| What will be the future of Interactive Advertising?
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An Interactive ad campaign can
be defined as "an integrated and planned series of messages appearing in
interactive media." John Leckenby, Ph.D,
2001
In truth, no one knows for sure. But one thing remains certain--the Internet is here to stay and so is Interactive Advertising.
In the following pages you will be able to get a glimpse of the current state of Interactive Advertising and peruse some predictions about its future. These predictions are based in part on historic developmental trends of modern media vehicles such as television and radio, and on possible scenarios put forth by today's leading Internet scholars.
Increase of Web Users
Five years ago it may have been easy to dismiss the Internet as a viable advertising media vehicle. Today, it is not as easy. As more people spend time online, the race for "eyeballs" will focus on the Internet.
The IDC Research Group forecasts that by the year 2004 there will be 500 million worldwide web users, one third of which could have "always on" broadband access (Mathieson 2000).
This particular figure suggest that not only will the Internet become a viable medium for delivering advertising, it will be an important one, and not one that should be ignored.
Increased Number of Websites
There are two factors that directly influence the emergence of the Internet as an advertising medium. The first is the continual increase in actual websites. The second is the development of broadband technologies.
A recent study by Inktomi and NEC Research shows that there are currently over two billion websites (Campbell 2000) and this number is sure to increase. An increase in websites ensures that there will be space available to showcase online advertisements.
Much like television programs and specific stations, websites will serve as delivery mediums for Internet advertising. Yet as more and more websites appear audiences will continue to fragment. It will become quite a task for a media planner to identify which websites will have a receptive audience for their advertising message.
Nielsen, the current leading provider of television ratings, has begun to develop web-site ratings to track Internet traffic and audiences (Cairns 2001). With over two billion sites, this is quite an undertaking.
Development of Broadband
As stated before, the second factor that promotes the emergence and eventual prevalence of internet advertising is the continual development of broadband technologies.
"The market for streaming media is growing rapidly, accelerated by the rollout of broadband cable and DSL networks that dramatically improve the quality and speed of internet access (Mathieson 2000)."
As is the case with traditional media vehicles such as television and radio, the success of the Internet and its very proliferation may depend on the revenue generated by advertisements.
In a rather symbiotic relationship, audiences will grow, and so in turn will advertisements. Audiences will be attracted to a web that is more dynamic and rich with content. These are the very qualities that will emmerge with the continual influx of advertising dollars. Advertisers in turn will flock to the web as audiences continue to grow.
The growth of websites could feasibly begin to take share away from other media vehicles, such as television. This will also serve as impetus for media planners who will face greater challenges in finding appropriate target audiences
Rather than focusing on the exact numerical data, the chart above is important because it illustrates the growth of the U.S. broadband user base.
This growth trend is echoed by the Federal Communications Commission (FCC) whose most recent report stated that, "high-speed internet connectivity in the US increased from 2.8 million in the second half of 1999 to 4.3 million in the first half of 2000 -- a 57% rise. High-speed subscribers are now present in all 50 states as well as the District of Colombia and Puerto Rico (High-Time 2000)."
Improved connectivity and improved quality translate to quicker download speeds and greater ease of navigation. At present, advertising on websites is limited in order to ensure quick downloads. This practice may become obsolete with the increase of bandwidth.
An increased bandwidth also creates a larger canvas for advertisers to create stellar campaigns. No longer resticted by small file sizes and reduced color palettes, increased bandwidth could give rise to memorable and more successfull online advertisements.
Mainstream Products Appear on the Web
Historically, online advertising has been directed toward a tech-savvy audience. However, in a recent report Yahoo states that 80% of its advertisers are consumer brands. Compare this to 85% technology ads in 1995 and it becomes clear that the web is becoming a more mainstream media (Kaur 1999).
It makes sense that in the beginning stages of the Internet, the vast majority of products advertised were technical. Examples included software, computer hardware, and financial products. This occurred as a direct result of the types of people that made up the audience navigating the original "information super-highway."
Yet, with an increase in numbers of people online, audiences are becoming more diversified and thus, so are the products being advertised.
Increases in web communities, such as Yahoo and Microsoft groups formed on a basis of likes, dislikes and hobbies, encourage advertisers to broaden the types of products advertised online.
These web communities are the reason why commerce sites such as Amazon.com, Dell.com and Expedia.com are so widely sought after. Their affiliate and affinity marketing programs combined with customer profiles and visiting/viewing habits ensure that advertisers will more accurately match their product advertisements with an appropriate audience (Cairns 2001).
Today, there are few product types that can not be found advertised online. Everything, from catfood to cars can now be advertised online.
