Online Advertising - History

[http:encarta.msn.com/encyclopedia_761564279/Advertising.html#p52 Advertising] is any paid form of non-personal communication about an organisation, product service or idea by an identified sponsor. Advertising was originally established in print media, such as newspapers and magazines, and followed onto the television and radio broadcast scene. However, focus has started to shift away from the traditional print and broadcast media,and towards the growing online advertising industry. Advertising has found a whole new medium with which to communicate to customers.

As the new millenium begins, we are experiencing perhaps the most dynamic and revolutionary changes of any era in the history of advertising. These changes have been driven by advances in technology,and developments have led to the drammatic growth of communication through [http:encarter.msn.com/encyclopedia_761566157/Broadcasting.html interactive media],particularly the [http:en.wikipedia.org/wiki/Internet internet.] The online advertising industry is growing and developing at a rapid rate. Since 1994 when online advertsing originated, the industry has faced many obstacles. Ad Age's interactive section provides a facinating chronicle of the beginnings of online advertising.After the dot com crash in 2001, online advertising's success diminished, but has since re-established itself and is now a thriving $8.4 billion dollar industry.(Kridler,2004) The use of online advertising as an advertsing medium is increasing in popularity at a fast pace. It is projected that the online advertising industry will to grow three times faster than advertising in any other medium. (Kridler,2004)

Businesses are beginning to evaluate the advantages and disadvantages of advertising online. Businesses are recognising that by advertising online, their message is communicated in a fast and efficient way, while not only interacting with customers, but establishing a one-to-one dialogue.(Adams,2003)Online Advertising's potential as a low cost channel for doing business directly with customers is viewed as a major advantage of advertising online. Many companies recognize the advantages of communicating via the internet and are developing Web strategies and hiring interactive agencies specifically to develop their websites and make them part of their integrated marketing communications program. (Blech & Belch, 2001)

Creative and innovative advertisements can be displayed online. As an advertising medium the internet provides great potenital in captivating,engaging and interacting with audiences. A variety of different advertising formats can be used to communicate a particular message to consumers. Different forms range from the traditional banner to interactive pop-up advertisement messages. Different advertisement forms acquire different audience responses. Each online advertisement format has its own attractions and limitations. For example, when a user clicks on a banner advertisement, that click can accurately track their campaigns in terms of how many people actually read the advertisement and go through the site.[http:www.banner-mania.com Banner Mania Advertising] provides an indepth view into a banner advertising network, which allow businesses to utilize thier banner advertising space while earning revenue.

The potential to create innovative, eye-catching, self-perpetuating and unique advertisments is limitless. Specific online advertisment design features can be employed to best communicate the advertising message in the most effective and efficient way. Colour, style, graphics,content,format and the target audience must all be taken into consideration when designing an online advertisement.By understanding and implementing the best suited design features, a company can produce effective campaigns that reach target audiences, and go beyond standard demographic groupings. Online advertisments can be designed strategically, with the goal in mind of reaching, and influencing a particular target market.

Online advertising spending increased as the hype around the web spread, and grew in intensity. Advertising sponsorship and revenues are forecasted to grow, alongside the realization of the potenial in online adverting. Mary Hilton states that what we are seeing with the internet is that it has gained alot of legitamacy over the last couple of years. It has been around long enough that there is robustness to it as a media of choice in the advertising industry.(www.the-daily-record.com) In online advertising, the company carrying the advertisements is usually responsible for hosting the arrangements, and they will often designate the task to a third party company. Advertisers calculate the cost and success of their campaigns relative to the number of visitors and of money-earning clicks.(www.adage.com)

Internet related advertising spending is growing at the highest rate of increase ever - 25% this year over last year.(Oser,2004)Growing numbers of large companies such as broadcast and television networks and newspaper publishers are beginning to shift larger parts of their advertising budget online. The growth of online advertising is occuring at a rapid rate. In recent years the internet has become an essential element in advertising strategies. Three major areas are expected to grow: paid search, display advertisements and internet banners and classifieds are all predicted to be the biggest growth areas in online advertising. The decreasing interest in print advertsing and the new found interest in online advertising is a major development for the online advertising industry.

