March 18th, 2009
WPP, Google to Fund Web-Ad Research
By Emily Steel
The Wall Street Journal
Duo Will Spend $4.6 Million on Business Analyses, Psychological Studies
WPP and Google are going back to school.
The ad holding company and the Internet giant have teamed up to fund research on how ads in traditional and digital media work together to influence consumer choices. Though the two companies have committed just $4.6 million to the three-year program, their venture marks the latest example of Madison Avenue and Silicon Valley working together to shed light on questions that face the industry as it tries to persuade marketers to spend more than a fraction of their budgets online.
On Wednesday, the two companies plan to unveil the first round of studies, which will take place at institutions including Harvard Business School, the Massachusetts Institute of Technology and Stanford University. The researchers will have direct access to up-to-date data from Google and WPP’s clients, which include major advertisers like Unilever and Ford.
Several of the studies will try to determine the best ways to allocate ad spending between traditional and digital media, as well as how online ads affect a company’s sales and brand image. Another will use psychology and neuroscience to analyze how the brain determines whether Web ads are relevant. Still another will examine how Chinese Internet users respond to different online-ad formats, such as display and search ads.
A Rare Steve Case Appearance at AOLMarketers and ad agencies already can gauge the impact of online ads by counting the Web users who click on them or tallying up the amount of buzz they generate among bloggers. But they would like to gain a broader understanding of what makes Web campaigns likely to succeed.
“Because the firms are, correctly, focused on solving the problems of individual clients, they don’t necessarily step back and see the big picture and develop useful generalizations,” says John Quelch, senior associate dean of Harvard Business School and a nonexecutive director of WPP, who is helping oversee the program.
That uncertainty has prevented big marketers from shifting even more of their ad dollars to the Web, says Mark Read, WPP’s director of strategy and CEO of WPP Digital.
Despite the excitement about digital marketing, the average marketer still spends just 9.9% of its ad budget online, according to Forrester Research. Even so, the Internet is the fast-growing ad medium. Digital-ad spending has continued to grow even as marketers have cut back on conventional advertising.
“Digital is young and hasn’t had the same amount of rigorous study applied to it” as print and TV advertising, says Forrester analyst Emily Riley.
WPP and Google put out a call for research proposals last fall and received more than 120 applications. Among the applicants was Glen Urban, a professor at MIT’s Sloan School of Management.
Prof. Urban plans to analyze Web users’ surfing habits to determine their thinking styles—such as whether they are most influenced by verbal or visual messages or if they are more holistic or analytical—and how to tailor ads accordingly.
A phone company promoting a new long-distance calling plan, for example, might show a holistic thinker an ad with a slogan like “Reach Out to the World,” with an image of two people reaching toward each other across the globe. An analytical thinker might get the same slogan but with bullet points highlighting the plan’s features.
The WPP-Google project isn’t the first time a big advertising company has allied with a top Internet player. Last year, Publicis Groupe and Google said they were working together to explore new marketing technologies, and Yahoo has linked up with WPP and Havas to develop new ad technologies and streamline the purchase of online ads.
Some of the Google-WPP studies will involve complex statistical and business analysis. Others studies are looking at the business from a psychologist’s perspective. One, at the University of Southern California, is examining the role emotions play in decision making and how advertising can influence those choices. The study will analyze how online ads affect blood flow to different areas of the brain, says Martin Reimann, a fellow at USC.