Growth in Interactive
Advertising Budgets
Greater bandwidth and a growing online audience should propel businesses to lend more importance to the Internet as an advertising delivery vehicle.
A consultant for the Exeter Group in Boston states that, "Firms must insist that their ad agencies become web-savvy in the new millennium (Ranganathon 2000)."
In response to client demand, as of August 2000, 73% of advertisers said they'd increase online advertising over the next 12 months (eAdvertising Report 2000). This increase in advertising volume translates to a dramatic increase in spending which should in turn positively affect the overall quality of online advertisements.
The continual increase of spending for online advertising including banners, interstitials, sponsorships, and e-mail promotions, has been closely monitored for quite some time.
On Aug 8th of this year the Internet Advertising Bureau announced that the medium's advertising revenues had reached $1.95 billion. This represents a 9.9% increase over 4th quarter 1999, and a 182% increase over 1st quarter 1999 (Callahan 2000).
Though the actual figures differ, Activ Media, eMarketer and Jupiter Communications all forecast large increases in advertising revenue over the next few years. According to Activ Media, a market research firm, web ads will earn $19 billion by the year 2001 (Kaur 1999).
In the chart below, eMarketer illustrates its own predictions for the growth of spending in U.S. web advertising.
Jupiter Communications predicts that by the year 2005 online ad revenues will hit $16.5 billion. This figure represents 8% of total U.S. ad spending for all mediums (eAdvertising Report 2000) and is sure to solidify the Internet as a viable, workable, and exciting new medium for the delivery of advertising.
Attracting More Creative Talent
By now it should be apparent that advertising budgets will continue to increase for Interactive campaigns. However, it may not be clear why these budgets will increase.
The first reason why budgets will increase is the fact that as websites are able to consistently deliver a specific type of audience they will be able to charge more for advertising space. The second reason, is that as more and more products advertise online, competition will grow, and the race for eyeballs will become that much more difficult.
"The interactive future paradigm will exceed the passsive current environment in its ability to accurately identify and deliver targeted advertising designed to elicit a response from the viewer (Cairns 2001)." Targeting ads in this fashion, while theoretically more succesfull and precise, depends much more on strategic and creative execution.
It is the creative execution and the strategic planning behind an interactive ad that will give it the needed strength to overcome the clutter of the current online environment, and also surpass its competition. The type of creative and strategic talent needed to design such an ad is not currently involved in Interactive advertising.
In fact, currently "...very few people in our industry at a senior level are involved in the recruitment, training and development." of young talent (Garret 2000). While "...senior partners at Goldman Sachs, Merill Lynch and McKinsey are all out at the universities recruiting the talent every year we (the Interactive advertising community) aren't." (Garret 2000).
If Interactive advertising hopes to become a successful alternative to advertising in other media vehicles, there must be an investment made in human capital.
Creation of Uniquely Interactive Ads
Internet ads come in many different shapes and sizes. The most common are banner ads that represent 53% of all online advertisements (Ranganathon 2000).
In the mix are also pop-ups, promotional e-mails, destination/promotional websites, interstitials, microsites, contests, and event sponsorships (Kaur 2000). Of these different types of advertisements the most effective at present have been event sponsorships (Blankenhorn 1999).
The number of different online advertising styles suggests an important attribute of online advertisements, that is the lack of technical restrictions commonly associated with traditional advertising such as size and space. This fluidity of design is continuously enhanced by the growth of new technologies such as streaming video and vector graphics.
The advantages of online advertisements are unmatched by any other form of advertising. There is no dispute that internet advertisements have a wider reach than any other advertising medium. This is compounded by comparatively low production costs, easy updation, and the ability to produce instant transactions (Ranganathon 2000)-- all qualities which are unique to internet advertising.
Banner ads in particular can accomplish several things. For example, banners can serve as gateway points for your site. They can drive traffic toward a store much like a traditional billboard does today (Ranganathon 2000).
Banner ads are also able to build brand recognition and serve as retail locations (Notess 1999). A recent study by Ad Knowledge found that 40% of viewers who remembered seeing a banner ad but did not click on it, ultimatelly made a purchase between eight to thirty days after exposure. "As long as the banner was noticed, it did its job...." (Carton 2001).
Evolution of New Formats
Yet a banner ad is not much more than a billboard online. It does not fully take advantage of the unique qualities afforded to the Interactive environment. Much like early television programs that mimicked traditional stage productions, the banner ad is no more than a billboard on the web.
Perhaps rather than focusing on straighforward and traditional brand messages, Interactive advertisments would be better served by becoming more targeted and personalized communications that rewarded viewers for their time (Brech 2000).
It is clear that formats for Interactive advertising have not yet been fully explored. CNET has introduced a box ad in the middle of their web page. This is only one example of how Interactive advertising welcomes innovation and is continuously searching for new and better formats.