Online advertising is creating innovative, low cost and highly targeted opportunities, while expanding into other media related to the web.(Feilds,2004) Further information on online advertising is avaialable at [http:www.adage.com Ad Age], and [http:www.entrepreneur.com Entrepenure.com.] An [http:www.o-a.com online advertising discussion list] site also provides further information on online advertising.

Specific information on some central issues can be found using the links below:

• Advantages and Disadvantages of Advertising Online

• Online Advertising Formats

• Online Advertising Design Features

• Online Advertising Sponsorships and Revenues

• Growth and Development of Online Advertising

Reference List

• Adams, R.(2003) www.advertising, Broadway, NY.:The Illex Press Limited, ISBN 0823058611

• Belch, G.E., Belch,M.A.,(2001) Advertising and Promotion: An Integrated Marketing Communications Perspective, New York: McGraw Hill, ISBN 0072314451.

• Feilds,J.,(2004) Net Value of Advertising Starts to Click, Sunday Herald, July 18, 2004.www.sundayherald.com.

• Kridler,K.,(2004) Online Advertising Growth Outpacing TV, Print Marketing, The Daily Record, August 2, 2004. www.the-daily-record.com

• Oser,K.(2004) Online Ad Spending Returns to Good Old Days, www.adage.com

• www.adage.com

• www.banner-mania.com

• www.encarter.msn.com

Skye Salleras 03:26, 14 Sep 2004 (EST)

 

Online Advertising Redux

 

Cooking up an Advertising 2.0 marketing plan usually includes at least some measure of online advertising. Online advertising has many flavors such as banners, blog ads, rich media ads, content sponsorship, email newsletter sponsorships and more. But the most popular flavor? Search engine advertising--with Google serving up the most ads. The lucrative Web 2.0 economy has been bolstered largely on Google's success in turning website traffic into money (I'm desperately trying to avoid using the overused word "monetization"). Google has filled its coffers on ad revenues. Spinning web traffic into gold has emboldened all manner of content-oriented sites, blogs, web-based applications, and online virtual communities and social networks.

The announcement this week of Google's acquisition of DoubleClick for $3.1 billion demonstrates how big online advertising has become.

Recent developments in online advertising and new features--especially search engine advertising, makes it time to review and expand upon this important facet of Advertising 2.0.

 

Reviewing the recent history of Google

Google was once merely a search engine. For years it focused ruthlessly on its core functionality--the math that drove the algorithm, which produced the most relevant search results. Their success produced all the traffic they could handle. But they didn’t sell anything. Then in 2002, it happened. Keyword based text ads stated appearing along the right column of search results. Suddenly lots of traffic was becoming lots of revenue. Shortly thereafter the Google AdWords program enabled advertisers to run almost instant campaigns using Google's self-serve, no-minimum bid, max-spend-per-day system. Google was quietly building up incredible profits, but exactly how much nobody knew--at least not until Google went public in August of 2004. (Images to the left show Google's growth since then and they just announced 63% profit on $3.66 billion in revenue, exceeding industry expectations again for the first quarter of 2007.) Once the world got its eyes on the unbelievable profits of Google AdWords, the wheels of online commerce began turning at rates unseen since the dot-com bubble era. But this time the bubble isn't full of gas; it's full of cash.

Google is still an excellent search engine, but as far as the kind of company it is, it's no longer merely a search engine. It's more like a media giant. Case in point: their recent announcement of the $3.1 billion acquisition of DoubleClick. Clearly Google is committed to maintaining their dominance as an online media machine. Oddly, its transformation into a media company is part of the reason they are having problems with both their $1.8 billion acquisition of YouTube and their copyright challenges regarding their book search feature. As a neutral search tool, indexing and retrieving data helps everyone and nobody would take a second look at their service. But with scads of cash in play, suddenly their marginally legal practices regarding storing of electronic copies of copyrighted materials no longer feels entirely neutral.

