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Web advertising takes maturing steps
Wednesday, May 21, 2003
On-line advertising is getting more sophisticated, ironically, by turning its back on the notion that the Web is a whole new world where old rules are passť.
"We were enamoured of the technology," says Doug Knopper of New York-based DoubleClick Inc., which offers digital marketing and Internet advertising technology and services.
He points out that if you see a Gap billboard, no one expects you to immediately change your destination to buy a pair of khakis, but that's exactly what Internet advertising was claiming it could do in the early years.
In a way, he says, the overselling of Web advertising resulted from a lack of knowledge on the part of some proponents about how it can be used to achieve a number of ends.
For example, there's now an understanding that, when used for simpler goals such as branding or changing consumer attitudes, "the Web works quite effectively," says Mr. Knopper, DoubleClick's vice-president and general manager of advertiser and agency solutions.
"Now the argument isn't 'Is Web advertising better?' " concurs Simon Jennings, chairman of the Internet Advertising Bureau of Canada, and sales manager for Yahoo.ca. "The question is how to use it to enhance media buys in other areas."
The industry was a well-documented victim of the dot-com crash. But now it seems growth is coming back, this time fuelled by real companies spending real dollars.
On-line advertising was up in the fourth quarter of 2002 over the previous quarter -- though the fourth quarter was down 9 per cent from the corresponding period in 2001.
Still, according to Nielsen NetRatings, half of the top 20 on-line advertisers in 2002 were Fortune 500 companies -- up from about two in 2000.
Greg Stuart, president of the New-York based Interactive Ad Bureau, says a number of sites are experiencing strong ad revenue growth. At work, he says, is the last remnant of the dot-com age. "There are many large companies whose long-term ad deals are ending, and those deals were done in a whole different time and different era."
But while those high-rolling dot-com spenders are history, they're being replaced by a much more dependable and long-term market, namely good old-fashioned advertisers like carmakers, soft drink peddlers and other bigbrand names.
What's winning them over is both an understanding that eyeballs are eyeballs, and a Web page has a place in singing the praises of the latest sugary beverage, just like print, TV and billboards.
What's more, eyeballs seem to be drifting to the Internet more and more. In 2001, being on-line made up 11 per cent of consumers' "media time" but in 2002, that figure rose to 14 per cent.
As well, the industry has now been around long enough to assess its own effectiveness. For example, the IAB recently looked at the optimal mix of advertising for four major brands -- McDonald's, Colgate, Kleenex, and Dove.
Its results suggest each could benefit by shifting its ad spending to more on on-line promotion. "Three of [the] four brands spent 3 per cent or less of their budgets on-line, yet the research shows the optimal mix for all four involves spending at least 10 per cent of budgets on-line," the report says.
"The fact is they now have quantifiable evidence that on-line is more effective and cost-efficient, and that it covers consumer they weren't reaching," says Mr. Stuart.
Another sign the industry is growing up: it seems to have stopped calling each new technological twist the "next big thing" and labelling everything else obsolete.
Case in point? The banner ad. Many would-be experts regularly pronounced its death, arguing it was simply too static and boring and made little use of the Web's ability to offer targeted, interactive advertising.
But, says Miles Faulkner, a Toronto-based consultant who helps companies create and implement Internet strategies, "the key thing is the sheer size, value and numbers, and the enormous reach. Banner ads are very effective, particularly for branding."
Another attraction of the banner is it is a straightforward, known commodity. "A client will say "I have x dollars for print, television and the Web," says Mr. Faulkner. "The industry likes standards."
That standardization is becoming increasingly important. The IAB last month introduced what it dubs the "Universal Ad Package," or UAP, as a response to demand from advertisers for more standard on-line ad guidelines.
The UAP is simply four sizes for Internet ads, measured in terms of pixels and intended to "improve the efficiency and ease to planning, buying and creating on-line media," the association says.
Click-throughs -- how many people actually click on an ad -- are also viewed as less important than before.
The problems with click-throughs, says Mr. Stuart, are many. For starters, there's no logic in publishers' rates being tied to click-throughs since the creative, offer and product that would affect click-through rates are all out of their hands.
Moreover, when looked at through a traditional advertising matrix, where the goal is often to boost brand awareness, pique consumer interest or change attitudes, the click-through offers very narrow and limited feedback.
It appears the same largely applies to another measurement, the cost per acquisition, or CPA.
"It's not a favourite in the industry," says Judy Watson, director of sales for Canoe.ca.
The new buzzword is view-through. A view-through occurs when someone takes an action, say visiting a Web site, within 30 days of having viewed an ad.
Another trend revealed by a recent DoubleClick report is that by the first quarter of this year, almost 50 per cent of ads served by publishers used content targeting. This involved segmenting different content areas of a site, and selling ads to relevant advertisers.
Meanwhile, a greater percentage of ads are using rich media, such as pop-up ads, which move around, and ads using Macromedia Flash creative technology.
A recent trend report from DoubleClick found that 28 per cent of all ads in the first quarter of 2003 used rich media. That compared to 17.3 per cent in the first quarter of 2002.
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