Internet AdvertisingThe Internet Advertising Landscape

The General Advertising Landscape

Source: Television Bureau of Advertising, http://www.tvb.org/rcentral/adrevenuetrack/trends/trends.asp?c=2007_2009

The General Advertising Landscape

The Internet Advertising Landscape: Revenues

Source: PwC/IAB Internet Advertising Revenue Report (www.iab.net)

Quarterly $ Revenue Growth Comparison – 2000-2008 YTD

The Internet Advertising Landscape: Revenues

Top 10 Search Providers for December 2008

Provider Searches (000) YOY Growth Share of Searches

All Searches 8,623,705 19.6% 100.0%

Google Search 5,421,943 33.5% 62.9%

Yahoo! Search 1,448,140 13.7% 16.8%

MSN/Windows Live Search 841,457 -15.5% 9.8%

AOL Search 357,025 5.1% 4.1%

Ask.com Search 169,116 6.0% 2.0%

My Web Search 62,415 -11.6% 0.7%

Comcast Search 50,385 45.1% 0.6%

NexTag Search 29,219 0.7% 0.3%

AT&T Worldnet Search 27,176 8.0% 0.3%

BizRate Search 23,593 37.1% 0.3%

Source: Nielsen Online, MegaView Search

The Internet Advertising Landscape: Advertiser

The Internet Advertising Landscape: Advertiser

Characteristics and Types of Internet Advertising

Direct R Responses

Marketing

The Definition of Internet Advertising

Internet advertising is the convergence of traditional advertising and direct responses marketing. The use of the Internet for delivering marketing messages to attract customers.

Traditional Advertising

Internet Advertising

Internet Advertising Advantages

TargetabilityGlobal reachTracking abilityLess expensive to produceFlexibility and rich media combinationImmediacyInteractivity

Internet Advertising Disadvantages

Customer-dominated environmentA cognitive, not emotional mediumPsychological fear of ITLimited space and information in some formatsConnection problemsNon internet users (yes, there are these people)Clutters

Types of Internet/Online Advertising

Company/Brand WebsiteSimilar to brochurewareCan be educational and entertainingExhibit clear business objectives- Move a potential customer from browser to buyer

Simulated shopping experience, comfort, privacy (e.g., BMW) http://www.bmwusa.com/Standard/Content/BYO/Default.aspx

- Entertainment to attract site traffic (?)- Valuable information resources (e.g., Tide)

http://www.tide.com/en_US/index.jsp

- Customer service (e.g., FedEx)http://fedex.com/us/

Opt-In E-mail

Classified Ads or Newsletters distributed by an entity through email blasts to opt-in audiences. Advertisers can individually sponsor a publisher’s email newsletter or they can purchase classified ad space.

Example: Cynopsis newsletter (industry facts + classifieds)

Opt-In E-mail

Advantages:Inexpensive and effective advertising opportunities to reach a niche market and a precisely targeted audienceCan track the number of emails sent (not measuring readership)HTML format attracts more attention with graphical adsCan measure reach (# of times graphics are pulled from the server)

Display AdvertisingOnline ads that combine text, images, and animation

(but are not interactive - those are rich media) to quickly grab the attention of website visitors browsing the pages on which they are featured.

Typical Display Ad Sizes.leaderboard (728 x 90 pixels) skyscraper (120 x 600 pixels or 160 x 600 pixels for wide skyscraper) banner (468 x 60 pixels) half-page (300 x 600 pixels) square button (or tile) (125 x 125 pixels) medium rectangle (300 x 250 pixels) Examples…

Display AdvertisingAdvantages:

Easy productionFlexibility in sizingImmediate response from target market (comparing to traditional media)

Rich Media AdvertisingOnline ads with which users can interact (include video, sound, and

animation that engage the users)

