In Search Of Effective Internet Ads

Folio: The Magazine for Magazine Management, April, 2001 by Bob Moseley

New interactive technologies are emerging to shape the future of the online advertising model.

Internet advertising is poised to be a colossal business, despite a shaky start on its training wheels.

Right now, it composes just two to three percent of total advertising expenditure, and that small percentage isn't having a great impact. Click-through rates are generally well under one percent and sinking. But optimism is prevalent in the fact that more than 75 percent of advertising agencies buy online ads. Moreover, according to a Forrester Research study, Internet advertising will double within three years, reaching $63 billion by 2005.

"More money will be spent on the Internet as more advertisers figure out how to use it, but it's going to be a real learning process," says Allen Banks, executive vice president of Saatchi & Saatchi North America.

Yet, while there seems to be universal confidence that the industry will grow, there's also widespread dissatisfaction with the effectiveness of "Webvertising"--as it has come to be known--today.

The scapegoat for online advertising's current state is often the standard banner ad. Many see this prototype as too static and dull to be an effective selling tool. One advertising pro compares banners to matchbook advertising.

Even interactive banners have their share of critics. A study by research firm Manhattan-Pacific Multimedia showed that as frequency of exposure to banners increases, click-through rates decrease, disproving the traditional notion that frequency leads to increased awareness and action.

Craig Gugel, president and CEO of Manhattan-Pacific, says the standard banner isn't a failure as much as a victim of overexposure. "Initially they were a novelty when the Web was first starting up," he says. "People learn how to avoid banners when they begin to identify them as advertisements unless there's something compelling or creative that they haven't seen before." The search goes on for more effective ad models.

Testing new models

Enter the new technology. Banner ads that simply projected a message on a screen are giving way to interactive models as advertisers design flashier ad models with more information to lure in consumers. One such technology is Point Roll, which hit the Web last August. Point Roll ads enable advertisers to simultaneously deliver multiple ad messages or pop-up panels within a single standard banner ad when Internet users point and roll their computer mouse across the banner. When the user moves the mouse away from the Point Roll ad, the pop-ups disappear.

"We believe the Web is a medium that thrives on instant gratification," says Point Roll CEO Jules Gardner. "Our technology delivers the content of those panels to the user instantaneously, avoiding the necessary lag time of either waiting for a Java applet to load or a redirect to another page. Plus, the user is able to bring up to eight splash pages that give the advertiser a higher likelihood of luring the user into a sale. It's like Baskin-Robbins having 31 flavors. We're trying to offer a variety of things." Point Roll charges $5 cpm (cost per thousand), which is on top of the cost of production of the ad, says Gardner, noting that Point Roll expands that ad space by almost 10 percent.

LiquidImage ads, invented by LiquidSite, take an ordinary-looking Web image and allow the user to reveal hidden layers of editorial content, streaming audio and video, advertising information and e-commerce capabilities. Another model, Enliven ads, now offers animation.

But these ads all rely on interactivity, the hallmark of the Internet, and are not subliminal. If the user isn't willing to click on or roll his mouse through them, the message isn't fully delivered. Online advertising can potentially deliver more than other mediums, but the user has to be interested. "There's a difference between an active user of the medium and a passive user," says Banks. "You have to make a deliberate decision to see the ad, whereas in television or radio it's just going to happen."

Cnet Networks Inc. is following a different philosophy that has long been associated with print--make the ads larger. The Cnet ads, called Messaging Plus units, measure about six inches wide and five inches deep on many computer screens, although they can differ depending on screen resolution. The ads also serve as miniature Web pages within a larger page, allowing users to interact without jumping off the site they came to.

While Messaging Plus units swallow up more editorial space, some online editors feel they may effectively reduce ad clutter. "Personally, I like the idea of only having one ad on the page. It loads faster and it's less distracting than having a bunch of small twinkling stars around the edge of what you're trying to read," says Variety.com online editor Travis Smith. "There's one ad, you look at it, and then you move on. It's an interesting experiment. I hope it works out for them."

The clutter factor

With all the bells and whistles available through high-tech ads, clutter is a concern of many Web sites. Take for example, Variety.com. The homepage features 4 x 4 and 5 x 3 pop-up ads, eight smaller ads down the far right and far left columns, and a solid banner across the bottom. Some of these ads are flashing, along with the editorial photos of big-name celebs.