According to Bob Liodice, the President and CEO of the Association of National Advertisers that is. Speaking at the 4As conference Mr. Liodice suggested that digital is the least accountable of all media. Mediapost’s story on this can be seen here.
I’ll discuss his issues one by one:
Only 50% of ads are viewable. Digital media sell on addressability to specific audiences. Most other media sell on “real estate”. With a fixed amount of real estate and strong demand a medium can ask a higher price because they can sell all the space/time to a few marketers at the exclusion of others. Digital media can sell to both, but they’ll sell a certain number of impressions to each and at a lower price. The result is multiple ads on a page, some of which are less or non viewable. A fixed position, less ad inventory model could mean more money for digital media because the supply of ad inventory would be reduced and the demand would be stagnant. TV, Radio and Magazines usually use an interruption model, meaning each ad is viewable/audible—but that does not make them any more effective. It just makes a marketer feel better because they have something more tangible to show for the media investment. People have always muted the ads, left the room or changed the channel.
Only 50% of every dollar spent in digital goes to the media itself. Digital media doesn’t have the ticket price that traditional media have. A single ad in a magazine can cost $50,000 or more. A network TV unit can easily cost $100,000 or more. A $10 million dollar TV budget buys ‘hundreds’ of occasions, yet that same investment in digital media theoretically buys as many ‘occasions’ as impressions. The traditional TV campaign might use one piece of creative so the cost of the execution is amortized over all the ad occasions. So are media servicing, trafficking, billing, etc. Since digital media are addressable there will be multiple ad executions and sizes and more invoices than the TV buy for the same investment. More trafficking, more ad serving, more billing, just more hands and eyes involved in the process. If this point is true (that only 50% of every dollar spent in digital goes to the media itself) it is not a problem because part of a digital media campaign is having a place for people to go when they click. Each ad might have a different landing page or microsite, thus adding to the costs of digital marketing.
The return on investment has been hugely disappointing. On the surface CTRs seem to be a low number. Why? Because we can measure them. What is the response rate for a TV ad that is comparable to a CTR? There is no measurement. Don’t get caught up in the CTR measurement in and of itself. Digital ROI should be measured the same way as ALL other marketing investments, the impact it has on the purchase, mainly the first purchase by a new customer, against fully allocated costs (media, creative, operational).
An e-GRP measurement standard is needed. This is a step backward for the industry. Digital media currently have a metric that tells us something more than simple ad serving, which is the best we can do for traditional media (other than DR). Why should we exchange a good metric for a bad one? GRPs have been used as the exclusive measure for traditional media for too long and are a relic of an age when aggregating impressions was the best the industry could measure. Yes, we’ve improved the measure over time to incorporate commercial exposure and DVR playback. Just because a TV ad is served doesn’t mean anyone ever sees it or takes note of it. Nielsen is doing a terrible job of estimating audiences. Rentrak has time and again proven to be a better indicator of commercial exposure.
I can understand Mr. Liodice’s perspective. He is the leader of a trade/lobbying association of advertisers. Where his perspective falls short is that digital is a marketing channel, not a media channel. I don’t see the ANA calling for the same standards on in-store marketing and/or trade programs.