The VP, Associate Director of Research & New Media provides his thoughts on why traditional advertisers are not yet fully embracing the Web as an advertising vehicle.

Jerry Back started planning online media back in 1994, conducting buys on, Prodigy and Hotwired, and, later in 1995, Time Inc.’s Pathfinder and the Utne Lens, among others. He was active in both online and traditional media planning efforts for Saturn in 1994 though 1998. “Basically, I cut my teeth on developing early strategies of how to best utilize the Net for clients,” says the VP, Associate Director of Research & New Media for Publicis & Hal Riney, an agency focused on the power of brands and using emotion effectively in its creative executions. So Back has seen the evolution of online advertising, from both online and traditional vantage points, and has specific ideas on what it will take to move more traditional buyers online.

Meet Jerry at the iMedia Summit, May 4-7 in Scottsdale, Arizona.

iMedia Connection: You don’t believe the Internet has yet panned out as a viable advertising medium for traditional marketers. Why?

Back: All other media have two types of ad revenue streams because these media can fulfill both Direct Response and Brand-positioning Objectives. All other media can do both: TV runs infomercials and branding campaigns; radio can provide call-to-action 800 numbers or humorous dialogue reinforcing the brand, and so on. But the Internet, up to this point, has been utilized primarily for Direct Response because that has been its intrinsic strength. All mediums have at least one intrinsic strength: For TV its sound and sight, for Radio it’s theatre of the mind, etc. For Online, the advertising units that have been available are best suited to delivering the Direct Response call to action.

So, as a medium, online can’t thrive until it fully develops an additional, brand-positioning revenue stream.

iMedia Connection: Why don’t you believe branding is taking place?

Back: What has hindered the development of that has been an imbalance between content produced, how consumers pay for that content, and the ad units available to advertisers to successfully message against that consumer.

Look at the history. From 1995 to 2000, before the bubble burst, consumers were getting the better end of the deal. There was a lot of content for free, and advertising was primarily relegated to the background and was unobtrusive, for a reason. The Websites, for the most part, were public entities, highly capitalized and their stock valuations were often based on total unique audience. So their goal was to provide a frictionless environment. They didn’t want roadblocks that would make consumers go somewhere else.

And that worked for online publishers for a long time because they were getting plenty of ad dollars through the Direct-Response stream. With the bubble bursting and a lot of the companies that were advertising going out of business or pulling back ad dollars and not delivering the same amount of dollars to the publishers, however, online publishers knew they had to bring dollars over from other media. But they didn’t have a group of ad units that traditional advertisers were willing to accept in exchange. They also now had conditioned consumers who expected free content and little advertising.

But with the advent of the stock market crashing and four trillion dollars leaving NASDAQ, the pendulum has now swung the other way. Consumers today are barraged by pop ups, and many are wondering “what’s going on, why am I getting hit with all these ads? It’s not the way it was previously?”

So, online publishers now have a dilemma. They have a conditioned audience that does not take kindly to advertising that is even mildly intrusive while at the same time they need to generate revenue. They need a good revenue source, which is dollars from traditional media. But to get that, they have to offer ad units comparable to broadcast and print in both effectiveness and efficiency. You can’t charge four-times more, nor can you sell cheap and give small ad units that can’t communicate.

iMedia Connection: What you describe is the situation several years ago. Don’t you think the industry has overcome much of this?

Back: I have been encouraged lately by some examples where I see the online ad unit actually having brand-positioning attributes equivalent to other media. Some publishers are starting to get it, whereas two years ago, they weren’t interested in giving brand-positioning advertisers an ad unit that would be comparable to broadcast and print media. Now they are, but only at a select few sites. I’m hoping this is a trend and that by year’s end, we will see more opportunities to buy ad units that do have brand-positioning attributes.

iMedia Connection: Give me an example of what you think is comparable.

Back: Specifically, the Ultramercial technology currently being utilized by Mercedes Benz and American Express on Salon.com. Mercedes’ execution is akin to print advertising and American Express’ execution is more akin to broadcast advertising. If a consumer did nothing else but go through those four pages of the Mercedes’ online ad, the consumer will successfully be branded with regard to Mercedes’ objectives. There is no need for a Direct Response, no need for a call to action. Mercedes has successfully positioned its brand against its target audience in the same way as if it had taken out a four-page gatefold ad in a magazine.