 

All that to say...

I review Google's history to emphasize how big online advertising is and how fast its growing. The thing that amazes me about Google’s AdWords program (as well as Yahoo! and MSN's advertising networks) is that, as big as they are, anyone with the smallest of ad budgets can easily participate. Just fill out a couple web forms and within minutes you're posting ads alongside search results. I’ve written about Online Advertising with Google AdWords and the basics covered in that newsletter are still the same. But there are new features, players and practices to review.   next >

 

 

In the early days, online ads were bought by the impression or view (CPM). But willingness to pay per impression for online ads, especially untargeted impressions, was short lived. That's because ads have a lot of work to do if they are going to preempt the inertia of activity in order to arrest attention and gain an opportunity to sell. The scale of difficulty in gaining attention slides from hard to hardest based on the amount of inertia to overcome. TV commercials (assuming they're being seen) have a bit less inertia to deal with than a magazine ad. That's because people are fairly passive while waiting for a television program to resume. Magazine ads have a little more work compared to television because when people are reading a magazine article they are more actively engaged in the activity. Online ads are at the far end of the difficulty scale. People are highly engaged when pursuing an online activity. Halting this inertia is very difficult. So paying per impression, when a mere impression has so little impact, is onerous.

Pay per click makes buying online ads a bit more acceptable. But clicks aren't much more valuable than impressions if the visit doesn't result in an intended action. Ultimately, advertising is for selling. There is always a desired action when an ad is placed: a sale, generating a lead, web sign ups. Wouldn't it be awesome if we only had to pay for ads when these results occurred?

Pay Per Action is the newest feature (still in beta and by invitation only) of the Google AdWords program. The advertiser determines the action desired - either a sale, a sign up, or some minimum number of pages viewed - and the advertiser determines how much the action is worth to them. Web pages that are part of the desired result are embedded with triggers and only when sessions initiated by ad clicks include these pages, is the fee charged for the ad. Nice!

 

Google is running fast and furious while Yahoo! is lagging behind in the search advertising market. But they recently announced an improved advertising system called Panama. They have caught up with many of the features of Google's AdWords. I particularly like their keyword discovery system. It's not as flexible as Google's but it does help to identify the most productive phrases and how much it will cost to target each of these phrases. Another difference between Google and Yahoo! is their payment models. Google charges a credit card after delivering a certain quantity of clicks. Yahoo! requires an upfront deposit that it bills against until it's used up, and then charges the deposit fee again. Not a big deal, but Yahoo! does raise the bar for "trying out" their new service more than Google's billing process does.

 

Both Google and Yahoo! are offering a new feature that enables the creation of multiple versions of each online ad. They circulate these versions and track their relative performance to determine the best performing ads. Of course best clickthrough performance from the search engine is not necessarily the bottom line. For example, one ad version might show a higher clickthrough percentage than another, but if the visits from that version abandon the site more quickly than a lower clickthrough versions, the better performing ad may be preferred. That's why we built the NewfangeldCMS advanced website tracking tools so we can see what happens after the click--but that's another newsletter.   next >

Geo-Targeting is not new but I realized that I forgot to mention this important feature of online search advertising in my previous newsletter. Geo-targeting helps local businesses advertise only within their service area. Clearly it would do no good for a plumber in Toledo to advertise his services on Google if his ad is just as likely to be displayed in Sarasota and Poughkeepsie. Selecting states and cities for online an ad campaigns opens up huge potential for local businesses. Especially given the rapid popularity of local search, geo-targeting makes online advertising effective for both big brands and small local services.

 

Another feature relevant to local search (and also one I did not mention in the previous newsletter) is pay per call. Similar to pay per action, pay per call services create 800 numbers that are displayed with an online ad which when called, redirect to the advertisers actual phone number. Google has experimented with "Click to Call" but the rest of the online advertising world seems to have chosen partnerships with third party pay per call providers like Ingenio (www.ingenio.com).

