CHAPTER 1 -
INTRODUCTION
1.1
Definition of Terms
The following is the list of some of the terms used in this paper, which need to be understood in order to follow the paper:
q Internet
- this is the
number of computers connected together for the initial purpose of exchanging
and sharing information. Also, such terms as Internet, Net, and Web mean the
same thing in this project.
q WWW – these three letters stand for World
Wide Web. In practice, the WWW is a number of interconnected documents that are
composed altogether and is called web page or website.
q Search
engine – a
powerful database, where users of the Internet can find different documents
using the keywords in the search system.
q Banners – banners are known to be small images
of different size on web pages containing advertisements in a form of pictures
and/or text.
1.2
The Hypothesis
The purpose of this project is to show that there are advantages in advertising on the Internet and that is has potential and promising future.
1.3
The Methodology
The title of this project is
“Advertising on the Internet.” This project will start with few sections for
Internet history, how it is organised and statistical data. Then there is going
to be brief discussion of the worlds famous companies such as Microsoft,
Hotmail, Yahoo and others that made their business on the Net. So that those
examples will show companies that have become some of the world most famous
either by innovations, inventing things no body ever thought about and most
importantly companies grown so called endogenously – grown out of nothing.
Thus, these examples will help in supporting the hypothesis of this project,
which is to show that on-line advertising has a future. Then, the paper will
smoothly proceed to the core of the topic discussing what online-advertising
is, what its differences from the classical one are, what its advantages and
disadvantages are. And, then, towards the conclusion of the paper there is
going to be shown some secondary research facts and then an implementation of
the primary research findings that will be conducted. Finally, the conclusion
will be drawn, under what circumstances there is the potential for online
advertising.
1.4
History of the Internet
So what is the Internet? In simple
terms, this is the number of computers connected together for the initial
purpose of exchanging and sharing educational information. The history of the
Internet began in 1969, when Advanced Research Agency (A.R.P.A.) went online
connecting four major U.S. Universities. That network was initially designed
for education, research and governmental organisations. Additionally, though,
it was made for linking the country in case when a military attack would
destroy the communication systems. Through the 70s, this network started to
grow being known as Internet. In 1972, electronic mail was introduced. In 1973,
the so-called TCP/IP protocol was designed, which has become the standard for
communicating between computers over the Internet. Through the 90s, there has
been a rapid growth of business organisations deciding to launch their sites on
the Internet, as well as different non-profit and governmental organisations.
In other words the Internet moved on to the stage of having its services for
commercialisation in the early 1990s.
“The Internet is not owned or funded by
any one institution, organisation, or government. It doesn’t have a CEO, and
it’s not a commercial service. The Internet is however directed by the Internet
Society (ISOC), which is composed of volunteers.”[1]
The book called “Understanding Business
on the Internet” gives an introduction to the Internet by informing readers
about the ten things they can do on the Internet. “Ask questions of unknown
experts; e-mail the White House; buy a book; find out about company products;
transfer software updates; search the library of Congress; read summaries of
management research reports; look at the Mona Lisa; find out the Budget
details; follow a training course.”[2]
Of course these ten things are just the general hints, whereas indeed,
nowadays, on the Internet you can do roughly everything one can imagine. At the
first sight, Internet seems to be a perfect solution for future communications,
businesses, marketing, advertising, data storing, and so on, but it’s got its
disadvantages as well. Some of the disadvantages today are that it is time
consuming, it usually threatens users with information overload, and it can be
slow.
1.5 Growth
through Time/Life-Cycle
So let’s move on and see a bit of a
numbers, how the Net has been actually growing. In 1998, there were
approximately 70 million people using Internet all around the globe.[3]
For instance, in the United States, there were 13% households out of the entire
population of US officially using Internet[4],
not taking into consideration students
using it from their institutions, people visiting web-cafes, Internet-clubs, or
employees using internet primarily from their working places, etc. During the
year of 1996, the number of registered commercial sites on the Internet
increased by more then 500%.[5]
The Internet is accessible from more then 100 countries. The growing rate of
people using the Internet is very high and still keeps growing rapidly; for
instance, today; there are from 10 to 20 thousands of new people each month.