So, the Ultramercial is the first ad unit I feel successfully allows for the same attributes of a print campaign. The consumer is in on the deal. The consumer is asked, “Do you want to pay a subscription or view this ad?” That’s completely different than being hit by the same pop-up ad, three times in a row. It empowers the consumer. That’s what we need to have happen -- bring the consumer in on the advertising/editorial equation that the consumer already accepts in other media. Consumers have always historically accepted advertising as a way to subsidize consumption needs. It’s just a matter if finding those ad units that are brand oriented. If publishers continue to develop ad units that fully position the brand, everybody in the online industry will thrive as dollars shift from traditional media. But I always tell publishers that we’re not going to be recommending major shifts in broadcast and media dollars if the Web doesn’t accommodate the creative needs of advertisers.

iMedia Connection: What is the response of the publishers when you tell them this?

Back: That they don’t want to drive away that conditioned consumer I mentioned earlier.

iMedia Connection: What do you think it will take to make what you’re talking about happen?

Back: Right now, most online publishers have short-term sales goals, and most online agencies are skilled at delivering on Direct-Response objectives, so neither party is sufficiently positioned to develop a successful solution that will unlock traditional dollars and bring them over to online media. What online publisher wants to go to his board of directors and say, “We need to radically change ad unit offerings that will initially create a lot of dissension among our audience, and might not start to pay off until 12 months or beyond?”

So I think industry groups, like the IAB and the OPA, need to grasp the vision of bringing ad units, that have brand-positioning characteristics comparable to broadcast and print media ad units, to the online media landscape to effectively create that second ad revenue stream. This change-through-leadership method has been done before on a smaller scale when CNET, the technology infomediary category leader, brought about significant change with the IMU units back in late 2000. Because CNET was such a must-buy for technology companies, it met little resistance when requesting advertisers add new ad sizes to the production. The secondary result was that many other sites adopted the IMU sizes, as well, and by February, 2001, the IAB issued IMU standards for the entire industry.

Now, bringing the ad units that are going to be necessary to bring traditional dollars over to online on a large scale is going to take vision and leadership from the associations and large online publishers. Without leadership at the top, and a strong understanding of what makes traditional advertisers use traditional ad units, the online industry will continue to move slowly in this area, and in some cases, websites will stay stagnant, and, in other cases, they will, unfortunately, simply die.

iMedia Connection: How do you address the fact that many major advertisers have been conducting branding studies on their online advertising for a while now and are showing the medium to be effective for this purpose?

Back: For the last two years, the research that has been done on the brand-positioning ability of online advertising hasn’t been compelling to many traditional advertisers. Most online research revolves around same session, aided-recall research, whereas other media often gets measured on a day-after, aided-recall basis. Specifically, researching the effectiveness of an online ad unit by giving a consumer a questionnaire immediately after viewing an ad raises questions. Take a look at the research that does purport that online advertising does have brand-positioning capabilities, look behind it and through it and see if you’re satisfied. So far, I haven’t been.

In addition, until the brand managers who manage these overall media budgets are impacted on an emotional level as a consumer, you will not see wholesale migration of traditional dollars going online. That’s another issue. When I saw the Ultramercial, I was impacted as a consumer. So we need to have more online ad units that fall into that vein, rather than just saying online advertising as it currently exists is good for Direct Response and Branding. And giving us studies funded by the publishers and touted by the industry trade groups won’t unlock those dollars. Until these brand managers are impacted by good, online advertising, we’re not going to see wholesale migration of traditional dollars to online media.

Traditional advertisers that know how to position a brand will know a strong branding opportunity when they see it. They don’t need a press release from the IAB that ropes together four different studies done by Dynamic Logic that says the current online landscape can brand just fine. If you investigate further and read the actual studies and appendices to see how they’re carried out, the claims become less compelling.

The future of online advertisers shouldn’t have to rest on studies saying that online advertising works. The power of online advertising should be immediately apparent at a consumer level to these brand-marketing managers. Until it is, they won’t transfer their dollars. They would like to brand against the targeted audiences available on the Internet, but they know they can still successfully brand with traditional media. Brand-positioning advertisers want but don’t require the Internet in the mix at this moment if it can’t deliver a comparable option to broadcast and print media ad units.

iMedia Connection: This may be true at the moment, but as media continues to fragment audiences, can they continue to ignore the reach of the Internet?

Back: Just for the near future, yes. But online will eventually have to make comparable brand-positioning ad units not only available but also ubiquitous because the person on the other side of the computer screen ultimately represents just as much a branding opportunity as the person sitting on the couch watching TV.