More
than half of U.S. companies are doing it; but is there the big
payoff?
By Liese Hutchison
Companies are flocking to the Internet to sell millions of goods
and services. To promote that unique product or humdrum gadget,
one tool businesses are using to reach consumers is online advertising.
According to the Association of National Advertisers, 61 percent
of U.S. companies advertise online. Last year alone, says a
PricewaterhouseCoopers study, these companies spent $4.62 billion
online—that’s a 141 percent increase over 1998’s revenue of
$1.92 billion.
According to the report prepared for the Internet Advertising
Bureau, categories that lead online spending were:
• consumer-related at 31 percent
• financial services at 17 percent
• computing at 16 percent
• new media at 12 percent
• business services at 7 percent.
Banner advertisements continue to be the predominant type of
advertising, accounting for 56 percent of all online ads. Sponsorships
account for 27 percent, interstitials at 4 percent and email
for 3 percent of online advertising.
“We are witnessing the rapid expansion of the Internet as an
unparalleled advertising and marketing medium,” notes Tom Hyland,
partner, PricewaterhouseCoopers. “Using revenue numbers on an
inflation adjusted basis, in this, its fifth year, the Internet
with $4.6 billion in ad revenue has surpassed the $3.7 billion
for television in its first five years, and revenue this year
is 47 percent of that of cable, doubling that percentage from
last year.”
With so much money being spent on online advertising, does it
deliver what it promises? Sometimes, says Joe Mastroianni, president
of Veritas Advertising. “There are several problems with advertising
online,” he states. “First is the clutter. Second is the click-through
rates on banner ads have dropped dramatically and are now at
less than one-half of one percent. And finally, the lack of
any verifiable numbers.”
Mastroianni says that the industry has consistently over estimated
the number of impressions an ad makes online. “When advertising
started on the Internet, it was very economical, but as rates
go up every month, advertising online has to be justified,”
he points out.
Mastroianni states that online advertising will be a part of
every company’s media buy, but he thinks advertising online
won’t hit its stride until better accountability measures are
in place and bandwidth increases. “With greater bandwidth, ads
can be created that are more emotional and enduring, similar
to television,” he notes.
Until there’s more accountability in banner ads and the bandwidth
increases, Mastroianni sees many clients moving to sponsorship
ads. “Sponsorship advertising might be an email campaign that
highlights, for instance, a stock tip and then you go to the
tip and it says ‘sponsored by,’” he says. Mastroianni notes
that targeted email addresses are readily available for purchase,
just the same as mailing addresses.
Jim Steward and Chuck Stillwell, partners at DICOM Marketing
Services, say they don’t want clients to advertise online until
a cookie is created to monitor who clicked on the ad and whether
that person becomes not only a lead, but a closed sale. “Our
philosophy is that when we negotiate an online ad buy for clients,
the driver is not the number of hits, but the number of qualified
hits,” Steward notes. “We must track those leads to closed sales.
“Measurement is the key. You need to establish the process up
front to monitor the success of the ad and to secure the name,
address and email address of the person who clicked on the ad.”
Both ad executives note that there is controversy in the industry
with tracking users that hit on a company’s ad.
“The Internet is a very splintered medium,” Steward notes. But
he also points out that the technology has improved so companies
can now advertise by market and even by zip code online.
The duo’s advice to any would-be online advertiser: “If you
want to do it the right way, you need to capture the results
of the ad. Don’t just go for the lower CPM or advertise on the
top five sites. The key to success is measuring how many leads
are coming from each ad on each site and measure the cost per
closed lead.”
Liese L. Hutchison is an assistant professor in the department
of communication at Saint Louis University and a free-lance
writer.