It should be mentioned that
a lot of people
|
Actually get to know Internet by
starting using e-mail. Lots of businessmen, students, housewives and other
people find email very efficient and very
useful. Here |
|||
|
|
|
you can take a look at some of the
opinions of business people. “My initial activity has been to correspond with
friends and ex-colleagues who are not within easy reach.” “Whenever I have
placed a request for help on one of the newsgroups I have usually had the
correct answer within twenty-four hours.” “I am using e-mail to swap data
between the various companies in our group. We are an interna- |
|
|
Table 1.1 Number
of people with Internet access at various times |
|||
|
Year |
Number of People |
||
|
1 1970 2 1980 3 1990 4 1993 5 1995 6 1998 7
2000 |
400 3000 100,000 3,000,000 24,000,000 68,000,000 150,000,000 |
||
|
Source: Web Advertising and Marketing;
pg. 4, 1998-99 |
|||
|
|
|||
tional company. Using a mail box means
we are now tied to any routine or physical presence.” “I joined primarily to
Figure 1.1 Life-cycle of
people with Internet access
be able to send electronic mail to my
daughter at university.”[6]
That is how different people find e-mail usefulness and more importantly, as
already mentioned efficiency. From the Table 1.1 it is shown that from 1970 to
2000 there has been the increase of people having an access to the Internet
from 400 people (1970) to 150,000,000 people. Also, on the Figure 1.1, the life
cycle of people with Internet access shown. The graph shows that the life cycle
of people with Internet access is still on growth stage.
1.6 Some of
the Real Life Examples
1.6.1
Microsoft Corporation
Nowadays, it is difficult to find a
person in a well-developed country who doesn’t know what Microsoft is. Dating
back to 1975, the mission statement of Microsoft was to create software for the personal computer that empowers and enriches
people in the workplace, at school and at home. Its early vision was computer on every desk and in every home.
These are the vision and mission statements of 70s[7];
basically, the success of the company was due to the detailed study of the
market and the entrepreneurial policy of the CEO - Bill Gates. Bill Gates uses
one very simple rule: “Freedom to
Innovate.” He wants his workers to sit and dream, innovate, to come up with
new ideas, to always try something; he doesn’t want standardised and routine
work. Today as a result of the latest challenge, which is the Internet, the
company goes not only by software, but also by latest Internet-related
technologies. The company has obviously the strongest competitive advantage
comparing it to Microsoft’s competitors. US Government sets different
regulations to prevent the company from gaining too large market share.
Although there are law suits against Microsoft, the company has nothing that it
makes customers unhappy, rather, Microsoft claims that customers are happy but competitors aren’t.[8]
This associates with what Michael Porter said in one of his videos “Do it or
your competitors will do it for you.” This is exactly what happens on the Net
now meaning that there are so many opportunities not taken now that every
person can find a way to earn money sitting at home. Today the term “Virtual
Organisation” is very popular, and nobody will think that one is crazy if
he/she says that his or her office is on the Internet. Another example of the
co-called virtual organisation is Hotmail. Hotmail is a free-of-charge service
that provides everyone with free e-mail account; it is called a “virtual
post-office.” In fact, these days, there are a lot of services like that, but
the Hotmail was one of the first ones that invented such a service. At first
sight, one may ask, what is the point in providing free e-mail accounts? But,
here, the only answer is advertising. The way that Hotmail survives is by
showing advertising messages while people check/compose/send their e-mails.
Upon the creation of this virtual organisation, they didn’t make enough money;
they simply had fair profit to keep going. But, in 1998 Microsoft Corporation
bought the Hotmail. The point here is: what is the difference between Microsoft
and Hotmail? Microsoft is a world leading software providers since 70s and
Hotmail is a free-web-based e-mail founded in early 90s. These two
organisations cannot be compared. But, from being nothing in early 90s, Hotmail
Company worth over $50 mil in late 90s. That’s where Microsoft’s CEO foresee
opportunity for the future potential and buys it.
1.6.2 Yahoo!
Another example of the company, which
turned to tens of millions of dollars in assets from being nothing, is Yahoo.