Typical rich media ads: peel-back (user can roll over the ad and it will appear to peel back and display all of the advertising content)floating (appear on top of the web page content. It can be placed anywhere on the browser page)expandable (when your mouse rolls over this ad, additional information will slide out)Interstitial (brief ads page in between the reference and target pages) video (video streaming on site; video banners)Roadblock (activate once a user clicks on a link. The roadblock will pop up and be viewable until the user click on it)Popup videoIAB guidelines (www.iab.net)

Rich Media AdsAdvantages:

Better branding capabilityHigher response ratesMore creative possibilitiesBetter message engagement

Text AdsSimple text advertising Some of the more common types of text ads:

link ads (links in website’s text content)contextual ads (a form of targeted advertisingappearing on websites which is selected and served by automated systems based on the content displayed to the user)search engine marketing ads (pay per click -ex. Google Adwords) online directories

Text AdsAdvantages

Searchable by search engines Less-ignored by readersLess intrusive yet effectiveSimple and less bandwidth intensiveTailored to web content

Online Audience Measurement

Web Audience Measurement

People based measurement: ComScore Media Metrix

http://www.comscore.com/metrix/xpc.asp

Nielsen/Net Ratingshttp://www.nielsen-online.com/solutions.jsp?section=sol_1&nav=1#3

Cookie based measurement: Google Analytics

http://www.google.com/analytics/features.html

Coremetricshttp://www.coremetrics.com/downloads/ds-web-analytics.pdf

Campaign Measurement

Measuring ad effectiveness on the advertiser’s side as well as web publisher’s side

Using ad serving technology

Impression and click-through measuredDoubleClick: http://www.doubleclick.com/products/dfa/index.aspx

Atlas Solutions: http://www.atlassolutions.com/services.aspx

Online Advertising Pricing Models

1. CPM Model: cost per thousand

Most popular pricing modelAdvertisers are comfortable with this modelE.g., a site charges $10,000 per banner with 500,000 impressions CPM=$20

CPM = [price/#of impressions] X 1000

Online Ad Sellers Using CPM Model

Individual websites (normally run of site buying; higher CPM due to targetability)Search EnginesAd networks

Search Engine

General rotation: a banner will appear randomly appear during searches

Run of Category: ad will rotate throughout a category such as arts, health

Keyword buying: buying keyword searches

Ad NetworksServices that connect the websites that want to host ads with the interested advertisers using a central ad server.Advertisers can run category package (ROC) or overall network package (RON)Large web properties do not sell to many ads through ad networks

Major Ad networks: 1. Yahoo! Network 2. Google Ad Network (AdSense)3. Advertising.com4. AdBrite 5. ValueClick Networks

2. Click-Through Model

Click-through: the action of a viewer clicking on an ad.Direct response modelOriginated from P&G’s online ad policy in 1996Typically, keyword search ads pricing

Criticisms on CTR Model

Publishers are forced to rely on advertisers’ creative quality for their own ad revenue.Brand-building value of banner is ignored.Publishers tend to run a banner until ad receives the number of clicks promised.CTR may have little to do with their goal such as conversion.

3. Flat Fee Model

Fixed fee charged for a certain time period (yearly fee, monthly fee) regardless of impressions or CTR

When publishers need seed moneyInstead of offering low price, when they need to save cost associated with other monitoring activity or traffic reports.Used as premium placements

4. Pay Per Viewer Model

Advertisers pay users money or incentives for everything from visiting advertiser sites to filling out surveys to purchasing products. Underlying philosophy is the most valuable commodity on the Web is a person’s attention and that the best way to acquire that is through incentives

5. Pay Per Purchase

Pay publishers only when purchases result from the ad. Publishers depend on creatives quality and consumer’s purchase interest. More advantage to advertisers

6. Hybrid Model

A mixture of different pricing modelsE.g., a site offers one price for impressions, a higher price for CTR, and an even higher price for pay per purchase model.

Online Advertising Buying

Before you begin…

Is your target audience online? If so, where?

Online Campaign Goals

Traffic BuildingSelling ProductsGenerating LeadsBuilding Brands

Traffic Building

Website with a large number of visitor sell more advertising.Important for media company whose main business model is ad revenue.

