campaigns are driving purchases. The survey was launched in the fourth quarter, and the results so far have had a robust impact on sales, says Wenda Harris Millard, chief sales officer at Yahoo. RIPPLE EFFECT? Perhaps the biggest indicator of growing demand for brand ads is an increase in prices. The cost of brand ads on portals has jumped 68% year-over-year, while entertainment sites have seen spikes as high as 90%, according to Jeff Lanctot, vice-president for media at Avenue A, an online advertising agency. Lanctot notes that many of the spaces being offered at higher prices are larger and more media-rich, so advertisers are getting more bang-for-the-buck for those increased dollars. The big question is whether this will boost the fortunes of Web sites beyond Yahoo, MSN, and the other big portals. In its second quarter, CNET Networks (CNET ), which operates tech news and product-review sites, cited branding as a potential growth area -- but not one that's moving the needle yet, according to Jupiter's Stein. Yahoo is fond of pointing out that 14% of all media consumption in the U.S. is over the Internet, but it's getting only 3% of all advertising dollars. Yahoo and its competitors hope that number can climb to around 8% to 12% pretty fast. But not all inequities are so easily ironed out. Such sites might do well to consider that while more mature mediums like cable TV and satellite represent more than half of viewing hours, they still get only about 28% of TV ad dollars. If rich-media ads don't grow as expected, Yahoo, MSN, and others may need to find a fresh growth engine to take over where paid search is leaving off.
 Lacy is a correspondent for BusinessWeek Online in Silicon Valley
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