ROI from online advertising can be 35% higher than believed

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New research reveals that marketers who fail to measure online branding are missing the real value of digital advertising. Jupiter Media Metrix reports that the actual return on investment (ROI) is at least 25%-35% higher than most believe.

However, only 15% of marketers are conducting formal online branding measurement - while the majority continue to favor direct response metrics, including click-rate (60%) and cost per conversion (75%).

"Jupiter case-study data shows that the actual number of customers driven to websites by online advertising is greatly underestimated by traditional click-rate metrics," said JMM analyst Rudy Grahn. "Furthermore, when brand advertising programs generate synergy across all marketing channels, that number can grow significantly beyond what can be tracked. Not everything is intended to be branding, but everything brands."

According to Jupiter analysts, marketers who are looking to correlate ad spend with an increase in traffic are taking the wrong approach. In fact, while online advertising is a more effective than marketers believe, it is still secondary to other factors in driving traffic to websites.

Online advertising only contributes to 17% of the traffic to a website, while seasonality and an increase in Internet adoption contribute to 46% and 37% of the growth, respectively.

Marketers can measure branding value by correlating behavioral data (including individual user click streams, repeated surfing patterns and aggregate user behavior) with the flights of specific ads.

While there are not yet standards for determining this correlation, marketers have begun experimenting with calculating the relationship between aggregate spend and the corresponding volume of user behaviors such as store locator pages hits, information requests and hits on phone-ordering information pages.

The fractured reach of Internet media is a major reason the Internet has resisted traditional branding practices.

For example, Yahoo! is widely considered as one of the web's mass reach vehicles - with a unique user base of over 20 million at 8pm, a near 35% share of total Internet unique users for that time, according to Media Metrix audience measurement data.

However, analysts point out that this aggregated audience actually represents traffic spread across 438 separate domains (including pseudonyms), making it difficult to generate message association online using offline marketing practices.

"Although much of the talk about the 'new economy' has been debunked, the old dogs still have new tricks to learn," Grahn said. "What is learned in online branding may not ultimately set completely new rules for marketers; but it will offer lessons wise marketers will heed.

"What marketers learn about building targeting models from observed behavior rather than pre-campaign demographic or psychographic data must be factored into offline campaign planning, as well."

The Jupiter Online Advertising Forum - August 7-9 in New York City - will examine the full spectrum of digital marketing, including: email marketing; cross-channel campaigns; rich media; branding; performance based marketing and more.

Jupiter Online Advertising Forum

About Jupiter Media Metrix
JMM delivers Internet measurement, analysis, intelligence and events to provide businesses with resources for understanding and profiting from the Internet. The company is headquartered in New York City and operates worldwide, across the Americas, Asia Pacific, Europe (as Jupiter MMXI Europe), and the Middle East.

Jupiter Media Metrix

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