Banner Blindness will lead to a Change in Pricing Strategy
With over one billion sites out there, it's no surprise that billions of dollars have been spent on how to be "heard over the rest (Campbell 2000)." In fact, the greatest problem of Internet advertising is its inability to break through the clutter.
Alun Howell, Creative Director at Ogilvy & Mather, believes that the on screen banner is the closest thing to traditional advertisements (Douglas 2000). And like traditional advertising, people will always be able to flip the channel or turn the page just as they are now cruising the net with images turned off for greater speed.
Because banner ads are becoming more and more common, they are being ignored in a phenomenon widely known as banner blindness (Notess 1999). The graph below clearly illustrates this trend.
In the year 2000 consumers were hit with 950 online advertising impressions per day, more than doubling the 440 impressions of 1999 (eAdvertising 2000). This constant barrage of internet ads is the main catalyst for banner blindness (Douglas 2000).
Internet ads are plagued with bad navigation and slow loading graphics (Freeman 1999). PC users accustomed to these flaws usually abort a page before a banner ad--usually the first thing to appear--has time to fully load (Gilbert 1999).
A modest estimate claims that most users will not wait more than 30 seconds for anything to download as click through rates continue to fall well below 1% (Douglas 2000). As illustrated in the graph below, users who don't bother looking at online ads certainly won't click them.
As counterintuitive as it may seem, even with the arrival of broadband and services like Road Runner, click through rates decrease. In fact, with broadband, service messages are more effective than the traditional messages we are accustommed to seeing in banner ad campaigns (Blankenhorn 1999).
Unfortunately, few advertisers have caught on to this trend. This can be seen by the fact that most banner ads today still look like modifications of pre-existing print advertisements rather than new concepts designed specifically for the web.
As click rates decline and banner blindness increases, it is possible that the pricing model may shift from straight cost-per-thousand to more of a hybrid that includes a performance based approach (Goldberg 2001).
As Interactive advertising moves away from transaction inducing advertising and toward branding campaigns, success will become harder to measure. Without the information provided by click-through rates or actual purchases, portal sites may have to resort to other forms of tabulation in order to design their fee system. Because of this we may eventually see portal sites such as Yahoo.com go to paid subscription models to boost revenue (Carton 2001).
On the flip side, Peter Georgescu, Chairman of Young and Rubicam, believes that "advertising is becoming more predictable and measurable and is encouraging clients to pay not on a commission basis but a fee based on results achieved (Cairns 2001)."
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Integrated Marketing Communications
As companies begin to realize the importance of Interactive Advertising, and the cost of that advertising rises, we will undoubtedly see a gravitation toward Integrated Marketing Communications. The Rutgers Business School defines Integrated Marketing Communications as follows: "Integrated marketing is a comprehensive approach to internal and external organizational communication. It combines the power of marketing and public relations and the many tools within those functions to deliver consistent communications messages to the organization's different constituents." "It begins with analyzing the needs and priorities of each audience, and then tailoring marketing and communications programs to address those needs and priorities." "The ideal integrated marketing model varies by institutional type, environment, and definition of institutional advancement priorities. Some integrated marketing programs are truly centralized and institutionwide, while others incorporate the same marketing principles in an environment with more decentralized management." Some Components of an Integrated Marketing Program:
Rutgers Source: Council for the Advancement and Support of Education CURRENTS Magazine, January 1998 Therefore, it is evident that the successful implementation of an Interactive campaign will depend on its incorporation in the overall marketing communications plan of each specific product. "Clients who are getting the best results are the ones who are doing innovative and unique things and who view Yahoo as part of an overall integrated program (Howard 2001)." In order to accomplish this, Interactive advertising agencies will "...continue to be creators but with a vastly expanded scope, becoming full-service agents for brands, as well as global agents for global brands....(Garrett 2000)." Targeted Messages Like traditional advertisements, an online ad must have good placement. Yet unlike traditional advertising delivery mediums, the Internet is powered by databases which make it easier to target and track ads. For example, banner ads can be called up and displayed based on a keyword submitted by a person looking up information on a search engine (Freeman 2000). Because online ads can be targeted in this fashion, it is easier to build brands by putting ads on sites where the right "eyeballs" are (Callahan 2000). When database information such as age and salary information (WebReference 2000) are coupled with keywords entered, the ability to deliver the appropriate advertising message at the optimal time is greatly increased. In today's internet world, online ads can be targeted and aimed at specific audiences with greater ease (Notess 1999). Traditionally, an aim of advertisements has been to increase top of mind awareness. Essentially the idea is that the more times a consumer is exposed to a product name through advertisements, the greater the chances of that consumer remembering the product in the event of a purchase decision. Increasing top of mind awareness in this way is known as increasing "mindshare." While the theory is solid it is difficult to tabulate. While this has