What If Online Doesn’t Work For Branding?

On The EcosystemJerry Neumann is a partner in Neu Venture Capital, a New York City-based seed-stage investor group with investments in 33Across, Metamarkets, PerformLine, The Trade Desk, Optim.al, Media Armor, and Yieldbot among others.

Jokes all start with one of a few stock set-ups. “A man walked into a bar.” But the punchlines are all different. VC pitches are the opposite: the set-ups are all different, but the punchlines are all the same.

Stop me if you’ve heard this one before. “We enable the half of advertising that is not yet online: brand advertising!” Been hearing that one for more than ten years now. It permeates the hopes and dreams of every adtech entrepreneur and investor. And still no one has cracked the code.

My friend Tim Hanlon got together with Tim Chang a few weeks ago on AdExchanger to offer some reasons why this might be. Worth your time, but here’s the tl;dr:

  • No standards or consistent measures of “success” other than outdated or inadequate metrics like CPM and CTR;
  • Limited real-time intelligence;
  • Unsuitable display ad formats; and
  • Lack of creativity in formats.

The prize is huge. As Tim and Tim point out, two-thirds of advertising spending is brand advertising, but online only one quarter is. In fact, if brand advertising dollars moved online in the same proportion that sales advertising has, it would almost exactly close the famous gap between time spent online and ad dollars spent online. The $50 billion gap that Mary Meeker mentions is exactly equal to the missing brand spend.

I understand the urgent desire to figure out online brand advertising. If we did, we’d more than double the online advertising market. Online pubs would rejoice, online marketing pros would have more excuses to go out drinking with prospective clients, my portfolio value would quintuple overnight. Good things all. And I appreciate the optimism that Tim and Tim have, their willingness to keep suggesting solutions. But I think it’s the triumph of hope over experience. Each of the proposed solutions has been tried, and tried and tried. And still we believe that this time it’s different, that this year an online branding play will work. Online video maybe, or Facebook, or Pinterest. Every new company is touted as the one that will make branding work online.

But what if we try all these things, like we’ve tried everything before, and they don’t work? What if we eliminate all the possibilities and what remains is… nothing? I’m going to be branded a heretic for saying this, but what if online just doesn’t work for branding?

I mean, not to be defeatist, but we understand branding pretty well. Marketers have been creating brands nigh on one hundred years now; it’s not a black art. And the solutions I hear, even Tim and Tim’s, are not untried. More, they are not the things that make brand advertising effective in other media. I don’t buy that these are the solutions. I think it’s distinctly possible that there are no solutions.

Maybe the medium itself is antithetical to the way brands are built. Like direct mail, maybe the very fact of delivering your message in a low budget, specifically targeted way cannot in any way build a brand. Brands attempt to exist autonomously, they are objects of desire, they want to distinguish what otherwise is indistinguishable. The psychological processes of branding are inimical to the idea that the brand has been chosen for you. Brands do not choose you; you choose brands. Brands are aloof, they aspire to be the Platonic ideal, their competitors just shadows.

Perhaps. I mean, I could be wrong. It could be that even though we sell ourselves to clients as brand-building geniuses, we don’t know what we’re doing; that we’re groping in the dark, throwing random darts and just haven’t hit the bulls-eye yet. We could be a bunch of monkeys at typewriters and Shakespeare will just roll on out one day. Could be. But it seems unlikely.

What if I’m right? What if online branding is a mug’s game? If it is, it won’t be too much longer before marketers get wise and just stop listening to online branding pitches. Maybe they already have. Maybe they never did listen to them. What’s the fallback plan? How do we go about getting the brand advertising dollars if online brand advertising doesn’t work? What can we do that will cause brand advertisers to move their branding dollars out of advertising altogether into some other online channel? Online display media buying is our little world. Branding is The Show.  How do we disrupt branding?

Follow Jerry Neumann (@ganeumann) and AdExchanger.com (@adexchanger) on Twitter.

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  1. Ah Jerry, you are going to break a few ad tech hearts – as well as smash a number of business models – with such an honest piece. Good to see if this stirs some debate.

  2. No need to apologize when you are right. It is an issue with the medium. Of course the entire last few years of display’s decoupling content and audience has done nothing to help matters. The ultimate irony is that this idea was originally used to court brand dollars.

    All is not lost though. Let’s get back to the medium – the greatest demand capture medium ever created.

    There is $60B North American spend out there in Direct Mail and $16B in radio. That’s all response. There’s also a $30B delta between online and print in newspapers and magazines – much of it response. even 40% of that moving to digital will double the market size and that’s bound to happen. Of course it will all flow to channels based on performance which right now is search and email.

