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Why online brand spending will create new winners in online ad networks July 14, 2010

Posted by jeremyliew in advertising, branding.
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One of Lightspeed’s consumer internet predictions for 2010 is that brand advertising dollars are going to start to flow online at scale. Two thirds of all ad spending in the US is for brand advertising, yet three quarters of online ad spending is direct response.

The recession of the last couple of years has provided a catalyst to drive more brand marketers online in an effort to seek greater efficiency in their media buys, and as they have tasted some success, they will continue to spend online as their marketing budgets recover.

Late last year the IAB put out a very interesting study about building brands online. I recommend that you read the whole thing if you are involved in the online advertising industry.

For those of you who won’t, here are some highlight charts:

Marketers believe that the internet can be a branding mechanism:

But the bulk of online advertising volume today is not considered effective for brand building:

This is because most online ad inventory has been optimized for direct response advertisers, whereas brand marketers want to see their traditional metrics (click image to see full detail):

Furthermore, brand advertisers want relationships with the media companies that they work with, not simply self service efficiency (again, click image to see full detail)

Most brand advertisers have primarily stuck with portals and big publishers who offer brand safety, reach/frequency control, reporting on the metrics that they care about and strong relationship, but often tied to higher priced media. As brand advertisers seek better efficiency from their online media budgets, they will turn increasingly to ad networks. Although there are over 300 ad networks today,  the vast majority of them have grown over the last 10-15 years by optimizing their offering for the direct response advertisers who have constituted the vast majority of online advertisers to date. I think we’ll see a new generation of ad networks emerge who are tuned to cater to the specific needs of brand advertisers, and I’m actively looking to invest in companies with this mindset.

Comments»

1. New opportunities from online brand dollars… « The Pontiflex Blog - July 14, 2010

[...] 14, 2010 Lightspeed, a global VC firm, predicted today that branding dollars will continue to move online as the [...]

2. Criteo Seeing U.S. Momentum For Retargeting; BBE's VINDICO Releases Demand-Side Video Ad Server; Consumer Protection Groups Lobby FTC - July 14, 2010

[...] Lightspeed Venture Partners' Jeremy Liew says brand dollars are moving online and certain ad networks will be the beneficiary. He writes on the LSVP blog, "I think we’ll see a new generation of ad networks emerge who are tuned to cater to the specific needs of brand advertisers, and I’m actively looking to invest in companies with this mindset." Read more. [...]

3. Skip brand - July 15, 2010

Jeremy is rarely wrong. Great article. My company is taking advantage early of these trends and a few more when you have empowered affluent (c-level decision-makers) at work (b2b) and at play (b2c).

Keep up the resarch.

Skip

4. Joseph Hirsch - July 15, 2010

He who controls the brand dollars, controls the ad networks that will succeed in 2010.

If Lightspeed is invested in a startup brand, or DR product that they funded, and allocated X value for marketing, they can invest in an ad network that funnels their money from one vehicle to the next.

jeremyliew - July 15, 2010

@ Joseph, the huge size of the brand advertising market means that any amount we might invest in a company that spend some of it on brand advertising will be a tiny drop in the bucket!

5. Oscar Yuan - July 15, 2010

While I agree and have alway thought this, the success metrics by which the effectiveness of online marketing dollars are measured are more conducive to direct response.

I would love to run a big, beautiful brand campaign online, but it’s not what makes people click on things. You drive online clicks through “$99 Sale Today Only!” You can run a brand campaign whose purpose is to stick in people’s minds, but when the metrics come back and the click throughs are low, the pressure is on the spend the money elsewhere.

When business leaders start looking at other online metrics such as reach and recall rather than click through rates, this will certainly start to take off. I hope this is sooner rather than later.

6. Business Founder - July 19, 2010

Very nice share. Thank you.
I need to bookmarked it

7. In search of a premium alternative: an action plan for online brand advertising « Boomerlake - July 26, 2010

[...] Why online brand spending will create new winners in online ad networks (lsvp.wordpress.com) [...]

8. In search of a premium alternative: an action plan for online brand advertising « Entrepreneurs Society - July 26, 2010

[...] Why online brand spending will create new winners in online ad networks (lsvp.wordpress.com) [...]

9. Ecommerce, Advertising, and the False Assurance of Numbers — giffconstable.com - August 4, 2010

[...] Jeremy Liew, Why online brand spending will create new winners in online ad networks [...]

10. Ken Rossberg - September 24, 2010

The move to branding online was inevitable, as many traditional advertising mediums are so saturated now. It’s really just a matter of coming up with efficient strategies and nailing down the ways to measure how effective one strategy is compared to another. With direct response, you know immediately how effective your campaign is.

11. Are we really on the verge of the dawn of a new golden era in display advertising? « excapite - December 13, 2010

[...] is the way they interpret the available data. For example in Jeremy Liew’s mid-year post on why online Brand spending will create new winners he identifies that “two thirds of all ad spending in the US is for brand advertising, yet [...]

12. Make it Happen in 2011 | Sharisax Is Out There - December 28, 2010

[...] video and social media: The key driver of this renewed confidence from brand advertisers is better measurement of brand metrics that can show the impact of online advertising beyond [...]

13. The Future of Advertising Will Be Integrated | User Manual Guide - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

14. The Future of Advertising Will Be Integrated | The Wall Street Geek - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

15. The Future of Advertising Will Be Integrated | TxtJive.Com - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

16. Reklam Gelecek Entegre Olacak - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

17. The Future of Advertising Will Be Integrated | Tech stuff center - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

18. The Future of Advertising Will Be Integrated | How to Business - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

19. Zooped.com - The Future of Advertising Will Be Integrated - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

20. The Future of Advertising Will Be Integrated | eMediaOne – Your daily dose of news and blogs… - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

21. The Future of Advertising will be Integrated | Both Sides of the Table - April 29, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

22. The Future of Advertising will be Integrated - Athens Report - April 30, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

23. The Future of Advertising will be Integrated - Finding Out About - April 30, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

24. The Future of Advertising will be Integrated - April 30, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

25. The Future of Advertising Will Be Integrated | 567 Technology - May 1, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

26. Mark Suster on the Future of Advertising | CEOMAG - May 1, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

27. Adrian - May 2, 2011

Brand Awarness will have an impact anyway in consumers behavis. This article, will be realative if CPM prices goes down, over premium sites.
Internet users are still young to believe this last 30 years of internet custom and moral is the standard culture we expect in the future

28. George - May 2, 2011

The future is definitely integrated, there seems to be alot of good progress in regards to integrating branding and messages in various channels. Good post

29. The Future of Advertising Will Be Integrated | JetLib News - June 21, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

30. The Future of Advertising Will Be Integrated | TechCrunch - July 19, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

31. The Future of Advertising Will Be Integrated | Tech 2 Up - August 17, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

32. The Future of Advertising Will Be Integrated « sociads - October 30, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

33. The Future of Advertising Will Be Integrated | Nghi's Blog - October 31, 2011

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]

34. The Future of Advertising Will Be IntegratedInternet Marketing & Web Design - July 12, 2012

[...] It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew. [...]


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