Which Half of Advertising Works?

After a two-decade-long affair with television as an ad medium that is still ongoing, I jumped nearly by accident into the world of online ad networks. A year ago I found two young firms in Latin America and Europe and convinced Fox to buy them, figuring these firms could benefit from the strong relationships we had with advertisers and agencies around the world.

During our due diligence in the acquisition process, a baby-faced account executive in Buenos Aires in charge of optimizing campaigns told me, “If our ads don't work, we don't get paid. And for as long as they work, our budget is unlimited.” That was my welcome to the world of “Performance Advertising,” which coming from the television side sounded like direct response except that ads need to work in a lot less than 60 seconds.

“We can charge on cost-per-thousand, cost-per-click, cost-per-action,” he continued, which reminded me of “per inquiry” deals and how the first piece of advice I ever got in this business was not to accept them.

Next, he showed me a report for an actual advertiser for whom more than 20 different creative executions are assigned to 100-plus Websites, then rotated, eliminated or redesigned, sometimes by the hour. The result? Click-through rates going up from an initial 0.01% to 0.4%, and even 3% for a certain subsite ad. I wondered how that would translate into actual consumption.

To find the answer, I asked our marketing department to use the ad network as the main medium to promote a new show. The marketing and performance teams at first didn't see eye-to-eye. “We're not looking for clicks for the sake of it. We need tune-in, and we need to turn the show into a brand,” said marketing. The performance team immediately heard, “We need a branding campaign” and was ready to send the campaign across to the branding team, whose role is more to seek prominent places than to optimize. I stopped them, as the goals should be non-exclusive, and the term “brandformance” was coined.

The show premiered to huge ratings and everybody was thrilled. But since we saturated on-air with promos, we needed to find out how big a difference the online campaign made.

Therefore, the marketing team set up a “geographic-split” test where two shows to be launched next would be given only on-air campaigns or only online, or both, depending on the market.

The results confirmed and refined the findings of the first test, and highlighted again what a huge range there is in consumer response to ads. When Philadelphia department store pioneer John Wanamaker famously said, “Half of the money I spend on advertising is wasted; the trouble is, I don't know which half,” he may not have appreciated that even within that “unwasted” half, the strongest creative executions have 10 times the impact of the weakest, or more if today's click-through rates are any indication.

Most importantly, our experiment created a new bond between marketing, TV sales and online sales. “Buyer and seller,” even if part of the same company, were able to see the link between effort and result down to the line-by-line level. The buy side was happy to find an alternative, scalable and cost-efficient tune-in medium. The brandformance sales team was happy to be measured not only by the number of clicks, but also by post-exposure recall and other variables. This gave them the incentive to become more creative when it came to pairing different executions with different Websites.

And the TV sales team, brought in to sell the whole package to our traditional advertisers, saw first-hand how accountability is often rewarded with higher budgets. It was a refreshing reminder that just because it's not always clear “which half of my advertising works,” it doesn't mean we should stop trying to find out.