Here’s the story starts from two students, Ph.D. candidates in Electrical
Engineering at Stanford University, who decided to get all of their favourite
addresses of the Internet web-pages together and make a list of them so that
they could keep track on them easily. Further, they found that their list was
getting too long, and they decided to get it all together as a database web
page and publish it on-line. During 1994 they converted Yahoo into customised
database designed to serve the needs of the thousands of users who began to use
the service. In early 1995, co-founder of famous Netscape Communications
(competitor of Microsoft) invited them to locate their computers at Netscape
house. Right now, it’s over tens of millions of dollars in assets offering such
service as Internet gateway, free web-based email account, cyber clubs, e-mail
and name directories, local directories, news, and others.[9]
1.6.3 ICQ
|
ICQ, these three letters, which mean
“I Seek You” (ICQ), |
|
|
meant nothing back in late 1996;
whereas now, it’s a necessity for most of the Internet ICQ users as a
chat/communication software. On the Image 1.1 you can clearly see the
increasing number of users from December 1996 to December 1998. Basically, in
two years the company attracted 30,000,000 users. That of |
Image 1.1
|
|
course would never have been possible
if the company had not used the right marketing and smart advertising
campaign. On the left-vertical axis you see the number of subscribers, and on
the bottom-horizontal axis you see the time. Therefore, by looking at the
curve you can imagine how many users this Israeli company gained. One more
thing that should be added regarding this company is that it is being run by
4 people the oldest of whom is only 27, and youngest is 24.[10] |
|
1.6.4 Tripod
Inc
Tripod Inc is nowadays wellknown name.
This project was organised by 27-year-old entrepreneur, which he recently sold
for $58 mil. One can be sure that
just by looking at the amount of money that Internet projects cost makes us
think a lot about it. Tripod is just a provider of free web-space for users who
want to create their own home pages for free.[11]
The secret of the company is very simple. The Tripod service gets famous by
providing free hosting for web pages. Then, when their service is very famous
on the Internet, commercial servers and organisations are willing to show their
advertising messages, or simply banners, on those pages. In other words if one
creates my personal page on their server, they have rights to show their
banners on one’s page. That is the agreement upon the creation of account. So,
advertising is where most of the profits are coming from talking of Tripod.
1.6.5 Other
Miscellaneous Data
There are also some of the facts that
are published on Internet Industry News. According to the research of Edison
Media Research & Arbition Co., about 13% of the entire population of the
United States of America listen to the radio on-line. About 7 months ago this
number was just 6%. So, roughly saying, in about 7 months, the listeners of the
radio online (i.e. on the Internet or while on the Internet) have doubled.[12]
Another interesting finding was reported by International Data Corp.; according
to their research, financial organisations of USA, who are willing to maintain
their current market share and expand it more, are trying their strength on the
Net.[13]
Victorias Secret reported another interesting fact. As a result of their show
of underwear, traffic to their site was increased by 3 in a week-time.[14]
These were some of the real life
examples, which certainly is a good prove that Internet is a big opportunity
for potential young businessmen. As to this project, these facts are support to
what this project is going to inform, prove, and argue for.
|
On the Table 1.2 you can see the
growing number of sites connected to the Internet. From June 1993 to March
1997 the number of sites increased from 135 to 700,000 sites. Figure 1.2
proves that the life cycle of sites connected to the Internet is still on
growing stage. |
|
|
|
|
Table 1.2 Sites connected to the Web |
|||
Date |
Number of sites |
||
1 June 19932 September 1993 3 October 1993 4 March 1994 5 June 1994 6 November 1994 7 March 1995 8 March 1996 9 March 1997 |
135 597 630 1,800 4,000 12,000 24,000 250,000 700,000 |
||
|
|
Source: Web Advertising and Marketing;
pg. 11, 1998-99 |
||
Figure 1.2 Life cycle of sites connected to the
Internet
CHAPTER 2 -
ADVERTISING ON THE INTERNET
2.1 The
Popularity of on-line Advertising
The Internet became a very valuable,
efficient and promising means of advertising and marketing as it has grown and
became known. A lot of opportunities were found on the Web; and now, successful
business people know that it is wise and important to observe as well as learn
from the experience and mistakes of others made on the Internet. “Marketing in
the Internet is a work in progress…,” says the article in the Megmag-Online
magazine.[15] Really,
unlike the regular classic marketing, in the virtual world there are no set
standards, strict rules and regulations, that’s what partly creates all the
opportunities. In other words, entrepreneurs can find plenty of opportunities
in the Internet using their ideas for innovation as well as things they aren’t
allowed to do in the classic business world. Then, the Internet has created a
true global market, this means that there’s a chance to target people all over
the world, not only local market; this also means that there are no national
borders technically, for marketing, targeting the audience of the company. Bill
Gates, the President of Microsoft says: “The Internet is the first medium that
allows anyone with reasonably inexpensive equipment to publish to a white
audience… It is the first medium that distributes information globally at
almost no marginal cost.”[16]
Here it is important to mention the implementation that has to do with the proper targeting of the audience; in
other words, selective targeting should be used instead of extensive.
