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Report on E-business

Ad-tracking tools give more bang for buck

Advertisers are more closely scrutinizing
effectiveness of on-line marketing efforts
to make sure they're paying for performance

Friday, May 25, 2001
Special to The Globe and Mail

Grant Rasmussen wants more bang for his seven-figure, on-line advertising buck.

And the Toronto-based chief strategy officer for RBC Investments is getting it by using the latest Internet ad-tracking tools to gauge whether and which of the ads that he places on dozens of Canadian Web sites are winning new customers for his firm's on-line and full-service brokerage services.

With Canadian on-line ad spending forecast to rise to $231-million this year from $132-million in 2000, according to Internet research company Jupiter Media Metrix, Mr. Rasmussen is among a growing number of advertisers who are turning to sophisticated software to more closely scrutinize the effectiveness of their on-line marketing efforts -- and make sure they're paying for performance.

Using the data, they can determine which ads and which Web sites are winners, and then shift their ad strategies and spending accordingly. When certain sites don't snag enough potential clients, advertisers also use the numbers to negotiate lower ad-space prices.

"Knowing where our on-line advertising is working and where it is not is critical," Mr. Rasmussen says. "If you don't know where it is effective, you are throwing good money after bad."

The tools that track the performance of Web ads have become hot because they allow companies to gauge more quickly and accurately how effectively -- even whether -- their Net advertising dollars are working for them.

"There is a healthy dose of cynicism about the effectiveness of Internet advertising, and that has many companies closely scrutinizing their on-line advertising," says Brian Fitzpatrick, director of on-line media for MindShare Canada, a Toronto media-planning and buying company. "There is a sense that Internet advertising is not working. Advertisers are saying, 'Prove to me why I should use it.' "

When Internet marketing companies and advertisers began charting the performance of Web-site ads in the mid-1990s, tracking systems were limited to reporting the number of times visitors clicked on banner ads and buttons, and results were usually reported monthly, says Chris Larsen, vice-president of media sales and service for Internet marketing firm Engage Canada Inc. in Toronto.

These days, more advanced tools and standards developed by the Internet advertising industry mean that information can be reported in real time. In addition, they're compiling more precise data, such as the number of times visitors click on an ad by day, the time of day they visit, the Internet service providers and brand of computers they use, and even whether surfers live in rural or urban areas, says Mr. Larsen, whose company places and tracks Internet ads on more than 4,000 North American Web sites, including 500 in Canada. Customers using Engage's ValueTrak or AdKnowledge software include the Canadian operations of Kodak Inc., American Express Co. and International Business Machines Corp.

"Advertisers want to know what kind of action they are getting, not only the number of click-throughs but where people come from and where they go once they are on a site," says Jay Aber, president of 24/7 Media Canada Inc., a Toronto-based, Internet marketing firm that places and tracks the performance of ads on more than 5,000 worldwide Web sites, including about 100 in Canada. "Unlike magazines or television advertisements, Web ads are very accountable."

Using the information they get, Internet advertisers can pull ads that are underperforming, fine-tune the text, alter the colour and shape of banner ads and Web-site buttons, and even change sale prices and discounts on the products and services they are advertising, says Mr. Aber, whose company's 24/7 Connect tracking software is used by RBC, the Toronto-based investment arm of Royal Bank of Canada.

Decisions can be made in a matter of hours, rather than over days or weeks, as is often the case with print, radio and television ads, Mr. Larsen adds.

"Tracking lets us say which ads, which Web sites, which users and what the Internet is doing best to get new customers for an advertiser. Advertisers can see trends instantly and quickly make strategic decisions," he says.

Mr. Rasmussen has been taking the data seriously. After looking at the results of one seven-figure campaign designed to attract new clients last summer, he boosted RBC's space on several money and investment sites and pulled ads from a handful of lifestyle sites, including three devoted to golf, that were reporting a low response rate.

"I may come back to a poor site if the content is improved, but if not, I will go somewhere else where I can spend my money more wisely," he says.

Ad-tracking technology also helps on-line advertisers test various formats and incentives.

In another campaign, RBC ran two ads on more than 35 sites. One offered applicants the chance to win a new car; the other had no incentive. Within a day or two, tracking quickly showed that almost three times as many people responded to the ad offering the car. Mr. Rasmussen quickly cancelled the other ad.

Chapters Online Inc. has been using its own tracking software for more than two years to determine which Web sites visitors come from, what they buy and, with some analysis, the interests of visitors who link to the on-line book, music and video retailer's site from other sites, marketing director Al MacNevin says.

It's information that he says helps the Toronto-based company make changes to its ad campaigns "on the fly." The data have been used to remove rarely used buttons from certain Web sites, shut down ads on other sites and adjust the appearance of ads. Mr. MacNevin studies ad data daily or weekly, depending on the campaign.

Both Mr. MacNevin and Mr. Rasmussen say the information they collect provides ammunition to negotiate lower ad-space rates. In recent months, Mr. Rasmussen used poor response rates on a lifestyle Web site and a portal to cut his ad costs by half.

Internet marketers concede, however, that landing lower ad rates is not a huge challenge these days because reduced ad spending by many dot-com companies has forced many Web sites to reduce ad rates by up to 50 per cent, Mr. Aber says.

Nevertheless, Mr. Rasmussen says tracking ad performance saves RBC hundreds of thousands of dollars in advertising costs annually. "Based on information gathered by tracking, we are now getting three times the value for our advertising spending," he says, estimating that the company's Internet ad spending this year will be up to six times what it expends on other media ads.

Last year, ad-tracking data helped Chapters Online reduce its on-line ad spending by up to 40 per cent over the previous year, Mr. MacNevin says. "When you use the data the right way, you don't advertise on underperforming sites and you are not wasting your money." He notes that about 25 per cent of his "less than seven-figure" ad budget is spent on-line, with the rest going to traditional media, such as radio, television and newspaper ads.

Although they find it useful to track who is clicking on Web-site ads, when and from where, Mr. MacNevin and Mr. Aber both stress that on-line advertisers should not lose sight of the Internet's value as a tool that, like radio, television and print, can significantly raise brand awareness.

"Too many on-line retailers judge their on-line advertising success solely on the click-through on their banner ads. But the real key is long-term awareness building," says Mr. MacNevin, who credits on-line ads for making Chapters Online the No. 1 e-tail brand name in Canada in 2000, as rated by Ernst & Young.

"The strategy should not be only to attract customers fast but also to keep showing the brand name. That way, when they do buy . . . they will think of you first."

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