Internet Advertising

The Internet Advertising Landscape

The General Advertising Landscape

The General Advertising Landscape

Source: Television Bureau of Advertising,

http://www.tvb.org/rcentral/adrevenuetrack/trends/trends.asp?c=2007_2009

The Internet Advertising Landscape: Revenues

Quarterly $ Revenue Growth Comparison 2000-2008 YTD

The Internet Advertising Landscape: Revenues

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

Top 10 Search Providers for December 2008

Provider
All Searches Google Search Yahoo! Search MSN/Windows Live Search AOL Search Ask.com Search My Web Search Comcast Search NexTag Search AT&T Worldnet Search BizRate Search

The Internet Advertising Landscape: Advertiser

Searches (000)
8,623,705 5,421,943 1,448,140 841,457 357,025 169,116 62,415 50,385 29,219 27,176 23,593

YOY Growth
19.6% 33.5% 13.7% -15.5% 5.1% 6.0% -11.6% 45.1% 0.7% 8.0% 37.1%

Share of Searches
100.0% 62.9% 16.8% 9.8% 4.1% 2.0% 0.7% 0.6% 0.3% 0.3% 0.3%

Source: Nielsen Online, MegaView Search

The Internet Advertising Landscape: Advertiser

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.
Direct Responses Marketing

Characteristics and Types of Internet Advertising

Traditional Advertising

Internet R Advertising

Internet Advertising Advantages

Targetability Global reach Tracking ability Less expensive to produce Flexibility and rich media combination Immediacy Interactivity

Internet Advertising Disadvantages

Customer-dominated environment A cognitive, not emotional medium Psychological fear of IT Limited space and information in some formats Connection problems Non internet users (yes, there are these people) Clutters

Company/Brand Website

Types of Internet/Online Advertising

Similar to brochureware Can be educational and entertaining Exhibit 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 publishers 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 audience Can track the number of emails sent (not measuring readership) HTML format attracts more attention with graphical ads Can measure reach (# of times graphics are pulled from the server)

Display Advertising
Online 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 Advertising
Advantages: Easy production Flexibility in sizing Immediate response from target market (comparing to traditional media)

Rich Media Advertising

Online 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 video IAB guidelines (www.iab.net)

Rich Media Ads

Advantages: Better branding capability Higher response rates More creative possibilities Better message engagement

Text Ads
Simple text advertising Some of the more common types of text ads: link ads (links in websites text content) contextual ads (a form of targeted advertising
appearing 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 Ads
Advantages Searchable by search engines Less-ignored by readers Less intrusive yet effective Simple and less bandwidth intensive Tailored to web content

Online Audience Measurement

Web Audience Measurement

People based measurement:
ComScore Media Metrix
http://www.comscore.com/metrix/xpc.asp

Campaign Measurement
Measuring ad effectiveness on the advertisers side as well as web publishers side Using ad serving technology Impression and click-through measured
DoubleClick: http://www.doubleclick.com/products/dfa/index.aspx Atlas Solutions: http://www.atlassolutions.com/services.aspx

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

Cookie based measurement:

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

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

1. CPM Model: cost per thousand Online Advertising Pricing Models

Most popular pricing model Advertisers are comfortable with this model E.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 Engines Ad 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 Networks
Services 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

2. Click-Through Model
Click-through: the action of a viewer clicking on an ad. Direct response model Originated from P&Gs online ad policy in 1996 Typically, keyword search ads pricing

Major Ad networks:
1. 2. 3. 4. 5.

Yahoo! Network Google Ad Network (AdSense) Advertising.com AdBrite ValueClick Networks

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 money Instead 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 persons 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 consumers purchase interest. More advantage to advertisers

6. Hybrid Model
A mixture of different pricing models E.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 Building Selling Products Generating Leads Building 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 analysis Focus group Expert panel to review the site

Selling Product
Important for e-commerce sites Bring the right target rather than a large number of target Going the places where customers go eBay store

Generating Leads
Easier to get prospects to request information online than to get them to purchase immediately Listserv, 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 analysis
Editorial content Lead time Banner size and placement on the page Availability of ad inventory Technology capability

Types of Sites
Well-branded, highly recognizable sites High traffic sites with less- or non-recognizable brand names Niche sites with low traffic Personal 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 publisher Possible to utilize targeting solutions

Online Advertising Selling

Selling Agents in Online Ad

In-house sales forces Representative firms Ad networks Online ad auction services

Online Ad Rep Firms

Sales representatives of media owners Sell spot ads to ad agencies on behalf of media companies Revenues 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 software sell left-over inventories

Ad Networks
Benefits to advertisers
Consistency in ad delivery reporting Can work with one sales rep for multiple site buys easy for site mix Competitive pricing because of the networks economy of scales removing leftover inventory More 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 industrys share. Home Page, weather, and local news dominate both the mosttrafficked portions of TV sites and the biggest revenueproduction 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

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

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 itself Product 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

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 Ads Linear Video Interactive Ad Non-linear Overlay Ad Non-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