Since the first banner ad alighted on top of a web page sometime around the end of last century, online advertising has been the Rodney Dangerfield of the media world. It gets no respect.
But that might soon change, thanks to a new service from the Nielsen Company. The Online Campaign Ratings system, which rolls out later this month, promises to measure brand advertising online more like the way it measures brand advertising on television--by identifying which demographics actually see each ad.
This will allow advertisers to make apple-to-apple comparisons between the new medium, whose impact on brand advertising has remained elusive, and the old medium, in whose powers brands have complete confidence. As a result, advertisers may finally be willing to invest more online, and possibly even pay more for the privilege.
"A number of impediments have prevented brand advertisers from getting into the deep end with online," Charles Buchwalter, Nielsen’s senior vice president of Online Campaign Ratings tells Fast Company. "If those impediments weren’t there, you could make a very strong case that brand advertisers would have spent much more money online."
Television has historically tapped its panels (often referred to as "Nielsen families"), which record exactly who watched any particular episode of television that went out over the airwaves. Online, there simply hasn’t been an efficient way to create such panels.
Enter Facebook. The social network is partnering with Nielsen to provide the demographic data on who sees ads placed around the Internet--even if those ads aren’t placed on Facebook itself--sort of like a real-time, always-on Nielsen family.
Here’s how it works: Advertisers tag their ads and then place them on their targeted sites around the web. When the ads are viewed, the ads make a call to Facebook, which then searches its own user database to identify the viewer of the ad. Facebook then gathers up that person’s demographic information and sends it to Nielsen. Nielsen is then able to report back to advertisers who saw their ads in a particular campaign.
All of this happens while protecting the privacy of both the advertisers and Facebook's users. The ads don't pass identifiable information about the campaigns to Facebook, and Facebook doesn't pass personally identifiable information about the user to Nielsen.
But the system allows Online Campaign Ratings to become the digital equivalent of "gross ratings points," or GRPs, the system the advertising world has long used to measure television’s reach.
Until now, online advertising has worked fine for direct response advertising--the kind that asks you take action, usually to buy something--but not as well for brand advertising. But brand advertising seeks to influence its target consumers to think well of a company and its products. As such, it’s historically focused on measuring "reach"--how many people from its target customer group actually saw the ad.
"Online advertising hooked itself to certain metrics that did not have anything to do with the other mediums out there," Buchwalter says. "Many brand advertisers have been on the sidelines because haven’t been convinced that they can build brands online."
That’s because brand advertisers don’t want to measure clicks. They want to measure "reach"--who actually saw their ads. And while the can "pre-buy" demographics, by choosing to place their ads on sites who their target customers tend to visit, they haven't been able to measure results to determine whether those were the people who actually saw the ad.
Online Campaign Ratings will be available as a subscription service starting August 15. Nielsen plans to offer it to not just to advertisers but also to publishers, who may want to get a better handle on how well they’re delivering specific audiences.
Kate Sirkin, the global research director for Starcom MediaVest Group, worked with OCR during the beta test. "What we’re getting is more accurate data on the audiences that are seeing our digital campaigns," she tells Fast Company.
Facebook’s participation, Sirkin says, has been key to making OCR a viable proposition. "Using Facebook’s scale and Nielsen’s experience in this marketplace to understand how many people and who we’re reaching with our campaigns was a great creative solution to a nightmare problem," she says.
Facebook isn’t the whole solution for Nielsen, however. Only about half of Americans are on the social network which means that OCR can only provide accurate demographics on about 42%, on average, of a campaign’s impressions, Buchwalter says. So Nielsen will still have to bring in more publishers to play the same role as Facebook and fill in the remaining gaps.
Still, 42% is much better than zero. "It’s transforming the industry’s ability to trust this kind of data," Buchwalter says.
And that means advertisers who use OCR will likely start making online advertising a much more integral part of their brand campaigns.
"Once and for all, they’re going to have a very accurate way of knowing how to spread their dollars across all media," Buchwalter says.
Which in turn could have a huge impact on publishers--possibly finally making online publishing a much more viable proposition.
"It’s going to cause a sea change in the industry," Buchwalter says. "This heighted level of accountability is going to help the online space gain credibility."
Which is why Facebook, which does a lot of the heavy lifting for Nielsen’s new system, is happy to participate.
Brad Smallwood, Facebook’s head of measurement and insights, tells Fast Company that, as Facebook started pioneering new forms of advertising, like Sponsored Stories and Comment ads, it realized that it needed an effective way to convince brands that the ads were worth buying.
"Whatever they’re buying, they have to have confidence that it’s going to lead to value," Smallwood says. "Creating standards will create that confidence."
[Image: Flickr user larskflem]