Otherwise, the whole thing of the Internet marketing or/and advertising maybe
worth nothing and will fail; but this is a subject that will be discussed in
details later on in this paper.
2.2 The
Concept of Internet Advertising
What is Internet advertising like?
There is a lot of ways to advertise in the Net, but there are some standardised
and perfect ways which barely can be replaced with anything else, unless of
course something new comes up in the future. The advertising is organised by
different advertising agencies. Let us see the policy of these agencies and the
way of earning money. The structure of advertising business on the Internet is
very simple, much simpler then the classic one. The businesses apply to
advertising agencies asking for such services as to design banners, target the
right market, conduct a market research, maintain the specified number of hits
to the page per day and more. The number of hits is the most popular and
profitable service. Thus, let’s consider the situation of a virtual shop which
seeks let’s say 200 hits to his page per day (i.e. 200 hits is 200 visits to
the page).
2.3 Ways to
Advertise: Banners
One of the most popular and efficient
ways to advertise is banners. Banners are known to be some small boxes placed
either on top or in the middle or the end of the page containing the message to
the potential customers. There are three different commonly known standards of
banners (measured in pixels, i.e. points on the display) - a). 468 x 60; b). 88
x 63; c). 81 x 31. In the Image 2.1 you can see some of the examples of the
actual banners and see what it actually is. For a). and b). kinds of banners,
there’s an exception - they can appear everywhere on the page, in any place you
can imagine.
Image 2.1
|
a). 468 x 60 |
|
|
b).
88 x 63 |
|
|
c).
88 x 31 |
|
Banners are very smart creations that
bring plenty of ways to attract people. There are many different ways to
present the ad itself. Also, it’s a paradise for creative people, such as
designers. For instance, banners can be animated; this effect cannot be
achieved in newspapers or magazines. It can be done on TV though, but the costs
between two are totally different. Then, for example, let’s say the customer
got interested in a product or a service which was advertised. What can he/she
do? Hurry up to write the contact info down? No! On the Internet, the customer
can simply click on the banner and the computer will take him to the place to
get a product or service like, for instance, virtual store of book, tapes, CDs,
flowers, etc.
Now, to achieve the specific number of
hits is not a problem, the problem nowadays is to have the right people come to
the page. This may seem to be a non-problematic issue but it actually is
nowadays, especially advertising online. Because some advertising agencies
don’t increase the traffic of the right people to the page, they simply make
any visitors come to the page no matter whether he or she is interested or not.
The way it is getting done is simply fooling people showing them misleading
banners, the example of which you can see in the Image 2.2. Just
Image 2.2
|
the example of misleading banner |
a) b)
c)
|
take a look at that sample of banner
shown in the Image 2.2.a for a while… For the person not knowing a lot about
the way Internet pages work, it simply looks like an additional window of some
player of talking e-mail. Notice that it is an image on the current page and
not an additional window, which is designed so as it looks like an additional
window. It makes the person, who believes it is an additional window, either
press the “Play”-button, or to press the “x”-button (cross) to close the
additional window. Therefore, the regular user would go ahead and press on that
banner either to try to play the so-called e-mail, or to try to close that
window. The thing is designed in such a way that wherever you press, it takes
to some destination that the advertising agency wants you to go. So, in other
words, the computer will take the fooled user “somewhere,” then the user will
realise that this isn’t the place he/she thought it was and leave the place;
however, the advertising agency will get the commission for the additional
comer to the page. Another similar example of such a banner you can see on the
image 2.2.b; basically it offers you to speed up your Internet connection.
Again, the regular user either tries to speed up the Internet connection as the
banner suggests or tries to close the window by pressing cross button on the
banner to close the window. The same story, wherever you press on the image it
takes you to the same destination. And let’s consider the last example of this
kind shown on the image 2.2.c. it asks you “Would you like a free advertising
on your website?” Alright, if the customers wants it he/she will get it, what
if it’s not the case? Where are you likely to press? “Cancel” is the button
user presses, but it takes him or her to the destination as user would press
“Ok”. Shortly, wherever the user presses on the banner, whether it is “Ok,”
“Cancel,” or some other place, computer takes him or her to the same destination.
