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BAIN Digital Advertising

BAIN Digital Advertising

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Published by Daniel Baur
The IAB and Bain & Company release In search of a premium alternative: an action plan for online brand advertising,the final result of the Building Brands Online research and analysis.
The IAB and Bain & Company release In search of a premium alternative: an action plan for online brand advertising,the final result of the Building Brands Online research and analysis.

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Published by: Daniel Baur on May 17, 2010
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06/01/2011

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In search of a premiumalternative: an action planfor online brand advertising
By John Frelinghuysen and Aditya Joshi
What media companies andbrand marketers can do tounleash the power of the Webto build brands online
 
Copyright © 2010 Bain & Company, Inc. All rights reserved.Content: Manjari Raman, Elaine CummingsLayout: Global Design
John Frelinghuysen is a partner with Bain & Company and a leader in the firm’sGlobal Media practice. Aditya Joshi is a partner with Bain and a leader in thefirm’s Customer Strategy and Marketing practice.The authors would like to thank Jason Wiethe and Chris Sims, managers withBain & Company, for their contributions to this Bain Brief.
 About this study
The authors would like to acknowledge the support and collaboration of the Interactive Advertising Bureau(www.iab.net ) and its members in the development of this Bain Brief. The IAB is comprised of more than 460leading media and technology companies who are responsible for selling 86 percent of online advertising inthe United States.
 
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In search of a premium alternative: an action plan for online brand advertising
 What media companiesand brand marketerscan do to unleash thepower of the Web tobuild brands online
As online advertising approaches maturity, itfaces a major crossroads. The industry cancontinue down the path of commoditizationdriven by direct response, with its promise of high volumes but little room for differentiation.Or it can reinvent itself around brand advertiserneeds and deliver more premium offerings.Making the right choice will not just ensuresustainable growth—it will redefine the indus-try’sfuture winners.On the surface, online advertising appears tobe in good shape. It has weathered the down-turn better than other media: Online adver-tising revenues fell by just 3 percent in 2009,while print and television advertising sawdouble-digit declines.
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Moreover, future growthprospects appear robust: Bain & Company fore-casts that online advertising revenues will growat an average annual rate of 12 percent between2010 and 2014. Spending on online advertisingwill overtake print in 2010. Dig a little deeper,however, and some worrying trends emerge
(see Figure 1)
. Consider:Much of the projected growth will comefrom
direct-response
advertising—in particu-lar, search. This suits advertisers seeking animmediate, measurable return on invest-ment (ROI), usually in the form of websitetraffic and sales transactions. However,response advertising is not geared to build-ing long-term brand affinity for marketersand does not fully value the content and“premium environment” of specific siteson which ads are placed. For example, twosites offering comparable response rates
Percent of total advertising spend
Br
a
nd m
a
rketersResponse m
a
rketers
100%20082011POtherOnlineTV,magazines,newspapersOtherOnlineTV,magazines,newspapers+5%3%+8%6%20082011P806040200
Source: Bain/IAB 2009 Marketer survey; N=700
Figure 1: Brand marketers still rely on traditional media, while increasingly, the leadingmedium for res
p
onse marketers is online
1AB Internet Advertising Revenue Report: 2009 Full-year Results. Pricewaterhouse Coopers (PWC), April 7, 2010.

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