No wonder there exists a stigma on the online advertising industry. And why wouldn't there be? With suspect tactics and shady subject matter, bad apples are ruining the Internet as an advertising medium.
Epic Advertising intends to change that.
To complement its performance-based advertising work, the New York-based direct online advertising company designed an entire department around fighting those bad apples --an in-house compliance team that deliberately scans and follows each of its campaigns for unethical practices.
Epic CEO Don Mathis spoke with SmartPlanet about what's smart -- and what's not -- in the Wild West environment of online advertising.
SmartPlanet: What does Epic primarily do?
Don Mathis: Epic is a global online performance marketing company. We believe that online advertising represents the future of advertising -- it's a combination of direct response and brand awareness -- where Madison Avenue meets the direct response community.
The data really provides an opportunity to provide actual measurable results. The difference between performance and non-performance in the online sector is that we're held accountable to a strict measure. It's similar to a magazine ad campaign.
SP: What are the pros and cons to a performance-based approach?
DM: The pro to performance-based marketing is that it's becoming much more of a science and less than an art. People who are rising to positions of authority now tend to have a measured, statistical approach rather than a finger-in-the-air approach. It really turns the age-old marketing paradigm of "50 percent of my advertising is useless, my problem is that I don't know which 50 percent" -- John Wanamaker said that -- it turns that upside down.
The con is the big challenge for people who believe strongly that building a brand is building an emotional connection to a product. The biggest criticism is that because it's so compelling and easy to count, the science-oriented approach might miss less quantifiable aspects.
We have a patent pending on a metric which measures a lift in brand awareness, online and offline. Television is still the most powerful medium for connecting to a brand, but it's hard to measure.
SP: How has the economic downturn changed ad strategy across the different media?
DM: There are two simultaneous shifts -- one is the shift from offline to online, which is offsetting the overall declines in total ad dollars spent. In that sense , I'm happy I'm here -- and not in, say, radio.
The second shift is fewer dollars spent overall -- of those dollars in the online ad environment, fewer are spent on brand awareness and more are spent on performance-based [campaigns]. The reason is because [a performance-based approach] provides the best measure of the effectiveness of that spend, and in a world of very constrained dollars, you want to make every one count.
SP: You hear a lot about the shift of ad dollars from the print world to the digital. What's the outlook?
DM: The total amount of global ads spent online is a fraction of what's spent in all the offline channels combined. There's a disparity there, and we have this interesting situation because more people spend time online than anywhere else, and yet more dollars are being spent in old channels. That's a positive, because that shift that's taking place is dictated by history -- the way things have been historically.
Companies are trying to be smart about it and approaching it very carefully. Strategies are weighted with tradition. It's a generational change, and we're still in the process of coming terms with a new medium. As they get comfortable with it, the dollars will more roughly mirror consumers' behavior.
SP: How is Epic combating the stigma on the online ad industry?
DM: We're still very much in the first inning in terms of comfort with the online medium. There has got to be control of the brand, where the ad will be seen adjacent to the right content. There's an increasing level of comfort with transactions online, but there are threats out there to that that will take advantage of consumers. There's got to be more done about that through the entire ecosystem.
The very openness that characterizes the Internet as a powerful medium also renders it defenseless against people with ill intent.
It's about means of distribution -- adware, spyware. fraudulent and terrible ad copy. It hurts the advertiser and it hurts consumers being spammed.
If you had, say, a performance-oriented campaign for Verizon Wireless to sign up for FiOS [fiber optic broadband Internet access], it would be illicit if the publisher used an iframe [HTML element] to cloak the terms of that ad and dupe consumers into thinking it's free or a lower price than it really is. From our perspective, we put an enormous investment in [fighting] it.
SP: What are some 'worst practices' in online ads?
DM: It's more about tactics that we wouldn't adopt: pop-unders and -overs, for example. E-mail marketing is difficult to police. We don't do this, and we're probably limiting ourselves. Co-registration, incentive marketing. We think all of that is in the category of sustainable marketing practices, and we probably forgo some revenue by not doing it.
Most of it can be done legally and in a "white hat" way, but you're out of the realm of right and wrong and into the realm of potentially annoying to the consumer. We're going to take the long road. Some of this stuff can be done legally, but I don't think it can deliver a good customer to the advertiser.
People are savvy. You need to cater to that savvyness. If you engage in switch-and-bait routines or any of that, people tune you out.
The flip side to it is playing to the strength of someone being savvy. You want to say, 'Here's what's great about this product and here's what you're going to pay for it.' A lot of marketers have the sense that you should hold back on something like a price point until the actual sale. We have a different philosophy: be upfront, pursue integrated campaigns -- such as search AND display -- and grab the right customer at the right moment.
A lot of marketing techniques out there are lazy. They're relying on tricks of the trade -- making that match between a person and an advertiser is really what we can do online better than anywhere else. It's much more difficult to do it elsewhere.
SP: What strategies work, then?
DM: Site-wide branding can be effective. There's also the question of whether it's done tastefully or annoyingly. The banner, the skyscraper, the footer, with a consistent theme -- that's effective. But if the skyscraper blows up while I'm reading an article, I find that intrusive and annoying.
This co-branding theme is sort of interesting. If you're looking at people who are really focused on old-world branded advertising being done in an online space, that's where the value of a co-brand might mean something. Take one of our clients, a large pharmaceutical company -- our message to them is that they should find a person who's most interested in a particular drug, say for a specific allergy. You ought to target that person on his Facebook page or Yahoo! Mail or a blog he goes to, because that will be cheaper inventory than a premium site.
That person will always be themselves, whether on a blog or a premium site.
WebMD was rumored to be the most expensive ad space on the web last year. So why does our client insist on advertising there? Because they want to be associated with the WebMD brand, and that's indicative of that kind of tension.
If you believe in free content that's ad supported, which we do, it depends on the consumer having a good experience with it.
SP: Tell me more about Epic's in-house compliance team.
DM: It's one part human forensic capability, and one part technology, making sure that distribution to copy is protected.
We put so much into it, in fact, that we realized we could add value to third parties and level the playing field to the entire ecosystem. We've started doing that with the spinoff Online Intelligence, which is wholly owned by us but separately incorporated -- and our first agent is a regulatory one: a state's district attorney office.
The whole ecosystem has two halves: white hat and black hat, good empire and evil empire. There is a point in which we all share something in common, which means it matters to us what the black hats do. That commonness is the actual publisher itself. You can have a scammy advertiser or ad network -- you normally wouldn't care, but they're buying inventory on sites that you'd also like to acquire, but you're blocked out of it because the guys breaking the rules are making a lot of profit.
When the playing field remains that un-level, it really demand a cleanup. Everyone in this industry, this ecosystem, profits from that.
At the end of the day, if we get it right, and others participate in the spirit of keeping the industry clean, everyone wins. If the Internet itself ever loses the confidence of the consumer, that has a tremendously traumatic effect on all of us.
SP: That seems to recall Epic's company slogan, "How the Web was won."
DM: We're happy to don the white hat and charge into battle if that's what it takes.