 

Website analytics software reports and evaluates overall website traffic. We currently use Urchin 5. Other players in the web analytics market include WebTrends, ClickTracks, and NetTracker. If your currently evaluating website analytics software keep your eyes on Seomoz.org, they are in the process of working up a robust comparison on all the popular analytics programs (see http://www.seomoz.org/blog/the-ultimate-analytics-comparison-project-needs-your-help). The June 2005 Web Smart newsletter covered Urchin version 6 which was shortly thereafter bought by Google and is now called Google Analytics. Google Analytics is free and can be implemented by simply adding a bit of code to the header of each page in a website. One of the nice features of Google Analytics is it's built in compatibility with Google AdWords. Traffic and goal conversion from AdWord campaigns is robustly reported along with all the other website traffic metrics.  

To optimize an online ad campaign, most SEM experts would recommend the use of landing pages. A landing page is a custom page specifically built to follow up with an online ad message. Simply pointing an online ad to a site's homepage is not optimal. Instead pointing to "landing pages," designed to capture the interest of the respondent and hopefully encourage the fulfillment of a call to action, is a more productive process. I have not experimented much with landing pages for my online ad campaigns but here is what Stephen Fraser -former marketing director at Lulu.com who now runs digital media consultancy called Bug-Eyed Marketing - has to say about using landing pages effectively.

 

The most important skill you can bring to your marketing is an ability to see yourself through a customer's eyes. In the case of search engine advertising that means choosing the right words and phrases on which to advertise and writing effective text ads--both of which are skills that require time and practice to do well. But using landing pages for paid search campaigns is just as important. Even if your search campaigns chug along under their own steam without landing pages, whether you realize it or not ignoring them as the final step in optimizing your online marketing campaigns costs you money.

Think about it this way, if you ran a shop on a busy street you wouldn't put a great-looking green sweater on your window mannequin and then fail to place that same sweater on a sales rack in the front of the store, would you?

In thinking about landing pages, put yourself in the shoes of an individual who:
   a) Types a word or phrase into a search engine because he or she wants to learn more about that subject, whether it is trail running shoes or web hosting for businesses.
   b) Notices, reads, and choses to click a descriptive text ad that has appeared above or beside the search results delivered by the search engine.

 

Your job as a marketer is to anticipate and deliver as closely as possible exactly what that individual expects to see and do on that page. In the examples above, a store that wants to sell more trail running shoes would not only want to write a text ad addressed to that particular customer [Looking for trail running shoes? BigFootRunning offers more than 25 models. Fast shipping!], but in order to make the ad successful, it would also need to deliver the customer directly to a page that showed all 25 models of trail shoes, ideally with easy navigation either to learn more about or to buy any one of those models AND a well-displayed description of shipping speed. In the other example, a web hosting company would do well to write a text ad addressed to a business, rather than to individuals [Web Hosting for Business Compare plans ranked most reliable by independent reviews.]. But the landing page for that ad HAS to deliver the searcher to a page that outlines the business hosting plans available AND the independent reviews and rankings. Not to deliver that information would defeat the momentum generated by having persuaded the searcher to click in the first place.

While the text ads I just suggested are fictitious, the two images to the left show real world examples of businesses using landing pages specific to those two searches.

Another way of thinking about the use of landing pages is to consider customer segmentation, another basic principle in marketing. The greater your ability to segment your customers into distinct groups--groups whose needs, vocabulary, habits and preferences you understand and can address in both your product development and your marketing efforts--the greater your success and the more economical your marketing will be.

Optimizing your campaigns involves testing different landing pages as well as different ad text and phrases to discover the factors most likely to get a response from customers. It is in this area where Google and Yahoo! now offer tools to make marketers' lives a lot easier. Elements for testing include headlines and calls-to-action as well as images and colors. The goal is to identify the elements most likely to sway the decision whether or not to buy something (or download something, sign-up for something, etc.) from your company at that particular moment in time. "Testing" as a task may make it sound tedious, but another way to look at this is as a process of learning more about the people you care about, the folks who make your livelihood--your customers. You don't have a more important marketing task than that!
 

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