| BUSINESSWEEK ONLINE : JANUARY 22, 2001 ISSUE | |||||
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| BUSINESS WEEK E.BIZ -- SPECIAL REPORT
The Wide World of Advertising The success of online advertising no longer rests on one marketing method: banner advertising. It comes down to a mix of marketing, hard work, and lots of testing to gauge the effectiveness of online advertising. The ability to pinpoint customers cheaply is expected to double the spending on e-mail marketing, from $600 million last year to $1.3 billion in 2001 . Pros: Response rates average between 5 and 15 times better than banner ads. Some 34% of the 200,000 'N Sync fans who got an e-mail before the release of the band's new album in March downloaded an accompanying video. Cons: As scores of e-mail messages pile up in in-boxes, response rates and prices are falling. Merrill Lynch estimates that in the fourth quarter, the cost of e-mail marketing fell 25%. Banners They make up 50% of online ad revenue, but their effectiveness may be waning. When IBM kicked off banner ads in 1994 on tech site Hotwire, 30% of the people who saw the ads clicked on them. Now the overall click-through rate for banner ads has dropped to a measly 0.3%. Pros: Easy to do broadly across the Web. Cons: It is still unknown whether banners boost a brand. In the absence of any strong proof, traditional advertisers such as Visa and Sony remain skeptical. Skyscrapers These are the extra-long skinny ads running down the right or left side of a Web site. Financial site CBS Marketwatch.com, for instance, regularly runs this kind of ad. Pros: Response rates for skyscrapers, which started being used aggressively in 2000, can be seven times as high as for banners, according to Mass Transit Interactive. Cons: Just as banner ads were launched with monster response rates, analysts expect the effectiveness of these ads to decline as consumers tune them out. Streaming Video and Audio Companies and content networks, including RealNetworks, NetRadio, and MusicVision, insert ads for marketers into music and video clips as consumers listen to them. Pros: It's much more like the TV that marketing advertisers know and trust. Can get click-through rates of about 3.5%, according to RealNetworks. Cons: Widespread use will depend on high-speed Net connections, which aren't expected to be adopted by a critical mass of 30 million households until 2005, estimates Jupiter. Effectiveness Tracking Upstart DynamicLogic designed a pioneering service to help traditional advertisers gauge the impact of their marketing by placing tiny files, called cookies, on viewers' computers. This helps them track where people go in the days or weeks after seeing ads. Pros: Offers the ultimate way to gauge the results of brand marketing campaigns. Cons: Time-consuming--and the cost can cut into the mass use of advertisements. Minisites, Pop-Ups & Interstitials These ads burst open on screens, allowing companies such as Volvo and SmithKline Beecham's Oxy acne medicine to dish up games and product information. Pros: Minisites allow advertisers to market without sending people away from the site they're visiting. This type of advertising also gets higher click rates--on average around 5% of people who see the sites click on them, estimates portal About.com. Cons: Can be intrusive and annoying. Think AOL's welcome screen. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Do e-Ads Have a Future? TABLE: The Wide World of Advertising CHART: Dot-Coms Are Spending Less to Advertise Online... ONLINE EXTRA: Unilever's Mark Olney: "It's Tough to Flex a New Muscle" Pepsi's Aim Is True INTERACT E-Mail to Business Week Online |
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