The Second Coming

American Demographics, April 1, 2001

The true power of the Internet lies in its ability to allow companies to customize their strategies.

When Away.com, an adventure travel site, sought to attract new customers, it ran an ad campaign across the registration pages of targeted Web site partners offering a free subscription to its Daily Escape Newsletter. More than 71,000 people took up the offer in the first month of the campaign, adding new names and e-mail addresses to the site's database. In contrast, when Visa wanted to increase its market share and reinforce customer loyalty, the credit card company sponsored content on Music Boulevard (now CDNOW), an entertainment site. In return, Visa was featured as the default payment of choice on checkout pages. Customers who attempted to use another form of payment were offered a $2 Music Boulevard coupon to pay with a Visa card.

Headquartered in San Francisco, California, L90, the company that devised the campaigns, came up with very different solutions for the two marketers. While dot-coms continue to disappear and the media industry tightens its belt, the New Economy is merging with the old and the Internet is gaining new legitimacy as a marketing tool. Increasingly, traditional companies are realizing that the Web is an effective platform for a variety of marketing strategies. But unlike other media channels such as TV or radio, companies must tailor the Internet to their needs. In fact, the true power of Internet marketing lies in its ability to allow companies to customize their strategies. "The Internet can be [used for] both advertising and direct marketing," says Rich LeFurgy, chairman of the Internet Advertising Bureau (IAB). "At the end of the day, we have an interactive medium, and how it's used depends on what marketers' objectives are."

One of the early online advertising business models - direct marketing - is still very much in force. By offering discounts, free newsletters, and coupons or encouraging people to play games and enter competitions, marketers can persuade potential customers to fill in a form or opt in to e-mail marketing. "We're doing more business these days from direct marketers," says Christine McClellan, product manager at Enliven, a Waltham, Massachusetts-based rich media ad company. "And what direct marketers want is very measurable - they want a lead; they want your e-mail address."

For example, when Business.com, a search engine and directory, wanted to acquire new registered users, L90 created the "Search for Accuracy Challenge" - offering those who registered the chance to win a 2001 Acura MDX SUV. Participants could run searches on Business.com to help answer the game's questions, allowing them to try out the site and - more importantly - pass it on to others, earning frequent flier miles if friends also played the game. According to Business.com, the first month of the promotion generated as many new registrations per day as they'd had on a monthly basis prior to the campaign.

Similarly, in order to increase traffic to both its bricks-and-mortar locations and its Web site, Hard Rock designed a trivia quiz about rock 'n' roll that allowed consumers to play within the banner space, where they could print a coupon redeemable for discounts on merchandise purchased on the company's Web site or a free dessert at participating Hard Rock Cafes. Traffic on Hardrock.com increased by more than 10,000 hits during the ad's four-week run.

As online advertising evolves, marketers are also becoming aware of the need to integrate different techniques. At Smarterliving.com, for example, users can fill out their requirements and enter a deal center, where five travel offers matching their request appears. They receive e-mails whenever similar deals come up and can, at any time, remove their details from the database. Because customers receive information relevant to their search, iWant, the application service provider, says its "Instant Opt-Ins" can guarantee clients a 10 percent click-through rate - a big improvement on the less than 1 percent achieved by most banners.

"E-mail is going to become a critical marketing application," says Mike Donahue, executive vice president of the American Association of Advertising Agencies. "But for it to work, it has to be opt-in, and double opt-in works even better - you give permission for someone to send you e-mails and before they send them, they confirm that it's still OK to do so."

However, advertisers are beginning to look beyond e-mails and clicks. Indeed, a growing chunk of online marketing is now focused on branding - about 55 percent, according to AdRelevance, the new-media measurement firm based in Seattle - for which results do not depend on how many people clicked on an ad. "If you see a billboard by the side of a road, you don't have to get out of the car and touch it for it to be effective," says Mark Ryan, director of media research at AdRelevance.

Branding can be achieved through a variety of means. Even the much-maligned banner plays its part. People browsing the Internet often stare at a screen for several seconds while a page downloads, so a banner that appears at the top of that page - particularly if it repeats each time the page is accessed - has a significant impact on its viewer. Of 12 banner ads tested by the IAB in its Advertising Effectiveness Study, 11 showed marked improvement in advertisement awareness after a single additional exposure. And each additional exposure to an ad boosted awareness by an average of 30 percent.