Internet Advertising Analysis Part 15; What Does the Internet Advertising Market Consist of?
Attempting to measure or define the amount of eadvertising, even while excluding e-commerce, is an extremely difficult task. In fact, Forrester Research writes, “Ad measurement on the Internet is a mess.” Bob Coen, McCann-Erickson’s ad guru, states: “The best we can do is use a judgment estimate somewhere in the range of reality.” Estimates of the total amount of Internet advertising revenues in 1997 vary from a low of $336 million to a high of $940 million. The range of estimates for 1998 is even greater, from a low of $560 million to a high of $2.0 billion. The situation isn’t expected to clear up right away. “I see another 15 to 20 years of confusion ahead,” says Gene DeRose, CEO of Jupiter Communications. Why do these disparities exist for historical figures? We believe there are two reasons:
1) Differing measuring techniques used. Some measurers obtain their information from the publicly quoted rate cards of Internet sites. This method ignores the fact that most publicly quoted figures are not actually used. Rather, a process of bartering and negotiation deter mines the actual pricing. Results also vary depending on which party’s results are being measured, the advertiser’s or the publisher’s.
2) Different technology used for measurement. This causes particular problems for the relationship between the advertiser/measurer and the Web publisher. Ratings companies miss 7% of a small site’s and 34% of a large site’s audited log files, according to the IAB, ARF, and FAST’s data reconciliation project. Further, Web publishers typically use server log measurements to monitor Web traffic. On the other hand, advertisers prefer to use audience measurement techniques. The two techniques come up with different calculations of the effectiveness of an Internet campaign. The differences can be broken down into two areas:
• International Traffic: Server log analyses include international traffic in their calculations, whereas audience measurement techniques do not. International traffic currently accounts for up to 40% of traffic, and this number is only going to grow, causing further distortions.
• Cached Pages: Cached pages are stored and served to multiple users. Audience measurement systems include cached pages in their data collection; server log analyses do not. Media Metrix estimates that by not including cached pages, server log analyses miss 20–40% of a site’s usage. “Audience measurement is perhaps one of the most frustrating business issues facing agencies and publishers today ... Credible and reliable online advertising is key to the continuing growth of the medium.” — Rich LeFurgy, Chairman FAST, IAB
Table 72 Type of Advertising Conducted Online
How Are Advertisers Using the Web? Banners are currently by far the most common type of advertising on the Web. Banners accounted for well over half of all ads served on the Internet in 1998 (eStats calculates that banners accounted for 52% of Internet advertising; Jupiter calculates the figure as 61%; IAB calculates 55%). Sponsorships took second place, with interstitials and other forms taking third and fourth, respectively. This mix is expected to change over time, with banners’ share declining. Due to greater bandwidth, we expect more rich-media applications to take over, giving sponsorships and interstitials a decided advantage. Banners: Banners were originally a static billboard-type ad displayed at the top of a Web page. No longer are they necessarily static, nor are they always at the top of pages.
Greater bandwidth has allowed for the use of audio and moving images, and allowed consumers to click on the banner and be taken to more in-depth information, to the company’s Web site, or directly to an area where s/he can purchase the product. Buttons serve basically the same purpose but are usually smaller and arranged along the side of a page. Side Frames/Sponsorships: A side frame is displayed along the side of requested content (instead of at the top like the traditional banner). Side frames are most often used in conjunction with sponsorships, allowing companies to “sponsor” content that a user has requested. Like banners, side frames allow users to click-through to more information, the company’s site, or to purchase the product. Additionally, however, sponsorships often create an interactive experience for the user.
Pop-Up Windows: This type of ad “pops up” in another browser window when a user enters a site. The new window containing the ad can be closed immediately or used to request more information/purchase a product. Pop-up windows are very similar (and sometimes identical to) interstitials. Interstitials: Interstitials are large, nearly full-screen ads that often appear on browsers as a new page is loading. Obviously, this works best when the page being loaded is heavy on graphics or movement, forcing it to load more slowly.
Figure 23 Type of Internet Advertising Conducted in 1999
Interstitials are often alternatively referred to as splash screens, pop-up windows, daughter windows, parent windows, intermercials, extramercials, or transitionals. Superstitials: This is another version of an interstitial, although not necessarily a larger one. These are often animated and sometimes contain interactive features like games. Users may click on a corner to remove the super/ interstitial. As currently developed, superstitials are cached on the user’s hard drive, so that they do not slow down the loading of the site. Also, they only play when they are fully loaded, so there is no delay for the user. This makes superstitials attractive as they are much less likely to aggravate users than other advertising. Push Advertisements: Push advertisements have all of the characteristics of banners, but they are continuously displayed on a user’s screen. As a user scrolls down a Web page, the push advertisement follows them, so it is always in the user’s view. Free ISP Banner/Tool Bars: The advent of free ISPs has created a whole new type of advertising, very similar to push advertisements. Free ISPs, like NetZero and Alta- Vista, offer consumers free Internet access in return for personal information, which is used to target advertising in a constantly visible banner ad. A free ISP’s banner ad cannot be shrunk or turned off, although the user is allowed to move it around his/her window. The free ISP targets advertising based upon the user’s characteristics (which the ISP received when the consumer signed up) and (in some cases) clickstream data.
Figure 24 Type of Internet Advertising Expected in 2003
For instance, NetZero has a financial channel that is sponsored by Ameritrade and DLJDirect. These sponsorships show up much like bookmarks in a user’s browser. E-Mail: Direct e-mail is direct mail’s Web equivalent. Depending on the type of e-mail and browser system employed by a user, s/he may receive plain text, text with links to a Web site, graphics, or even interactive features. Of critical importance in the direct e-mail sphere is the consumer’s ability to opt in or opt out of an e-mail list.
Figure 25 Cost of Developing Various Types of Internet Advertising
How Will Advertisers Use the Web? The future of Internet advertising lies with rich media. Rich media is simply a fancy way of describing the integration of animation, sound, interactivity, and even ecommerce into a space that was formerly held by the static banner ad. Rich media is becoming an ever more popular form of advertising on the Web. It is more effective at generating consumer awareness than regular banner ads — duen to its greater interactivity, complexity, motion, and audio abilities. Today’s rich media may give users a fuller experience of a product (i.e., an audio product description, a virtual “test drive,” and other means that will push the consumer further down the road to a sale) without having to leave the current Web site. Rich media ads are currently estimated to account for only 5–20% of the ads served. However, we expect this number to grow as advertisers attempt to differentiate their ads in light of the falling clickthrough rates and as bandwidth increases.
Table 73 Online and Traditional Advertising
Continue with:
Part 16; Rich Media still has some drawbacks ,
Part 17 Inventory and Concentration , Part 18; Market Share and Concentration Data , Part 19; Global Impact, Part 20; Residential and Business Use ,
Part 21; Pageviews , Part 22; Advertising vs. Direct Marketing , Part 23; Investment Conclusion
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