Therefore, these kinds of banners are misleading and inefficient.
2.4 Ways to
Advertise: Pop-Up Windows
Another way to attract people is
so-called pop-up windows. The term pop-up window stays basically for additional
windows that come up or pop-up while you are exploring on the Internet. In most
of the cases it is a small windows, the size of which is about ¼ of the
entire window or display, containing promotional message in most of the cases.
In my opinion this trick has no potential future at all. First of all, this is
very annoying and people just tend to try to close the pop-ups even before some
message turns up on it - as a result that it either slows the computer down or
simply it gets on people’s nerves. Second, a lot of people switch some function
off in the configuration of their Internet Explorer so that they won’t even
have to close these windows and other dangerous for their computer stuff.
Therefore, this way of advertising is quite unsuccessful but still used a lot.
One of the reasons why it is still one of the ways to advertise is that some
advertisers think that pop-up windows bother users less then banners on the
page itself. Another typical reason is that some banner exchange networks give
credits to web sites for simply showing the banners without necessarily
clicking on them. In other words, one site, let’s call it X, that is registered
in banner exchange network shows the network members’ banners on its pages and
they show X’s banners on their pages. Therefore, the more banners X shows on
its pages, more banners advertising X will be shown on banners exchange network
members’ pages. That’s why some web-masters still use pop-up windows.
2.5 Ways to
Advertise: Direct Marketing
Then, yet another way to advertise is
using so-called Direct Marketing or Market by E-mail. Just like the previous
example, this way isn’t very successful but has a potential future though. It’s
called direct marketing or market by e-mail simply because advertising agency
tries to contact the customer directly by e-mail. Initially, this service was
launched as a result that many customers wanted to receive different kinds of
news, newsletters, product offers, etc. But later advertising agencies adopted
this way of reaching the audience to advertise. Shortly, they faced the problem
of the shortage of people to send ads to. Without having to wait for too long
to solve the problem. They contacted different news groups and offered them a
deal: newsgroups sell them thousands of e-mail addresses that is all.
Certainly, not every newsgroup will sell the e-mail addresses of its client,
because of privacy violation and ethics. But there is enough shares of
newsgroups that would do it, after all no one will find out about the deal. So,
after the advertising agency have got thousands of e-mails it simply sends
their advertising messages to these people.
The bad side of this goes right away.
If person didn’t subscribe to the newsletter (ad-message can be easily called
newsletter) he or she is highly likely to delete it without reading through.
This sort of stuff also called junk mail. Even worse that can happen if when
the customers get fed up and they might block all messages from either the
certain e-mail address or the whole Internet provider (meaning all mails from
the certain Internet provider are blocked). But, as it’s said in the beginning
of this section that there is a potential future for direct marketing, if you use it with care. In order not to
fail in direct marketing, first what needs to be done is to identify what kind
of message goes to customers. It might be information about producer, services,
job openings, policy information, surveying people etc. So that when it’s known what kind of info is
going to the customer, the advertiser, will go to the next stage of conducting
the actual message itself, in a way to attract customer first, and more
importantly not to bother him or her at a first glance. Then advertiser has to
make sure he/she not over-communicating customers as well as giving them a
chance to unsubscribe from the list.[17]
Let’s see what Broadwatch Magazine has to say about their experience in market
by e-mail: “For others, this makes e-mail inherently more risky, while for us
it is the main line of our business and should therefore be an important
communications channel as it reinforces our customer relationships.”[18]
Therefore, using market by e-mail should be a careful work done, and as the
Broadwatch Magazine says that the book must be written on how to be successful
in market by e-mail.
|
On the Table 2.1 you can see the
prices of Direct Marketing of IMC Marketing Agency. Number of email addresses is how many recipients will get the
message. Special Offer is a special
price offered by the advertising |
|
Table 2.1 |
||
|
|
Number
of email addresses |
Price |
Special
Offer |
|
|
|
250,000 500,000 1,000,000 3,000,000 10,000,000 and more |
$315 $450 $1000 $1800 to be discussed |
$250 $350 $700 $1200 to be discussed |
|
|
|
Source: IMC Marketing, 1999 |
|||
agency for the certain period of time.