Website Management

Landing page (website) management is important.

Log data analysisFocus groupExpert panel to review the site

Selling Product

Important for e-commerce sitesBring the right target rather than a large number of targetGoing the places where customers go eBay store

Generating Leads

Easier to get prospects to request information online than to get them to purchase immediatelyListserv, registration, coupon book, etc.

Building Brand

Online exposure only can create brand equity. (e.g., even banner exposure)

This idea leads to CPM based pricing model.

Site Selection Process

Audience analysis

Demo, affinity, loyalty, lifestyle, other psychological factors

Secondary data analysis MRI, ComScore, Nielsen, etc

Site Selection Process

Website analysisEditorial contentLead timeBanner size and placement on the pageAvailability of ad inventoryTechnology capability

Types of Sites

Well-branded, highly recognizable sitesHigh traffic sites with less- or non-recognizable brand namesNiche sites with low trafficPersonal sites

Network Buying

Sometimes, ad networks sell advertising (function as rep firms).Benefits of network buying

Increases selling and negotiation power of small-sized website From advertisers’ perspective, it is easier to contact one network representatives rather than many individual website publisherPossible to utilize targeting solutions

Online Advertising Selling

Selling Agents in Online Ad

In-house sales forcesRepresentative firmsAd networksOnline ad auction services

Online Ad Rep Firms

Sales representatives of media ownersSell spot ads to ad agencies on behalf of media companiesRevenues come from commission on ad sales

Ad Networks

Consist of a group of sites with advertising inventory to sell.Benefits to web publishers

easy access to more advertisers through networks’ sales power (rep firm function)save cost for expensive ad management softwaresell left-over inventories

Ad Networks

Benefits to advertisersConsistency in ad delivery reportingCan work with one sales rep for multiple site buys easy for site mixCompetitive pricing because of the networks’ economy of scales removing leftover inventoryMore targeting options with a slate of sites easy for site mix

Ad Networks vs Rep Firms

Both ad networks and rep firms broker ad space.

A rep firm represents the site itself (or a collection of sites by the same owner) while an ad network represents a group of sites.

Radio/TV Stations Online Advertising Selling

The General Landscape

Internet sales are still a tiny percentage of gross revenue for radio/TV station, but it is growing fast.

Not all sites are created equal.

Local TV Web Revenues:2003-2010

The General Landscape

In 2007, TV stations were using the Internet to tap advertisers in “classified” categories, further eroding the newspaper industry’s share.“Home Page”, weather, and local news dominate both the most-trafficked portions of TV sites and the biggest revenue-production sections of those sites The pricing for video ad varies, and majority of sites are pricing web inventory at flat rates.

Pricing/packaging Approaches

Types of Online Ads from Radio/TV Stations: In-stream video

Linear Video Ad: is presented before, in the middle, or after the video content is consumed by the user, in very much the same way a TV commercial can play before, during or after the chosen program.

Example

Non-linear Video ad: runs parallel to the video content so the user see the ad while viewing the content. Non-linear video can be delivered as text, graphical ads, or as video overlays

Overlays which are shown directly the content video itselfProduct placements which are ads within the video content itself

Both linear and non-linear video as products have the option of being paired with what is commonly referred to as a “Companion Ad”Example

Types of Online Ads from Radio/TV Stations: In-stream video

Companion Ad

Commonly text, display ads, rich media, or skins that wrap around the video experience, can run alongside either or both the video or ad content

The purpose is to offer sustained visibility of the sponsor throughout the video content experience

Combination models:Linear Video Ad with or without Companion AdsLinear Video Interactive AdNon-linear Overlay AdNon-Linear Non-Overlay Invitation Ad

Linear Video Ad with or without Companion Ads

http://www.fox.com/fod/play.php?sh=prison

Linear Video Interactive Ad Non-linear Video Ad

http://abc.go.com/

Non-linear Non-Overlay Invitation Ad Video Advertising Practices