September 27th, 2006
The Fuzzy Middle Between Branding and Direct Response
As advertising dollars continue their inexorable march from offline to online, the battle for control of those dollars will be fought over the fuzzy middle ground between branding and direct response. I can’t count how many times at the OMMA conference I heard someone say it “depends on the advertiser’s objectives.” The problem with allocating online ad dollars to branding vs. direct response is that many advertisers, especially those with the big bucks, want to have it both ways.
eMarketer predicts that this year the growth in online branding ads will equal the growth in online direct response ads, and that branding ad growth will exceed that of DR across the next few years.
Thanks to the explosive growth of direct response over the past few years, driven by search, absolute spending on direct response ads has already eclipsed spending on branding ads.
I think the BIG question here is how companies vying for these dollars and the companies spending them will parse the definitions of branding and direct response:
Note: branding includes display ads/banners, rich media/video, sponsorships, slotting fees; direct response includes paid search, classifieds, e-mail advertising, referrals
For the purpose of forecasting, which requires clear bucketing, these definitions are perfectly reasonable. But the reality is that “brand” advertisers using banners and rich media are still obsessively tracking clickthrough rates, while many “direct response” advertisers want to find ways to build their brands (which was evident in the OMMA session “Beyond Response: How Search Builds Brands“). Many ad categories (e.g. auto, financial services, consumer electronics) consistently wear both brandng and DR hats.
On the media side, you have branded content sites like The New York Times, Yahoo, and AOL receiving the lion’s share of the branding ad dollars, while search engines receive the lion’s share of direct response ad dollars. But each camp wants to control more of the pie, with Google’s ambitions looming largest.
Then you have social media, i.e. blogs, MySpace, YouTube, etc., whose control over online attention is growing at a torrid pace, wondering what their share will be.
Then you have the X factor of online video, with TV advertisers turning to online, and a growing frenzy over the video ad space. Beyond 800 numbers, most TV ads were never intended to be direct response. Will that change as video ad dollars move online? Will a new science of DR video ads arise following the path of DR text ads?
Right now the fuzzy middle between pure branding and pure direct response is still up for grabs (thanks to Marissa Gluck for getting me thinking about the middle).
If you feel the urge to quibble with my graphic, then you understand the problem with the fuzzy middle — even the ends of the funnel are not that easy to define — assuming you even believe in the funnel.
Traditional approaches to advertising, rooted in TV and print, still hold sway over branding. And search clear dominates direct response. Whoever can figure out a new value proposition for the fuzzy middle will be able to take a big slice of the pie — and possibly even growth the pie, as search did.
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Interesting, but problematic… Maybe it would make more sense if you substitute the notion of ‘branding’. In this context ‘brand advertising’ would perhaps be more appropriate. Branding is about differentiation, identity, and ultimately about behavior and it saturates all levels of commercial communication, including direct response (eBay, iTunes, Amazon).
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KJTK, your quibbling over terms is a perfect example of the fuzziness I’m talking about. All commercial communication, including text ads, has a branding element to it. So why the distinction between branding and direct response? It comes down to the issue of measurement — should online “brand advertising” be measured by direct responses, i.e. clicks, conversions?
I think you hit the nail on the head with your response to KJTK: Why the distinction between the two?
As you said:
Brand advertising worked in world with few brands, but now?What if you looked at it from the perspective that “brand advertising” only had a place at the table because there was no effective alternative?
Now that there is, why would you NOT aim to have someone respond directly to your communication if you had an opportunity?
I think your “fuzzy middle” is the convergence of the two into one.
Lies, damn lies, and statistics. There’s not as much money going to pure branding on the web today as the continuing hype would have us believe. Let’s take your example of The New York Times. Ad Relevance shows the following as the top 10 advertisers for the most recent month:
1. New York Times (House ads)
2. E*Trade
3. Scottrade
4. Fidelity
5. Equifax
6. Cablevision
7. Microsoft
8. Samsung
9. Dell
10. Countrywide Financial
I assume that Microsoft and Samsung are the only ones that might have a pure branding objective. Microsoft, of course, is one of the world’s largest brands as well as one of the web’s largest direct response advertisers, so this is a generous assumption. This pattern holds for every big branded site.