2.6 Advantages
and Disadvantages of Online Advertising
2.6.1 Review
of Online Advertising
Now, as the concept of on-line
advertising is clearer let’s see the advantages and disadvantages of it
comparing it to other media. First of all, I’d like to speak of targeting. If
we take for instance TV-advertising, targeting there exists but it is very
limited. That is the ad message cannot be different for different audience; in
other words, if one sees TV show with advertising of, say, bicycles during the
commercial brake. Obviously, the same ad will be shown to everyone who watches
the same TV-show. Let’s say if it’s some TV-series, this advertising of
bicycles will be shown to children, students, housewives, people in the work
force, and other markets. Now let’s see some similar situation with On-line advertising.
Here, the advertising agency, using latest computer technologies, can target
different markets more precisely. For instance, markets can be targeted on such
criteria as age, sex, location, interest and other criteria. For instance, the
advertising message of fast food places can be shown only during working hours
from Monday to Friday only to people in the work force. This adverting message
will not be shown to any other kinds of markets, so that the effectiveness of
the advertising campaign will be maximised.
Here it would be a good idea to explain
the way it is possible to target markets so precisely since there are a lot of
arguing around it that it isn’t really possible. Let’s take a look at Hotmail
service that now belongs to Microsoft Corporation. Hotmail is one of the first
free web-based e-mail providers. When someone wants to sign up for Hotmail
he/she goes on-line, fills in the fields for the questionnaire and proceeds to
getting free e-mail account. The whole procedure takes about 2 minutes or even
less and the person got e-mail account and the company got one more customer
with all the details about him such as age, gender, location, interests,
education level and other factors. Thus, this information that the customer
submits is in most of the cases correct and that is what the advertising agency
is using to show the right ads to people.
Moreover, talking of targeting or as it
is called among Internet marketing people – focusing, advertising agency can
control the ad messages shown to individuals or small group of people. For
example, teachers of the University of Indianapolis can be controlled by
advertising agencies using their IP-addresses. Therefore, teachers will see
messages appealing to themselves only. For example, the ad can be something
like “All teachers of UI are invited to the educational fair…” and similar
messages. Shortly, small groups of people or the staff of a particular
organisation can be traced by their computer addresses and further used in
advertising campaigns.
Second speciality of on-line
advertising is the ability to precisely define the effectiveness of advertising
campaign. Banner advertising service includes the statistics of how many times
the banner was shown and how many times people actually clicked on the banner.
The effectiveness of banner advertising is measured using the numbers of how
many times banners were clicked over how many times they were shown. But, still
we don’t know what the person did after he/she clicked on the banner. Because
one might click on the banner and then leave the page right away for different
reasons. However, the solution to this problem has been found as well. Using
more advanced methods of tracing people’s actions on the Web, it has become
possible to actually see what people do on the page, where they go, if they go
at all, if they fill in different questionnaire, how much time they spent on a
particular page. All this helps to see if the traffic going to the web page is
interested in the material which is there or not. For example, using the
ability to see what sub-pages have been visited within one page and how much
time was spent on some particular page we can conclude if the person found
something interesting for him or her or not. All this helps advertisers see if
something needs to be improved. Like, if the effectiveness of banner
advertising is low, for example 4.2% (21 clicks/500 times banners were shown),
we can conclude that banners aren’t attractive enough and we need to improve
the graphics and attractiveness of it. Or, if we find that customers spend
little time of the company pages, that they don’t even bother to go further in
details of the page; we conclude that our page isn’t interesting for the
customers. So we need to do something about it, maybe update it or change its
appearance or the content of it.
2.6.2
Online Advertising vs. other media
World Wide Web offers a lot of advantages. So as when comparing it to other media it looks perfect way to advertise.
Talking of a large national coverage of advertising, only World Wide Web is excellent medium here. Radio, Newspapers, Periodicals and Magazines, and TV cannot ensure large national audience. Only Direct Mail can be as effective as World Wide Web as far as Large National Audience goes.
Examining the international exposure, World Wide Web is the best for sure. WWW can target customers all over the world at low costs. It could be done with TV and/or magazines but at very high costs comparing to WWW.