    One last thought. Brands know themselves that digital is worthless. How else do you explain that fact that they put facebook before themselves in their own URLs that they promote? Who needs em!

  3. Jerry – nice post. I made many of the same points in an Ad Age piece a couple of months ago and it made a lot of people angry –


    The format that has the best chance of succeeding at driving brand advertising spend online is video. If/when quality video inventory reaches the scale that can accommodate targeting layers, I think there is a real opportunity for brands to benefit from online advertsing. Smart brands will also leverage social media, but it won’t be through paid advertising.

  4. Sean Gelles

    Are you saying that online media doesn’t have an audience, that it doesn’t create relevant associations, that it doesn’t create memory structures, that it can’t create salient brands? Obviously online media can and has done all of this for brands. That’s why the author of this article has a blog. Throwing up standard banners is not the test of brand marketing. The best brand marketers out there like Coca Cola already know this and are already realizing the branding power of online media through rich engaging creative content distributed dynamically through paid, owned and earned channels.

    • Sean Gelles

      P.S. The distinction between digital and TV is becoming meaningless

  5. Discussing whether or not interactive marketing is good for branding is putting the cart before the horse. First, you must define what you mean by “branding” or “brand advertising.” In our industry, if you ask 10 people you’ll likely get at least 10 different answers.

    For years I have maintained that the primary difference between “branding” and “direct response” is timing. Both are trying to favorably orient a person to their product in order to have them buy that product vs. a competitors, or vs. doing nothing. Direct response tries to get the person to act now, whereas “branding” focuses on trying to make sure the person makes the desired decision whenever the need arises for them.

    However, if I see an ad on TV that is intended for “branding” purposes and I go out and buy that product right away, was it branding or direct response? Conversely, if a marketer sends me a piece of mail every month or week for an extended time and I don’t respond, but some time later am in market for the item that had been promoted to me in the mail, and I include that marketer in my consideration set – was that effort direct response or “branding?”

    Too much is made of the distinction between these two designations. The reality is that marketers have precious little control over what their campaigns elicit from the intended audience, but it’s precisely that reaction from the audience that determines whether the campaigns performed “branding” or “response” functions.

    It’s time that we focus on clearly defining the outcomes a marketer is looking for, whether “branding” or “response” or – as it should be – taking into account all measures across the spectrum of consumer behavior, rather than perpetuate an inane debate on the merits of what techniques or channels work for which objectives. DEFINE the objectives first, and then determine what works.

    • Jeff Moore

      John – I like where your head is at. There is a consistent instinct to debate the dichotomous points of this argument (and many others in ad tech) without stopping to reconsider the framework of the argument itself. It is hard to innovate when boxed in by artificially derived and self-limiting strictures…accepted doctrine notwithstanding.

  6. Thanks, Alan. AdAge? Old school. I missed your article, but it’s a good read.

    You do blame the dearth of branding on ad formats. If it were as simple as that, wouldn’t we have fixed it already? It’s not that we haven’t been experimenting with formats for the last 15 years.

    Isn’t there already a ton of quality video inventory online? Comscore says some 38 billion online video plays this February, 180 million viewers, each with some 20 monthly hours of watching. That’s a mass audience. What are the brand marketers waiting for?

    I’m not saying that branding absolutely will not work, my question is what if it doesn’t? If brand advertising does not take off this year, will it ever? And, if not, then what?

  7. John –I’m not going to split hairs about what branding is; I know it when I see it, and I don’t think I’m special that way. Besides, no matter what your definition, you can’t argue that brand advertising dollars have migrated online in any significant way. Other than that I pretty much completely disagree with your comment. Advertisers can and do make a distinction between sales advertising and brand advertising. Of course they don’t always function as intended but they do, on the whole, function as intended when executed properly.

    Sean–yes, I am saying that. My final and very (to me) convincing argument is that if it worked more advertisers would be doing it. The marketers who control the big ad dollars are pretty damn sharp: they’re not avoiding online brand advertising out of peevishness. If there are a few brands that have built themselves online then–given the absence of a larger movement of brand advertising online–they are exceptions that prove the rule.

    As for my brand, Allstate has branded my name far faster with a few million dollars of TV ads than five years of my priceless bloggy urbanity did. (Although, to be fair–even if not in the popular imagination–at least the top few spots on DDG for “jerry neumann” still belong to me. Suck it, Leo Burnett. )

    • In a triumph of brand recall, I misremembered which insurance company is using my name. It’s State Farm and the agency behind it are my old friends at DDB Chicago.

