Internet in Advertising Industry

One of the latest buzzwords of modern technologies today is online advertising or internet advertising. Internet advertising is a form of marketing communication that involves advertising through the internet. The recent surge in internet advertising is due to the mere fact that internet is an inevitable source of information today and is used by more number of people than any other source. Almost all types of internet advertising have their counterparts in the traditional forms of advertising.

The greatest advantage of using internet as an advertising media is that each and every aspect and parameter of the campaign can be tracked and measured which helps in tracing trends and thus guides to the right path. For e. g. If advertisement of a Jeweler about his designs receives more clicks on a site meant for young girls than on a site for middle aged women, it is clear that the designs are appealing to young girls. This information can then further be used for segmenting target customers into young girls and middle aged women and offering different designs on different sites.

The influences that internet has posed over advertising industry can be exemplified with the fact that US Internet marketing spend totaled $16. 9 billion in 2006 (PricewaterhouseCooper, 2006) also Advertising Association reveals that online advertising in the UK increased by almost 50% in 2006 to more than GBP 2 billion.. Internet advertising would work wonders if customer base is spread all across the world and transaction can be handled well over the Internet. It also works well with certain types of products and services for example online banking services are preferred more than the traditional banking services.

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While Internet advertising can directly affect sales, it can have huge impact on exercises of brand awareness, recognition and networking. The key characteristics of internet advertising that makes it different from traditional advertising are – a. Interactivity: The traditional form of advertising (print, television, radio etc. ) lacked this very important factor which also involves customer into it. An interactive advertisement can quickly give the spectator quicker ways to participate, explore more or to give his feedback. b.

Measurability: Measuring various parameters defining consumer behavior and therefore taking corrective action is the key to effective advertising which is easily possible in internet advertising. It is also possible to measure Return on Investment (ROI) made in the advertisement put on the internet. Some of the current Internet advertising metrics being used today are: Click-Throughs: The number of times consumers click on an advertisement. The Cost-per-Click is the amount spent by the advertiser to generate one click through.

The Click Through Rate (CTR) is calculated by dividing the number of click-throughs by the number of impressions served. This gives the rate at which consumers are clicking on an ad. Cost-per-Action/Lead (CPA/L): The amount spent by the advertiser to generate one lead, one desired action, or simply information on one likely customer. This information is sometimes obtained through a contest or a literature request form. The advertiser pays an amount based upon the number of individuals who enter the contest or fill out the form.

Cost-per-Sale (CPS): The amount spent by the advertiser to generate one sale. Advertisers pay an amount based upon how many consumers actually purchase something. c. Mass media but targeted: Though internet is a medium that appeals to masses at a point of time but the advertisements can be targeted to consumer segments by advertising on relevant portals and blogs. Traditional mediums of advertisement like television lack this advantage. E. g. It makes more sense to put advertisement of men’s apparel into a website meant exclusively for men than into an airline reservation portal.

d. Cost Effectiveness: Internet is a cost effective medium of advertising when compared to other mediums like television and magazines. (Referencing: An analysis of Internet Advertising and Online Advertising) e. Quick Reachability: It is observed that the internet reached 50 mn users in USA within 5 years, whereas television took 13 years to reach same number of users (Hyland, 2000) Internet advertising can be divided into the following eight categories - Source: Interactive Advertising Bureau/PricewaterhouseCoopers, “IAB Internet Advertising Revenue Report” Q2, 2004

E-mail Advertising: A form of Internet advertising that uses electronic mail for sending promotional messages to a targeted customer base, this is particularly useful when customer base is wide but specific, and this also comes at a relatively low cost. Rich Media: This form of Internet advertising that makes use of number of interactive digital media, like sound, video and animation. Its basically very animated and interactive in nature which is either automatic or demands more user involvement.

Referrals: Referral marketing happens when your porduct or website is referred to by some other source because of your association with the latter one. Internet interactive advertisements offer lot of referrals. Display: Display advertisements can appear on internet as animated/ nonanimated banners as well as interactive media that includes audio visual effects displaying products/sevices. Sponsorship: Online sponsorship involves placing sponsor’s logo or brand in the sponsored website to build goodwill and publicity. Much of the online marketing is geared towards direct marketing while sponsorships add the element of brand marketing.

Classifieds: Online Classifieds are counterparts to traditional newspaper and periodical classifieds, they are more text based and can have as little information as the product or services sold and a telephone number. Slotting Fees: Slotting fee is the fees paid by a vendor (manufacturer, retailer etc. ) to place his products or services on a website. Search: Search engine advertising has the largest share in the pie of online ad spending – In search engine advertising on the internet a consumer searches for what product they are seeking by typing in keywords.

These keywords when matched to the keywords defined in the advertised site lists the site in the search result, order depending upon the number of matches. The purpose of this type of advertising is to increase the visibility of the advertised site in the search list. Another well known term and a broad category of Internet advertising which comprises of some types discussed above is Internet affiliate marketing; this is sharing a part of a profit or giving a royalty to someone who will do the Internet advertising for you, although it is done for a commission.

Internet windows and banners, this banners could either be still banners or interactive banners, used for Internet advertising are among the list and links that redirects customer to where the advertised product or site is but a word of caution here is that the advertisement should be user friendly, in case you are looking for some information gathering which requires users to fill a form it should be an easy exercise, if you want to route user to a specific site or product number of clicks should be minimum. Easier the process more will be the clicks.

Internet marketing has become an integral part of marketing plans of almost all renowned companies; according to a survey conducted by Nottingham University (Taylor & Francis Ltd. , 2002), more than half of the firms under survey in UK, sample data being of 843 firms, that advertised also advertised on the Internet and a majority of remainders reported that they planned to do so within two years. Considering the present economic scenario, the Internet marketing serves as a cost effective and RoI Centric marketing communication tool.

