Why Internet Advertising? And why on another site, even if you have your own?

Just 40 years ago television was considered "new media"? And just 15 years ago cable wore the same badge. During their respective early days, each of these "new media" had to prove their value to earn a spot on the media plan-the same position the Internet finds itself in today.

Does Internet advertising belong on your media plan? This is the question everyone is asking. CEO's are asking their brand managers. Brand managers are asking their agency account managers and account managers are asking their media departments.

The answer most certainly is YES - regardless of the brand you manage or the category in which that brand competes. Look at the facts:

• Fact: Television Audiences are Migrating to the Net The erosion of the network television audience during the 1980s and 1990s changed media plans forever.

  Recent studies and findings indicated a distinct shift in media habits with almost 37% of respondents claiming that they "use the Web instead of watching TV on a daily basis." Earlier this year, the North American online audience had doubled in the past 18 months.

  Taken alone, this migration of the television viewing audience to the Internet is particularly striking. This data is made even more impressive by the fact that Internet users are remarkably upscale. So, not only are we witnessing a fundamental shift in media habits, the Internet audience represents that hard-to-reach, well-educated, high income population most coveted by marketers.
  
  

• Fact: The Net is the Fastest Growing Medium in History Internet advertising began in 1994, when the first banner ads were sold (Hotwired, October 1994) and the first commercially available Web browser, Netscape Navigator 1.0, was released (November 1994). The internet has 50 million U.S. users. With television, cable and radio included for historical context, the growth of the Net is nothing short of remarkable, It took TV 13 years and radio 38 years to reach this milestone.
  
  
• Fact: Internet Demographics are a Marketer's Dream Net users are young, well-educated and earn high incomes. And, increasingly, research shows that both men and women are using the Internet. GENDER women now represent over 42% of the online population. AGE The average age of Web users is 34.9 years old. INCOME more than 65% of Internet users have household incomes of $50,000 or more. EDUCATION 75% of Internet users have attended college.
  
  
• Fact: Web ad banners build brand awareness and may be better at generating awareness than television or print advertising. Since their first appearance on commercial Web pages, the value of banner ads has been debated. Many felt they were physically too small to offer much branding and some advertisers convinced themselves that click-through was the only metric by which to measure ad effectiveness.

  They erroneously believed - despite the fact that no research existed to support their belief - that without a click-through, no brand building would occur. Specifically, it has been shown that exposure to the ad banners alone increased brand awareness from 12% to 200% in a banner-exposed group. The study also compared the impact of the banner ads in this test to television and magazine norms from prior studies. The findings were remarkable: Single exposure to a Web banner generated greater awareness than a single exposure to a television or print ad.

  Now You Know the Facts Every new medium has had to prove its value to advertisers. Just 15 short years ago, cable / satellite television fought to earn the respect of advertisers. Today it is a $6 billion industry. Those in Internet Publishing realize the Internet is no exception. We accept the challenge to prove the value of this medium and will build the case with facts-not hype- for including the Internet on your media plans. All these facts in aggregate create an undeniably compelling case for advertisers today to include the Internet in their media plans.

  Industry leaders in Building Brand Identity, have been noted recently saying, "The World Wide Web will be one of the strongest brand building tools available." Based on the facts at hand, we couldn't agree more.

Advertisers are rolling up their sleeves to figure out how to make advertising work on the Web.
They are torn about what to spend and who to hire. But as Web advertising becomes a significant portion of marketing budgets, advertisers will need to adopt a set of best practices for this new medium.

Advertisers are searching for the formula that will unlock the potential of the Web. Forrester interviewed 51 companies that currently advertise on the Web and found that:

• Spending patterns vary. Consumer brands spend a small fraction of their budgets on the Web.
  
  
• Technology companies spend five times more of their brand dollars there. Spending on sites
  
  
• still exceeds spending on ads.
  
  
• Banner campaigns run the gamut. There is no such thing as a typical Web advertising campaign.
  
  
• Ad pricing frustrates advertisers.
  
  
• Personalized targeting has not yet taken hold. Advertisers target mainly on content.
  
