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Web ads don't click for big brands

One of the nation's leading sponsors of online media, Rob Wrubel lays out as much as $20-million a month for Internet ads. Over time, his firm's ad buys have supported a wide spectrum of Web content, from video clips of rock bands to coverage of the Iraq war, and an array of online names: Facebook, Google, Yahoo, CBS, MySpace and CNN.

Wrubel manages ad spending for the University of Phoenix, a for-profit college that paid more for online display advertising in the United States than any other business over the past year, according to statistics from TNS Media Intelligence.

"We are, in fact, everywhere," said Wrubel, CEO of Aptimus, the online ad outfit owned by the university's parent company. He compared the company's spots to "carpet bombing" and said that "someone once calculated we accounted for 1/64" of online advertising.

Yet the fact that the University of Phoenix, a relatively small player in the world of advertising, ranks at the top of Internet sponsors also highlights what for many online media businesses is a grim economic reality: The biggest U.S. advertisers, which have long supported other formats — television, radio, print — have not fully embraced the Web.

So while print and video outlets face enormous pressure to transfer their wares to the Internet, many in the industry wonder where the money to support online content will come from.

Money shapes content

The nation's largest advertiser, Procter & Gamble, which spends nearly $5-billion a year on advertising, devoted less than 2 percent of its measured ad spending online, according to figures from the 2007 Advertising Age list of leading national advertisers. The company spent most of its vast ad budget on television.

The University of Phoenix and its parent company, Apollo Group, by contrast, spent $278-million on advertising last year, most of it on the Web.

"While spending on Internet marketing has been growing dramatically over the past decade, the top 50 or 60 brand marketers are very much underrepresented," said Randall Rothenberg, CEO of the Interactive Advertising Bureau, a trade group. The online industry has been "growing by grabbing the low-hanging fruit."

As with television, radio and other media, advertising dollars will shape what is and what isn't available on the Internet.

There are, to be sure, billions to be garnered from online advertising — about $21-billion last year in the United States, according to the Interactive Advertising Bureau. Analysts expect that figure to double or more in the next decade.

Yet for all the growth in online advertising, there are some doubts that the advertising revenue available is enough to pay for the kind of content — articles, videos, etc. — that Internet visionaries have predicted.

For one thing, the largest chunk of money spent for online ads is in search advertising, those little text ads that run beside search results. These ads do not directly benefit companies putting information online. Instead, the money from search advertising is reaped by the search engines — Google, Yahoo and Microsoft — that run them.

Often, most of the money a big brand spends online is for search rather than display advertising, said Kevin Kells, who handles consumer-packaged-goods advertising, both search and display, for Google. Display ads are the graphic or pictorial ads that many content sites rely on for revenue.

Moving cautiously

Many online companies are looking to the big advertisers, which just haven't shown up, at least not in force.

The reasons are complex.

In part, many observers said, the advertising industry and its work force are more accustomed to creating and presenting 15-second television spots or magazine ads than they are to arranging an online campaign.

Penry Price, Google's vice president of North American advertising sales, noted that while it is relatively easy to do demographic targeting in other media, it is more difficult to get precise information about online audiences for a given Web site. Consider, for example, an advertiser trying to reach young women interested in fashion.

"We know they're online, and they may be online more than they are watching TV or reading magazines, but there's no easy way to find them," Price said. The process of adapting to online media is "a fundamental challenge for the entire advertising industry."

In part, too, big brands are reluctant to move online because they have more to lose.

"If you are responsible for a brand that has been around for 50 years, you clearly are more cautious," said Kelly Twohig, who manages digital investment for Starcom, a media agency. "You have less license to innovate."

Aptimus' Wrubel, a Web veteran who was CEO of AskJeeves.com, said he thinks that the big advertisers will soon make the transition online. The possibilities of the medium have yet to be fully explored, he said.

"We are now going to see large advertisers do what they did with television in the '50s — to get behind programming," he said, offering that the advertisers are likely to capitalize on the Internet's social and interactive aspects. "The medium offers a fundamentally different experience for consumers."

Blogs, 'webisodes,' singers: anything to get the University of Phoenix name out there

Although the University of Phoenix continues to shell out a large sum of money on selling itself — it spent more on advertising last year than it did for faculty compensation, according to its annual report — Rob Wrubel is focused on changing how its story is presented.

Like other companies marketing online, the University of Phoenix is considering and adopting new Web advertising strategies, some of which blur the line between advertising and programming.

Being everywhere on the Web, after all, is not the same as being understood or valued.

Wrubel, who manages ad spending for the University of Phoenix, wants to encourage faculty members to have blogs so that when a person searches on a given subject, the results might lead them to the University of Phoenix. He speculates that the company could produce reality-TV "webisodes" involving people going back to school — a way to find and engage the target audience.

And the company has recently initiated a partnership with the young folksinger Kate Voegele, the first artist signed to MySpace Records.

Voegele is taking University of Phoenix classes online, and a MySpace page with her music includes a Web video diary of her touring and making time for studies.

"It's better than blasting them with banner ads," Wrubel said. "It's the purest form of advertising. It's testimonial. Rather than just remember our banner ads, people can remember our story."

Washington Post

. TOP 10s

Overall advertisers

The top 10 advertisers for all media (2007 spending):

1. Procter & Gamble,

$4.9-billion

2. AT&T, $3.34-billion

3. General Motors,

$3.3-billion

4. Time Warner,

$3.09-billion

5. Verizon Communications, $2.82-billion

6. Ford, $2.58-billion

7. GlaxoSmithKline,

$2.44-billion

8. Walt Disney Co.,

$2.32-billion

9. Johnson & Johnson, $2.29-billion

10. Unilever, $2.1-billion

Web advertisers

The top 10 buyers of display advertising on the Web in March (monthly spending):

1. University of Phoenix,

$22-million

2. Bank of America,

$21.6-million

3. LendingTree.com,

$16.7-million

4. E-Trade Financial,

$16.2-million

5. Countrywide Home Loans, $16.1-million

6. Classmates Online,

$11.9-million

7. Sprint Wireless,

$10.5-million

8. Netflix, $10.2-million

9. Verizon Wireless,

$10.1-million

10. Scottrade, $9.2-million

Sources: TNS Media Intelligence, Advertising Age

Web ads don't click for big brands 06/28/08 [Last modified: Monday, November 1, 2010 1:37pm]

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