What if Online doesn't work for branding?

I enjoyed this article very much over on Adexchanger, which got me thinking:

What If Online Doesn’t Work For Branding?

For those of us who have been in the online advertising industry for a long time, I think this is a great question. 

Firstly we should be clear what we mean by “brand advertising”. Often we use it in the online industry to mean “something bought at a high CPM price”. However, this is clearly not what P&G means. I would suggest something like this: brand advertising is what causes us to buy a particular soap powder instead of another one that appears to have the same characteristics but costs less. Brand is therefore Warren Buffet's famous "moat" that protects companies from competition. Coca Cola is a famous example, but almost everything Unilever makes fits into this category.

Historically, TV has been pre-eminent at building the characteristics of trust, quality, recognition, etc that build up a brand.

Does "brand advertising" work on the web? And if so, given how smart the people at P&G are, why do they spend so little money online? Perhaps the dirty secret is that forcing people to watch a 30 second ad for soap powder between their favourite shows is just a lot more powerful than any number of random ads for a product you have no interest in. This would explain why the brand advertising end of display is so small.

On the other hand, direct response works dramatically better online than offline. Google’s more than $40Bn of revenue demonstrates this.

So I see two possibilities:

1.     Brand advertising through traditional display ads doesn’t work. If so,the best opportunities online must be video (which is TV after all), and more excitingly social recommendations. If Facebook can ever get the power of personal recommendation to combine with an ad unit large and flexible enough to allow creative agencies to tell a story I think something really exciting could happen there (I guess that explains the mooted $100B valuation).

2.     Brand advertising can work based upon the same principles we see in direct response: create the right tailored ad for the right individual, instead of generic ads targeted at every man woman and child who visit a website. Get this right, and I believe the “upper funnel” could start to work online to build brand engagement and not just fulfil an intention. More on this in the future...