  
• Web advertising needs best practices. As Web advertising becomes a significant portion of marketing budgets over the next four years, advertisers need to develop a set of best practices around what to build and what to pay.

Advertisers on the Web have three choices. They can build or make use of use an established:

• Destination sites, which use information, entertainment, and high production values to pull users in and bring them back again;
  
  
• Micro-sites, small clusters of brand pages hosted by content sites or networks; or
  
  
• Banner campaigns and other low-overhead Web advertising-like sponsorships. To understand which is best, advertisers need to ask: Can it be sold online? Products that can be sold online and shipped economically or delivered digitally-such as music, tickets, books, software, and mutual funds-can use a destination site to support everything from brand awareness and consideration, through post-sales support.
  
  But if the Net doesn't enable your company to offer a product faster, cheaper, or better, rule out a destination site. Is it a considered purchase? Sellers of complex products like computers, cars, and industrial coatings can use a Web site to squeeze costs, allowing prospects to check specifications, configure their purchase, and get product support on-line. But if your customers are more likely to ask their neighbours than you about your product, you don't need a Web site.

Destination sites create a new channel – www.GigglingGourmet.com is considered such a site.

Destination sites are right only for companies that can use the Net as a full-fledged channel for exchanging information with customers, in order to book a sale (See the September/October, 1996 Leadership Strategies Report, "The Fourth Channel: Vision.") Advertisers that do build destination sites should:

• Do a gut check beforehand. A company must be willing to spend money and time to build a destination site and then more to maintain it. A half-baked site actually will erode a brand. Don't underestimate the volume of customer interactions. L.L. Bean dedicates a team of customer service reps to reply to e-mail seven days a week.
  
  
• License, don't produce content. True content providers always will out publish advertisers. When Toyota first moved onto the Web, it created seven different lifestyle 'zines. Today only Car Culture remains-and that will soon be produced by one of the big auto publishers.
  
  
• Get found. Once a site exists, marketers need to promote it. Smart companies dedicate at least 20% of their overall interactive budgets to promoting the site online. They also sneak URLs into print and TV ads and become experts in such Web guerrilla marketing techniques as getting found by search engines and trading links with other sites.

Micro-sites are sufficient for considered-purchase products.

Micro-sites enable advertisers to communicate deeper product benefits and collect customer information without the cost of a full-blown Web site.

Advertisers of considered purchases like clothes and appliances should:

• Put micro-sites where the audience is. The rumoured $3 million that Levi's spent on its early way-hip site could have put micro-sites on all the top youth sites for months.
• Maintain clues that this is advertising. Commercial content masquerading as editorial undermines the trust on which brands are built. The Giggling Gourmet website has both commercial and contributed content the content is of such interest that users return regularly and also refer others to the site.

Banners are enough for most off-the-shelf products

Most consumer goods companies should use their resources to:

• Build interactive banners. Banners should let viewers request free samples, register to win, link to the home product/brand’s website, and order products.
• Sponsor appropriate content. Instead of building a big site, a brand like P&G's Tide should be looking for a way to sponsor the online schedules of every Little League in the country. A logo and positioning line are sufficient to make an impression.
• Maintain a corporate site. Companies need a "face to the public" that catches search engine queries and serves investor relations and recruiting groups. But consumer brands should resist pumping up the site with product information. Save that money for creative campaigns.

Ad space and agency pricing mechanisms are still in flux.

Smart advertisers will:

• Lock in low rates. Early advertisers can win favourable treatment from grateful sites and networks. Lock up search engine keywords with a right of first refusal. Negotiate a first-sponsor rate in perpetuity.
• Reset expectations. In traditional media, an advertiser might spend just 20% of its budget with an agency on ad development, placement, and account management -with much of that covered by commissions. The other 80% goes to the media properties. On the web, this ratio is closer to 50:50 for now. So don't expect your agency to survive by commissions - plan to pay fees. When able to lock in low rates you are invariably dealing with the website owner direct so you save on commissions.

But most of all, plan to use the medium. Most of everyone else will be doing likewise.

The IAB
www.MaintainAWeb.Com / www.GigglingGourmet.com own research and experience 1999 - 2006