ONLINE ADVERTISING 101
Byline: Sharon Edelson
NEW YORK — Not only is the Internet changing the way products are bought and sold, it is revolutionizing advertising as we know it as e-retailers employ a whole new media lexicon. The goal: drive traffic to their web sites and entice customers to drop items into virtual shopping carts.
Banners, pop ups, text links, sponsorships, promotions, static buttons, interstitials are the new tools of the e-commerce trade.
The multimedia capabilities of the Internet give advertisers access to technology that combines graphics, text, sound and moving images for advertising in new and unforeseen ways.
But the world of online advertising bears at least one striking similarity to traditional media: the necessity to cut through the clutter.
“On the Internet, the proliferation of choice is startling,” said Wenda Harris Millard, executive vice president and general manager of Doubleclick Network, which sells advertising on behalf of major web sites. “You really need to advertise to differentiate yourself because there are millions of web sites out there.”
In terms of costs, online ads are sold on a cost-per-thousand or cost-per-click basis. Prices range from $1 to hundreds of dollars for more tightly focused campaigns. The beauty of online advertising is that it can be targeted to within an inch of its life, experts said.
“It’s not about the traffic and it’s not about the biggest audience,” said Millard. “It’s about getting the best audience. If an advertiser is looking for college students that are animal lovers and sports enthusiasts in the Northwest and wants to reach them between 8 a.m. and 10 a.m., we can deliver that. But the guy is going to pay through the nose. You could never deliver that with TV or print. Online advertising allows you to do things that traditional media has never been able to do.”
So what’s working?
Macys.com is using banner ads to build awareness and drive traffic to its site. The company also employs push broadband, a rich media with moving images and sound to promote specific products, special events and “anything that requires a bigger story than a banner,” said Kim Miller, vice president of Internet strategy for Macys.com. “We did some broadband marketing for Mother’s Day and Father’s Day.”
Online retailers love e-mail marketing, a targeted approach that delivers messages about special promotions, products or contests to existing online customers.
“E-mail is really one of the key things we’ll be looking at doing more of,” Miller said. “Rich media is a big push from a corporate standpoint. We’ve done rich media in a variety of different places, but generally it’s been specific to a particular demographic. For example, we targeted men for Mother’s Day on a sports-oriented web site.
“E-mail allows us to be much more specific,” Miller added. “We’ve had great success with e-mail marketing. We work with a company called Digital Impact to tailor the e-mail to consumer’s demographics and interests. Digital Impact sends out a sniffer when we send an initial e-mail to the consumer. It enables us to get a lot closer to one-to-one marketing, which is very exciting. And it’s cheaper than sending out a direct mail piece.”
The Gap has become a sophisticated e-mail marketer, according to Drew Ianni, online advertising senior analyst at Jupiter Communications.
“When you go to their site and buy something they capture your e-mail address,” Ianni said. “A lot of consumers are willing to receive the e-mail because they like the Gap.”
The cost of acquiring names online is far less expensive than traditional direct marketing, Jupiter’s Ianni said, noting that a company can spend several hundred dollars to $1,000 to acquire a customer offline, while the online costs of capturing a customer “can be as low as $70.”
Fingerhut uses combination online advertising to drive consumers to its web sites, which include Fingerhut.com, Macys.com, Thehut.com, Andysgarage.com, Andysauction.com, Myjewelry.com, Outdoorspirit.com and Birthdayhut.com. Fingerhut also maintains an interest in subsidiaries such as Mountainzone.com and Roxy.com.
“We buy banner ads and place them against specific demographics,” said Willie Doyle, general manager for e-commerce at Fingerhut. “For example, we’ll be in the shopping sections of the major portals with a comprehensive product presentation or something as simple as a button or text listing. We will also place some messages into opt-in e-mail lists.”
As it does in its catalog business, Fingerhut engages in a fair amount of promotional activities such as sweepstakes on the web, Doyle said.
“We don’t use coupons per se,” he added, explaining that Fingerhut creates gift-with-purchase offers instead.