The top 25 web advertisers month after month after month are led by Vonage, Lower My Bills, Netflix, and other big DR advertisers that, by virtue of their massive exposure, have also established significant brand awareness.
Yes, brand advertising in its classic sense is an important and growing sector of web advertising. But “broad reach” ads on “branded content” are highly likely to have DR as primary objective. Let’s just call it all what it ultimately is: branded direct response.
Guibbling? Well, my first branded direct response took place sometimes in the early sixties. I was collecting Coke caps in order to get a camera, Happy Times. In those days, no one was talking about branding, direct response or fuzzy middle. We responded to promotions and it used work out pretty well…
Mine was Bazooka comics to get the binoculars that could see through clothes
[…] Publishing 2.0 Scott Karp on the Convergence of Media and Technology « The Fuzzy Middle Between Branding and Direct Response | Home | […]
Between Google, with its algorithms, oceans of data, and direct response measurements (click!), and TV brand advertising, with its outdated input metrics that are useless for measuring real return on investment in dollars and cents, is the “fuzzy middle†where the battle for the future of advertising will be fought. Whoever figures out how to bridge the chasm between brands and dollars will win the prize.
The Fuzzy Middle Between Branding and Direct Response As advertising dollars continue their inexorable march from offline to online, the battle for control of those dollars will be fought over the fuzzy. (more) Advertising Agency Cleveland Ohio - Top Online Advertising Agency nt Ohio Inventor ? Tocquigny Strengthens Its Leadership Position Metrics-driven marketing agency woos ? of Personalities†will discuss New Jersey-related First Ladies Frances
Scott Karp
I totally agree with this statement…I work for a top ten global interactive brand, with our top advertisers (some of which are on the list in the comments above). I would argue that 90% of the dollars spent with us by top tier advertisers (primarily in the tech industry) on banners, rich media, sponsorships, etc are measured as direct response in the same way that our price comparision engine effectiveness is measured. It is all about “branded direct response”. And that concept and the true measurement of its effectiveness is as fuzzy as a middle can get.
[…] I’ve written before that the future of online advertising lies in the fuzzy middle between direct response and branding — at the end of the day, the challenge is finding currencies for advertising that map to advertiser objectives. […]
rich media/video, site sponsorships whereas direct response may be more about search marketing, classifieds, e-mail advertising, referrals and so on. There’s certainly a great overlap but trying to do both is often a greater hindrance than help. Link
The Fuzzy Middle Between Branding and Direct Response » Publishing 2.0…
The Fuzzy Middle Between Branding and Direct Response These stats address the move in the 2007 ad spending budgets to a more integrated and balanced view of “branding” versus “search/email” based direct response. The branding budget, wh…
[…] Ultimately, publishers–individually and collectively through industry consortiums like the Interactive Advertising Bureau and the Online Publishers Association–must invest in new ways to demonstrate advertising value. Scott Karp at Publishing 2.0 is probably right in that the future of online advertising lies in the fuzzy middle between direct response and branding, but that the page view will reign until innovation dethrones it. […]
[…] Ultimately, publishers–individually and collectively through industry consortiums like the Interactive Advertising Bureau and the Online Publishers Association–must invest in new ways to demonstrate advertising value. Scott Karp at Publishing 2.0 is probably right in that the future of online advertising lies in the fuzzy middle between direct response and branding, but that the page view will reign until innovation dethrones it. […]
[…] hold hands, and juxtapose commercial messaging with content. Scott Karp at Publishing 2.0 points out a likely evolution of this conundrum: a fuzzy middle ground between direct response and brand […]
[…] with his analysis of the changes that are happening all over the world of media. His post, The Fuzzy Middle Between Branding and Direct Response hits home. I’ve been "that guy" at the client, pissing and moaning about the agency who […]
buying agencies that control brand advertising dollars — and why Yahoo and Microsoft followed suit. Brand advertising will be a big driver of growth for online advertising, and the challenge for online media companies is to optimize ad sales in the fuzzy middle between online-native direct response and offline-native brand advertising.
buying agencies that control brand advertising dollars — and why Yahoo and Microsoft followed suit. Brand advertising will be a big driver of growth for online advertising, and the challenge for online media companies is to optimize ad sales in the fuzzy middle between online-native direct response and offline-native brand advertising.