Talking of targeting to a specific audience, only WWW and Direct Mail can succeed at it efficiently. Neither TV, radio, nor newspapers can target to specific audience as precisely as WWW or Direct Mail. Again WWW has an advantage here, as it’s much cheaper then Direct Mail.
Audience members can view ads at their convenience when we use WWW or Direct Mail. In other words, audience members have a choice of whether to view ads or not, and ads don’t bother them as much as when they see them on TV, hear them on radio, or read through the newspaper.
The cost of advertising is a very important and strategic factor when it comes to promotion of a product or service. Talking of different media we can say for sure that WWW is the cheapest way to advertise.[19]
It looks like there are no media that can compete with the Internet except for Direct Mail. Direct Mail is the strongest competitor of the Internet but still has its weaknesses in costs, interaction between customer and client, and international exposure. The summary of advantages and disadvantages of different advertising methods you can see on the Table 2.2.
|
Table 2.2 Advantages and
Disadvantages of Selected Advertising Methods[20] |
||||||
|
Marketing
Quality |
World Wide Web |
Radio |
Newspaper |
Periodicals/magazines |
Television |
Direct Mail |
|
Large national audience |
Yes |
Maybe |
Maybe |
Maybe |
Maybe |
Yes |
|
International exposure |
Yes |
No |
No |
Maybe |
Maybe |
No |
|
Can be targeted to a specific
audience |
Yes |
No |
No |
Maybe |
No |
Yes |
|
Audience members can view ads at
their convenience |
Yes |
No |
Yes |
Yes |
No |
Yes |
|
Relative expense |
Low |
Medium |
Medium |
High |
High |
High |
|
Instant customer interaction |
Yes |
No |
No |
No |
No |
No |
|
Source: Web Advertising and Marketing;
pg. 23, 1998-99 |
||||||
To conclude the comparison of different
methods of advertising just take a look at some of the hints on the Table 2.3.
|
Table 2.3 What Does $700 Buy You
These Days? |
|
|
Radio |
Two 30-seconds spots on a morning
show of a major metropolitan station |
|
Newspapers |
Once a week of three-by-five-inch ads
in the classified section of a largely circulated newspaper |
|
Periodicals |
A small classified ad in a trade or
hobby-related magazine |
|
Direct Mail |
About 700 mailers sent to clients
throughout the United States |
|
The Web |
Development and one month publication
of a five page Web-site |
|
Source: Web Advertising and Marketing;
pg. 35, 1998-99 |
|
2.6.3 Online
Advertising as a Medium
Now, let’s see how online advertising
works as a medium. Let’s compare the person sitting in front of the TV and the
person sitting in front of the computer display. Watching TV, people are
usually sitting relaxed and whenever the commercial brake comes on people tend
to change the channels using the remote control since the TV promotional
bothers audience a lot. In the case with Internet, situation is slightly
different. Browsing through the Web, users need to pay attention and they are
not relaxed most of the times. So on the computer any user faces the ads and in
no way can avoid it like on TV. Moreover, banners don’t bother users as much as
TV commercials do because banners are small and users see them browsing through
the page without necessarily having banners bother them. Banners take small
percentage of the screen without taking any time of the users if not
interested. Furthermore, companies can change their banner messages as often as
they desire. All the process is automated meaning that the company’s
representative designs banners and uploads (sends) them to the company that
manages banner showings. It takes practically no time to send the banner to the
advertising company. Thus as soon as they got a new banner they put it in the
process. No other medium has this advantage! For instance, consider the case
where you signed a contract with some magazine to show your ads. Then, when the
magazine is printed and out for selling you learn that there’s some mistake in
the contacting address, or in customers appeal message, or you decide that the
ad isn’t good enough and you want to change it to another one… In this
situation there’s nothing left to do but let it go like that – too late to
change anything. The same is on TV. Coming back to comparing TV and magazine
with Internet as mediums, it should be mentioned that a standard biggest banner
(468x60 pixels) takes only 9% of the screen. TV ad is 30-40% of the screen.
Also magazines, it is 50% of the page, where readers just turn the page and go
to next article and so on. Thus, on-line advertising takes only 9% of the
screen assuming that we are talking about the biggest standard banners. Then,
smaller banners that were discussed earlier on take even less percentage of the
screen. Obviously, on-line banners bother people less then other classical
mediums.