J.C. Penney, one of the first brick-and-mortar retailers to develop a web site on Prodigy a decade ago, is further along the learning curve than some traditional retailers when it comes to online advertising.
Modem Media Poppe Tyson, Penney’s online advertising agency, said the retailer supports its web site with ads on other relevant sites, mirroring its in-store and seasonal promotions with web-based advertising.
“If they’re doing a ‘Star Wars’ or back-to-school or Mother’s Day promotion, that tells us where we need to place their advertising,” said Karen Anderson, media operations director at Modem Media.
For Mother’s Day, Penney’s advertised on Women.com.
“We’re working very closely with [e-retailers] in building customized sponsorships that help them speak to consumers in a way that’s impactful for them,” said Gina Garrubbo, executive vice president of sales for Women.com. “Bluefly.com is sponsoring an area on our site. Marketers have woken up to the fact that women are now the majority of new online users. They’re great consumers. A woman who’s going online is not afraid to shop online.”
Because traditional offline advertising — everything from print ads to shopping bags emblazoned with a web site address — has been effective in directing consumers to web sites, many companies have only been dabbling in online advertising.
“I think it’s still unproven,” said Anne Marie Blaire, senior manager of Internet brand development at Intimate Brands Inc. “It’s more important for us to run ads for the Victoria’s Secret web site in our VS catalog and let people who shop our mall stores know about it. We’re reaching new customers through traditional print and TV ads. The brand is pretty powerful and top of mind.”
“The biggest driver for our traffic is still our existing Fingerhut catalog,” Doyle agreed. “We do a combination of this new online media as well as traditional print media placing ads in Fingerhut branded catalogs as well as consumer magazines.”
VS has been testing ads on Ivillage.com. The company has advertised on Compuserve’s shopping area and placed banner ads on Yahoo. Blaire said the banner ads on Yahoo broke click- through records, but added, “At the end of the day, I’m not most concerned that they clicked on, but that they came to my site and purchased something.”
Online advertising has a long way to go before it catches up with traditional media. While $200 billion was spent on all media last year, only $2 billion will be spent to advertise products and web sites online in 1999, according to Doubleclick, an online advertising company.
But the Internet is clearly picking up steam. OrderTrust, an order management provider for online merchants estimated that 26 million people will shop online during the 1999 holiday season and The Boston Consulting Group claims that online shopping revenues are on track to rise by 145 percent in 1999.
“The thing that’s most dramatically different is the nature of the Internet medium and the interactiveness of the advertising,” said Fingerhut’s Doyle. “It allows you to really gauge what the response is immediately. The old adage, ‘Half the advertising is working, I just don’t know which half,’ doesn’t apply here. The response, tracking and measurement in real time is the most dramatically different and advantageous aspect of online advertising.”
Companies like Orb Digital Direct measure the effectiveness of online ads and work to maximize Internet advertising. “We make necessary changes to the creative or to offers to increase the click -through rate,” said Andy Pakula, president and ceo. “We monitor a lot of behavior to get people to make the transaction a lot faster.”
Competitive tracking of advertising on the web will be the job of AdRelevance, a Seattle startup. It will launch next week, and will collect, analyze and report in real time the online advertising efforts of companies in eight categories, including automotive; computer hardware and software; financial services; e-retailing, which includes fashion and beauty; telecommunications; consumer electronics, and travel.
“For the first time on the Internet you will be able to get a very detailed perspective in real time of what your competitors are doing on the web,” said Will Hodgman, president and chief executive officer of AdRelevance.
“For the industry to collect information at this speed, the implications are fairly significant. You’re able in real time to adjust your advertising campaign based on what your competitors are doing and be more preemptive or proactive in your online communications.”
Hodgman, who has a traditional advertising background working at firms like Foote Cone & Belding and McCann Erickson, said, “The web is teaching us that advertising and selling is all about speed and intellect. The faster and more insight you can get, the better you are. The web is dragging us into the day when we can make more sophisticated decisions about how we place our advertising.”