Internet advertising plays an important role in marketing plans of companies operating in service sector and also for companies that have geographically dispersed customer base. As reported by Hospitality eBusiness Strategies (HeBS, 2008), in 2009, more than 55% of all travel bookings and upto 40% of all hotel bookings in North America will be generated from internet. Another 25 to 30% of hotel bookings will be directly influenced by online research but booked offline. It was also said that by 2010 the internet will contribute over 45% of all hotel bookings in North America.

While discussing about successful Internet advertising strategy, one can always refer to the case study of the success that Internet advertising brought to a portal directed towards teenagers in Hong Kong, Ronnie Cheung, "Case Study of a Successful Internet Advertising Strategy in HK: A portal for Teenagers" (July, 2003). The research has a framework for measuring advertising effectiveness that included traditional objective measures (click-through rates), subjective measures applied by advertisers, and seasonality corrections. The research derives a mathematical formula for measurement of effectiveness.

Extracts components from ten banner advertising campaigns at one web site between January 2001 and May 2002, and analyses them by means of proprietary data-mining rule-induction software. Selects two rules form the several generated, on the basis of confidence levels. Findings – Finds that, in the case example studied: small interactive games and free gifts deliver the highest brand impression after normalization of the banner click-through rate; revenue is significantly affected by local cultural and seasonal factors; “media-rich” design is an important factor in attracting the target audience to click on a banner.

Notes the importance of countering the natural variability of click-through rates, and proposes a variety of design add-ons to stabilize them. Researching is the best way to explore effectiveness of Internet advertising; among different types of research methodologies that are present the exploratory research is well suited to measure the effectiveness of Internet Advertising. Exploratory research proposes to discover something more about an already known topic. For e. g. we know that Internet advertising exists but we don’t know if it is really or not. If yes? To what extent? As suggested by Engel et al.

(1994), advertising effectiveness can be measured by measuring important parameters like – the characteristics of message itself, the attitudes towards the advertisement and the characteristics of consumer. Once exact parameters for measurement are decided, hypotheses are formulated (H1, H2,…. ), a hypothesis is basically an assumption that a researcher formulates based upon his expectation of research outcome, for e. g. if a researcher expects that people have more positive attitude towards Interactive Internet advertising than other forms on Internet advertising then the hypothesis could be –

H1: Subjects will have a more positive attitude towards an interactive advertisement than its non-interactive version. After hypothesis formulation, which can always be more than one depending upon number of parameters to be measured, data collection method is specified, data collected could either be primary data (recommended) where subjects are subjected to experimental environment and live data is collected from them or secondary data where already collected information is used.

Once the data is collected it should be analyzed properly, depending on qualitative or quantitative nature of data various techniques including statistical technique is available. Data analysis is followed by hypothesis testing and final conclusion. A live Research: An exploratory study of the effectiveness of interactive advertisement on the internet was conducted by Department of Marketing and Distribution Management, National Institute of Technology at Kaohsiung, No.

1, University Road, Yenchao, Kaohsiung, Taiwan, the aim of the research was to measure the effectiveness of interactive Internet Advertisement, there were 3243 people in the graduate student population with 359 people from Taiwan, 2369 people from the USA and 366 people from China. The study used a non-proportional stratified random sampling method. In the study, 36 students were selected from each nationality group. A total of 108 subjects were selected to participate in the experiment.

Since it was not possible to know what viewers will and will not see during experiment, the traditional cognitive measures like recall and recognition tests were replaced by viewer’s affective and behavioral responses to interactive advertisements. The variables to measure advertising effectiveness were selected: the attitude towards the advertisement, the attitude towards advertised products and total amount of time spent in watching the ad.

The findings of research were contrary to researchers’ expectations; interactive advertisements were less effective than non interactive advertisements on internet. For the actual research methodology and details findings please refer Yang, Chung-Chuan (1997). Demerits of Internet Advertising: Internet advertising is for people who are computer literate and technology oriented this means that the consumer class that is not computer educated is unreachable and cannot be targeted.

In developing and developed nations accessibility to internet is still a big issue. Even if a person is computer literate and wants to use internet but resides in a rural area, internet accessibility becomes difficult, so this further trims the targeted consumer base. Lack of human interaction and trust – There are still people who rely on the traditional ways of buying things by feeling and touching the product which is not possible on the internet. References:

An analysis of Internet Advertising and Online Advertising; Why Internet is an effective Branding and Advertising Tool? Engel, J. F. , Warshaw, M. R. Kinnear, T. C. (1994) Promotional Strategy: Managing the marketing Communication Process. Burridge, IL:Irwin Online and Traditional Advertising PricewaterhouseCoopers reported U. S. Internet marketing spend totaled $16. 9 billion Hyland, T. (2000) Why Internent Advertising? New York: Inernet Advertising Bureau Taylor & Francis Ltd. , (2002) Internet Advertising by UK firms, Journal of Strategic

Marketing HeBS, (2008) 2009 Internet Marketing and Strategy Brief, HeBS: 2009 Marketing Brief Department of Marketing and Distribution Management, National Institute of Yang, Chung-Chuan (1997), An Exploratory Study of the Effectiveness of Interactive Advertisements on the Internet, Journal of Marketing Communications, 3, p61-85. Ronnie Cheung, "Case Study of a Successful Internet Advertising Strategy in HK: A portal for Teenagers", International Journal of Market Intelligence and Planning, Vol. 24, No. 4, pp. 393-405, Jul 2006

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