always been true in other mediums, the tendency of online advertisers is to focus more on the quantifiable numbers, such as click-through rates, that are available to them. A result of advertisers focusing on the numerical data afforded to them from online advertisements is a current debate that online advertisements differ from traditional advertisements because their purpose is no longer to increase "mindshare," but rather to increase "lifeshare" by tracking individual customer transactions and building relationships with them (Centaur 1999). By delivering ads created specifically for an individual consumer (WebReference 2000), such as a suggested book from Amazon.com based on previous purchases, internet ads may be able to foster stronger relationships than any other advertising medium. The loyalty inspired in customers may be greater since there is more of a one to one relationship between the buyer and the seller, thus promoting return purchasing. Though the internet has the potential for low cost global advertising, it's real strength is its ability to deliver highly targeted and individualized ads to a small, yet receptive audience. Recent studies support this idea by showing that bilingual advertisements are more effective online (Kaur 2000). To John Danner, Chairman of Netgravity, the advantage or value of online advertising is not in raising awareness or direct marketing, it is the low cost per acquisition of a new customer (Centaur 1999). Highly targeted ads delivered at the right time to the right person at a fraction of the cost of traditional advertising are making this possible. New Media Vehicles The quest to deliver the right message to the right audience at the right time and place, has always compelled advertisers. This desire, compounded by the Internet's transactional nature and the low cost of aquisition of new customers has lead to a renewed interest in the development of online media vehicles. For many, the Internet is a place that can only be reached through a person's desktop computer, yet this is no longer the case. Greater advancements are being made every day as we see cell phones and electronic planners gaining access to the online environment. The way in which consumers experience the Internet is also changing. Where the keyboard and mouse were once the only ways to navigate the Internet, many new advancements are being made. The NetPen, designed by Cross, is a writing instrument that allows a consumer to scan and store codes printed in magazines, newspapers and product packages. Once these codes are scanned, a consumer then puts the pen into an electonic inkwell and is whisked to related websites thereby avoiding the hastle of typing in long urls (Walker 2000).
Like the NetPen, webcams are also changing the way consumers navigate and interact with the Internet. Digimarc Corp has persuaded 160 magazines to embed Internet-linked watermarks into their pages. A consumer could then hold up these pages to their webcam and be brought to the right website online (Earnshaw 2001). Not all advancements are as obvious as the NetPen or Webcams. More subtle changes are occurring. As a direct result of the Internet, advertisers have been able to reach audiences in schools and at places of employment. Rather than reciting old litanies of how advertising does not belong in the schools, local districts welcome the Internet and invariably the advertisements that come along with it. And while companies may instill policies forbidding their employees from surfing the web, many times their work is done online and thus employees are being exposed to advertisements (Heather 2000). Though one could argue that a radio being heard in a place of employment also permeates advertising, or that students wearing branded merchandise are in effect mobile billboards, there is no question that consumers are running out of advertising free space. The result is a growing level of consumer annoyance and a decrease in advertising efficacy sparked by a growing ability to "tune out" the advertising. Rick Sareen, a director of Media 21 believes that, "We can't target ads at people any time, any place, anywhere just because technology allows us to or we will end up alienating everyone. (Carter 2000)." The trick in the future will be to deliver less, though more targeted advertising messages. This will be possible through the use of the Internet's ability to track consumers attitudes, online purchases and browsing behavior. "The goal must be to create messages so in tune with the consumer at the time and point they receive them that they suck the messages from us (Carter 2000)." Global Americanization With the growth of the Internet and the proliferation of online communities, people the world over will become exposed to a more global culture. Availability of products and ideas worldwide will lead to greater homogeneity among citizens of the global village. While physical boundries are diminishing in importance, language barriers stand in the way of true global online communication. Simply stated, if a consumer accesses the Internet from China, France or Brazil, he'll likely run into some difficulty understanding the content unless he speaks English. This is because the majority of websites in the world are currently in English and housed in the United States in spite of the fact that only seven countries in the world (8.3% of the worlsd's population) recognize English as their primary language (Cohen 2000).
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According to
eMarketer's recent Global Report:
Though it is probable that a greater international web presence will emmerge, the question at present is to what extent will online audiences be affected by the overwhelming amount of American websites? For quite some time American media, such as television programming, music and film, have been available globally. Yet never before have American products been so readily available to the global community as they are now with the growth of transactional Internet sites. How the Americanisation of the global village will affect Internet advertising remains unclear. It would be foolish however, to assume that it will not.
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