Is online advertising drawing close to its expiry date?

Many recent visitors to ZDNet India's website would have been surprised to find two searchlights loitering on their PC screens before resting on a banner saying "A word from the people who brought you microprocessing". The banner, which held an ad promoting Intel's new range of Xeon processors, has been dubbed ‘site capture' by Intel and its agency Euro RSCG. Site capture because one click on the banner would turn the entire page into an ad. In fact, each and every page on the site now bears an Intel ad.

This is just one example. Net publishers are testing various ways of accommodating advertisers so they can draw in the scarce online marketing monies. Could be sheer desperation, but even the most conservative websites - such as the NYTimes.com, Fortune, MSNBC, CNN and Yahoo - are using bigger, more-obtrusive ads to catch buyers' eyes. Some use streaming video and audio banners, or even pop-ups, and the most extreme offer a host of free-form technologies that let marketers command an entire web page - like ZDNet.

In another recent example, Ask Jeeves transformed its home page to a tropical theme for two days to promote 20th Century Fox's video release of the Tom Hanks hit "Cast Away." Among other things, an animated volleyball - a prop in the movie - bounced across the company's home page as an added attention-grabber.

The Intel ad, the website claims, is first-of-its-kind in India. It is a combination of dynamic HTML and Flash advertising content which moves around the full page to capture the users' attention and offer him a chance to actually interact with the ad.

According to ZDNet India executives, "This ad will offer more branding power than banners and will be the catalyst to attract brand-focused traditional advertisers on specialist portals with a rich audience."

Beyond drawing in the eye-balls - and hopefully, short-term revenues - some web publishers are hoping such new formats will change the way online advertising is measured and valued by advertisers.

Although traditional ad prices are based on measurements such as demographics and number of subscribers, websites are typically paid by the number of times readers "click" on an ad or click throughs. Clicks are supposed to offer advertisers a solid measure of response, but the standard has progressively offered small returns to publishers. Average click-through rates (CTR) on the net have fallen to an estimated 0.44 per cent recently, according to Nielsen/NetRatings, down from a high of 2.12 per cent in 1996.

The skepticism of many traditional marketers regarding online media's limitations as a communication vehicle can be pinned down to the banner. A study by Millward-Brown as early as 1998, noted, "judging a medium's effectiveness on the basis of the size of the creative unit is well-intentioned but flawed." The study of 16,758 respondents went on to find that even when there are no clickthroughs, the mere presence of the banner increased ad awareness, brand awareness and brand perceptions significantly.

But the scenario is bound to change. The early results show such bold formats are effective. For one, ZDNet claims to have received a fantastic response to the Intel ad. Here is the click statistics: 25 per cent CTR for users who saw the ad unit and went on to discover macroprocessing on the Intel site. "This, in an industry and medium where CTRs are closer to 0.5-1 per cent," an obviously upbeat Shvetank Shah, ZDNet India's CEO, told agencyfaqs!, "We are just beginning to see the true power of online advertising. The medium lends itself to creativity and interaction with users."

However, as things stand now, sponsorships are taking away share from banners internationally. In India too companies such as ICICI and Citibank are doing a great job of snapping up "Money", "Finance", "Money Matters" channels on a host of sites to maintain thematic consistency.

Such advertisers are mostly relying on the early projections for the nascent Indian Internet advertising market.

According to Media2india estimates, the market was between Rs 250-350 million in the year 2000. While this is still a fledgling segment of the overall advertising industry (size approximately Rs 9,000 crore), the good news is that it is growing - and growing fast. No doubt, the overall resilience of the advertising market, which grew at 20 per cent in 2000-01 (Source: Business Today) - doomsayers notwithstanding - is contributing to this, but there are also indications of long-term sectoral adoption of this medium.

Yet, as websites fight for scarce ad monies and promos get splashier and more obtrusive, the question is: Can sites please the folks in marketing and die-hard readers at the same time?

© 2001 agencyfaqs!