  8. Jerry, good feedback. I completely agree that advertisers make a distinction between the two ways of looking at things – my point is that it’s an outdated way to think about things. The reality is that every (or at least the vast majority) of marketing investments result in many different impacts, and by following this artificial distinction advertisers rob themselves of gaining a more comprehensive understanding of the totality of impact they’ve had in the marketplace. If I only track “branding” metrics, I fail to take into account actual near-term sales and other activities that have taken place. If I only track “DR” metrics, I fail to understand the impact my efforts made for those who weren’t aware of my offering, and or who may have just entered the consideration cycle. Advertisers who are forward thinking will look at the full spectrum of results of a given investment – though in reality few actually do this.

    In terms of your challenge about online migration of branding dollars, I believe you’re greatly oversimplifying the situation. There are scores of factors that enter into this equation, not the least of which is agency fee preservation, old habits dying hard, offline/online media bundling, fear of change, fear of accountability, the lack of common metrics mentioned in the piece (though I personally think this is a red herring), rapid and constant change, a dearth of truly seasoned practitioners due to the age of the channel, and many more.

    I’d be willing to bet that if we went back many decades to those who scoffed at the brand new television medium, radio and newspaper proponents used your same “then why isn’t everyone doing it?” argument to claim that TV wouldn’t be a game-changer for them. All new media take time to settle in and become mainstream. And while Internet advertising has been around for a while now, it’s an infant compared to TV and other older channels.

    Further, your argument ignores that whatever branding dollars are being spent online in 2012 are substantially higher than in 2011, which were substantially higher than in 2010, and so on. Advertisers are experimenting, learning, comparing, etc. and increasing their investments according to the findings. (By the way, sounds kind of like traditional DR methodology).

    If the only means of comparison was actual dollars in a brand new channel vs. a very mature channel, all the while ignoring the increases occurring each year, all new channels would look like losers. In fact, look at the “brand” dollars being spent in mobile today – not even a blip on the overall advertising radar screen…yet. But I can tell you just from what our mobile division alone is doing with these kinds of awareness & engagement campaigns, this channel will be significant, as will the stationary web that you have discounted.

    • Jann E.

      Great response.

      Branding doesn’t happen with just one channel.

      Online media will never get all the brand dollars because it isn’t the only channel that has the ability and opportunity to touch consumers and build the story that brand marketers want to build in a meaningful way.
      But online will continue to grow and be utilized in brand building ways.

      And John, to reiterate your point, it is still a young media.

      From my perspective, online media creates a bit of a distorted view of the marketing world. Things have accelerated so quickly, that when new technologies become available, marketers are expected to get caught up in the excitement and just jump onboard. But the smart, seasoned marketers take the time to understand how a channel can effectively fit into their brand (along with everything else they are doing), and wants – or rather needs – to ensure with a strong level of confidence that the risk will payout.

      Everyone has goals they are measured on, and it usually comes down to revenue.

      I read an article today that made me chuckle about someone in mobile who was frustrated that clients weren’t moving their money into mobile fast enough.

      The mentality is the same: “Why hasn’t this happened yet! Don’t marketers see the opportunity? Don’t they get it?”

      Like online media, mobile is still new IN THE SCHEME OF THINGS. But marketers want to be where consumers are. So my response to this article and the mobile article are exactly the same…

      It may not happen tomorrow, but it will happen. And you won’t get all the money, but you will get more.

  9. John–

    Now I’m with you. I agree that it is being done wrong. My worry is that there are structural reasons marketers don’t switch to doing it right and that those structural reasons may persist for a long time to come.

    It should not take as long to port branding to the internet as it took to develop it initially. It certainly did not take as long in TV, where branding was the initial advertising mode. So, saying “just wait and it will happen…”? I think there maybe should be a limit to deferring success.

    It would be justice if immediately after today I am proven wrong by a marked upswing in online brand advertising. But after 10+ years of hearing how we’ve finally reached the elbow in the hockey stick, I’m asking the question: what if there isn’t more brand advertising online? Shouldn’t someone be working on what to do in that eventuality?

    • Jann E.

      You should be working on the new ‘eventuality’ anyway.

      Regardless of how long it takes marketers to latch on to a certain channel in a big way, technology has led way to the ‘innovate or die’ mentality.

      If you aren’t working on the next big thing, then you will suffer the ‘Blackberry Effect’ and get trumped by something new, just when you thought you were about to really take off.

