The Branding Benefits from Pay-Per-Performance

Very interesting article in this week’s AdWeek about “advertisers… taking a broader view of search, buying terms they want consumers to associate with their brands, even though the searchers clearly aren’t hunting for their products.”

It cites an example, “Honda has bought thousands of such keywords as part of a new campaign for its CRV. While it continues to buy auto terms as well, the carmaker is acquiring keywords related to its new “Crave” theme, like “chocolate,” “banana splits” and “celebrity gossip,” all designed to bring searchers to a community Web site Honda created for users to collect and share craves.”

This campaign is indeed a salient example of traditional brand advertisers experimenting with online media buys that have traditionally been in the pay-per-performance realm. I believe it gives a nod to the implicit notion that advertisers do receive “branding benefits” from online pay-per-performance campaigns, whether it is intentional (as in this case) or not.

Many online retailers that heavily use affiliate programs have known this fact for years. Surely Amazon.com receives more than just the direct gain from the traffic by having is products and links featured throughout the web on its affiliate sites. I’ve been in more than one conversation recently where someone has argued to me that affiliates (not just Amazon’s, but generally-speaking) are consistently and systematically undercompensating affiliates because they only measure direct sales generated by the traffic for the retailers, not the residual traffic that it generates in stores or the increased branding effect inducing purchases long after the cookie is expired.

In reality, though, branding benefits from pay-per-performance largely depend on the brand doing the advertising itself – I would maintain that this traffic has a greater impact if it is reinforcing and strengthening an existing well known brand (like Honda in the above example) than it does necessarily creating brand awareness for a lesser-known one. I suspect it’s the products’ brands, not the merchandisers’ brands, which will continue to experiment more in this realm, as they are the ones who are losing their pull from disruption in their traditional brand-building outlets.

The difficulty, of course, is the perennial ability to accurately measure the effectiveness of brand advertising. The AdWeek article doesn’t avoid the issue, “While brand-building search campaigns are not held to strict sales metrics, the ability to track results helps quantify their effect.” The article claims 50K visited the site in a month, while a comment on Search Engine Watch from the agency responsible for the campaign claims that the campaign has generated “nearly ½ of a million visits to the crave.honda.com.” As of this morning, however, there are only 348 user-submitted “craves” – the action the site is enticing consumers to take to further engage with the brand. Is that success? Is less than one-hundredth of one percent of people interacting in the intended way good? As pay-per-performance and branding campaigns begin to converge, these are the questions that advertisers wrestle with. Regardless, these advertisers who are on the fringe experimenting with new outlets will reap the benefits from them, whether they are easily quantified or not.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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