Focus on Research

June 11, 2013 3:12 pm

Harvard professor finds online adverts offer better value

So-called “lean” advertising, using online video rather than television, allows companies to reach consumers more effectively and at a lower cost.

This is the conclusion of Thales Teixeira, assistant professor of marketing at Harvard Business School, in an article published in the Harvard Business Review this June.

In his research, Prof Teixeira identifies many companies that have run “effective [advertising] campaigns for 10 per cent or even 1 per cent of what they would have spent on traditional ad agencies and paid mass media”.

He emphasises that it is not only cost savings that should prompt companies to review their advertising medium. At a time when fewer television commercials are viewed less, online video is not only growing in popularity but is also a more engaging means of reaching consumers.

“Because viewers actively choose online videos, they tend to watch them more attentively than they watch TV ads,” Prof Teixeira writes. He cites a 2010 survey by Vision Critical, a research company, which found that 48 per cent of online advert viewers subsequently visited the brand’s website and 22 per cent made a purchase.

Prof Teixeira singles out the example of DC shoes, a footwear company and pioneer in online video advertisement. Having filmed cars racing around well-known locations, with images of their products interspersed, the company uploaded the videos to YouTube rather than paying for premium television advert slots.

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Over the past four years, these videos have been viewed over 180m times. One was YouTube’s “most-shared” video in 2011, a year in which the company’s sales increased by 15 per cent. Though paying online media for this exposure would have cost more than $5m, Prof Teixeira asserts that it cost DC Shoes only “a tiny fraction of that amount”.

The Harvard professor however emphasises the importance of distribution in any “lean” advertising campaign, however strong the content.

Noting the limitations of simply publishing videos on YouTube - where only 3 per cent of videos are viewed more than 25,000 times - Prof Teixeira says that successful companies practice “inbound marketing” to draw consumers to their clients’ content using data analytics and search engine optimisation.

Social media syndication companies adopt more aggressive distribution strategies on behalf of their clients. According to Prof Teixeira, these involve the placement of videos on managed digital platforms - such as YouTube channels - and their promotion through “networks of high-profile digital influencers” to reach large online audiences. One syndication company, Mekanism, has achieved more than one million views for three-quarters of its online videos to date.

Given their low cost relative to traditional advertising agencies, “novel distribution strategies are perfectly suited to rapidly building brands on limited budgets,” Prof Teixeira concludes.

http://hbr.org/

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