      It’s the same issue that plagues most [CPG, auto, technology] brands these days – we have taught consumers to be ‘switchers’ by offering too many choices and good deals.

  10. Jerry, thanks for the well-reasoned counter-point! (And just switch back to State Farm already, will you?)

    Agree with just about all of your healthy cynicism, and would argue that this discussion (in toto) simply calls out the lunacy of continuing to compartmentalize marketing into legacy definitions/distinctions like “brand,” “direct,” and “promotional.”

    The frenetic pace of tech innovation has no regard for these quaint industry containers, and the increasingly digital- and mobile-savvy consumer doesn’t either. It’s all overlapping, concentric and inter-dependent in the new world we have created for ourselves.

    Today’s “brand” marketing is a much more sophisticated beast – exacerbated and, often, confounded by digitally fueled push-button consumer opinion and behavior. It’s not whether an individual display ad “worked” or not (although most media/digital agencies are incentivized to think it is) – it’s really how all of a myriad of marketing activities (digital and otherwise) work *together* across a complex landscape of consumer activity that now determines success.

    Looking at *any* media or metric in isolation is increasingly a fool’s game, and the game of marketer and (especially) agency catch-up is enjoined!

  11. Of course online CAN work for branding!
    Working with neuroscience institute Mediamento we have proved that being exposed to an online ad increases brand recall.
    Some conditions are necessary: the message must be fully seen, and repeated the right number of times.
    The problem is that these conditions are rarely met: 5% of contacts actually see the full message the right number of times.
    This means that online is still at 5% of its optimum!
    So yes, online, as it is managed today, does not work for branding. But optimization tools now make it possible to increase control both exposure and frequency.
    This way, online will be the most efficient brand advertising medium.

  12. Alejandro Correa

    Maybe the problem is not online media, but the concept of branding itself. Maybe people buy products based on quality, price and value…and not propaganda repetitively beamed at them through commodified media?

    • I got into this a bit on our blog:

      “[Nielsen] is why we are saddled as marketers with a lot of insights tied to big heterogeneous groups like “18 to 24 year old women” or “55-plus men in the Chicago DMA” (Designated Market Area). Sample sizes are small which means insights are not statistically significant at a resolution you’d actually care about – so for the Chicago DMA, we’re talking about the third-largest DMA (“Designated Market Area”) in the country with over 3.5 million TV households, but if you look at a 25,000 person sample we’re talking about 762 panelists. That’s a 3.6% margin of error just at that level, let alone slicing that specific audience any other way. ” [http://optim.al/blog]

  13. Matt Barash

    Been giving this some thought and am in agreement – sorta. The end goal of ALL budget invested in advertising is to move more product. So why does it really matter if there a defined difference between brand dollars vs direct response dollars – the only difference might really be a subjective label slapped on an excel spreadsheet by an analyst somewhere? Think about it for a split second…Both move a user towards a purchase…the key difference is just how close to the water are you going to lead the horse and does he drink from it. Eventually, he gets thirsty and takes a sip, right?

  14. I can’t understand why people are getting so uptight about this argument. For many brands display advertising has not proven to be effective as a branding vehicle. This is a fact. For all the fanfare about social media, arguably the most successful online ‘branding’ campaign (Old Spice) started its life as a paid television advertisement. It happened to be so good that people wanted to watch it online.

    All this talk of creating content that straddles paid owned and earned channels (like we haven’t heard that one before) is so dull. And the other ‘complex’ argument that success is determined by a ‘myriad of marketing activities’ (LMFAO!) makes me want to hurl. This kind of jargon is what got us all into trouble in the first place! Marketing is not this unknown wilderness that requires dark arts to master. Data tell us a lot, and right now the data we get about online advertising (and we’re talking about paid advertising here, not TV ads that have gone social or owned web experiences) for branding purposes does not stack up. People don’t remember online paid advertising because they see so much of it and it all looks the same. It’s not some Rubik’s cube conundrum that we can’t solve. It just doesn’t work at a particular level. There’s no need for anyone to be defensive about this.

    I think the intention of making the online landscape less opaque by tracking viewability of ads, changing ad formats and making ads more interactive and dynamic is a great step forward. However, I don’t think this will drive more brand dollars online, unless of course people stop watching TV altogether and they have nothing else to do with their money!

  15. Tradigital is leveraging traditional media to drive digital for maximum impact. There has never been, and will never be any talk around the cooler at the office about on online banner ad. No talk, means no engagement, no emotional connection, no recognition. Brands must engage and connect in order to be recognized. As a Digital Director is clearly see the benefits of technology and digital, but when it comes to branding it’s not there.