2.6.4 Banners
as the Most Successful Way to Advertise
Which way of on-line advertising is
most likely to succeed and survive? In my opinion it’s banners. If you don’t
like to go where the banner suggest you don’t have to go, you can simply
proceed going further to the page not paying attention to what the banner says.
You can see this on the Image 2.3. Therefore, it’s the least unpleasant and the
least uncomfortable for customers, which is important for the advertisers.
After all, if ad-messages don’t attract people it’s advertising failure. And
it’s advertisers job to attract them.
Let’s see what is going on with other
alternatives. Market by e-mail can be annoying, disturbing, unpleasant; on top
of that it can take time to read it over to realise that it’s a junk mail and
not one of those the person wanted. Moreover, it takes on-line time to retrieve
messages from server, which means more time spent and costs. Another
alternative is pop-up windows. This, in my opinion, is the worst and most
unsuccessful one. Also, pop-ups are highly likely to fail as it has been
explained before.
Image 2.4
|
Here you can see the way banner is
presented to people who check their e-mail using Hotmail free services. The
banner is right on the top. The e-mail messages are on the right frame. So it
doesn’t bother people, banner is just up there, whoever finds it interesting
he/she goes |
|
|
ahead and clicks on it to see more
information regarding it, if not interested, person doesn’t click on it or
anything, but leaves it there and does the stuff he/she wants. |
|
Obviously, the most successful and the most likely one to have the future is the way of banners. Let’s take a look at some of the published material and some of the researches conducted. A five month study of broadband advertising on the Internet found that it significantly increases brand recall as well as provides more effective branding experiences, engages viewers for longer periods of time, and offers lower costs per branding impression (CPB).[21] Furthermore, Online banner advertisements are as effective as television advertisements in their ability to significantly increase consumer awareness of brands, according to a study by Ipsos-ASI.[22] “According to the research, the recall level of an online ad is equivalent to that of a television ad when measured for immediate recall. The data shows that 40% of the respondents who view a static online ad banner will remember it, as compared to 41% of those who view a 30 seconds commercial. The research was based on America Online (AOL)/Ipsos-ASI database. Researches have tested more then 45 banner ads on approximately 7,000 randomly recruited AOL customers in various areas of the AOL site.”[23] “While comparisons to other media are extremely important to the advertising community, we believe that online advertising is even more effective than television advertising using other effectiveness measurement,” said Myer Berlow, AOL’s Senior VP of Interactive Marketing. “No other medium allows advertisers the opportunity to immediately capture the attention of active and engaged consumer; to provide them with more information about their product or service; and to complete transactions. This is one of on-line’s real competitive strengths over print and television advertising, and one cannot be duplicated in the offline world.”[24] Only few words can be added to this beautiful and straight to the point comment about on-line advertising: online advertising is very flexible and sort of alive to the consumer demands and wants. For instance, when you see the ad and you are very interested in it. Let’s take some famous CD for instance, that is being sold with some special discount; it happens that you are interested in this particular CD. You simply press on the banner and the computer takes you from the current page to the place where you can order the CD. Whereas considering the same commercial on television or printed ad, you would have to write the information down or call some music store up. So the difference is huge, the printed ads or television is fixed and predefined, but online ad-messages are very flexible, full of life, and very low costly to update/change the outlook of it. So, banners obviously are the most effective types of on-line ads.
Based on the number of the advantages
discussed above as well as findings from researches discussed, one could
conclude with certainty that Internet advertising is very promising and
certainly has potential future. Specifically, from different means of online
advertising, banners are the most commonly and successfully used way to
advertise on the Net.
Now, let’s take a brief look at some of
the secondary research that will support my argument and make it stronger.
According to the IAB research, 18% of users support the banner advertising very
much, 41% of users do like it, 34% - don’t mind it, and only 6% don’t like it
and 1% are highly against it. According to the agency DOT that researched
Russian Internet audience, 50% - like it, 18% of users don’t like it but understand
that it is necessary, 28% - don’t mind it, 4% - don’t like it. Both of the
researches prove positive attitude of Internet users towards banner
advertising.[25]
There are more and more companies who
launch different kinds of research projects collectively with other popular
servers. One of these projects’ findings is worth to be discussed. The
Ukrainian Magazine “PCCLUB” launched a so-called Questionnaire-Lottery,
researching different kinds of subjects interesting for marketing-people. The
project was launched collaboratively with a number of popular web-servers, so
that different kinds of audience will be researched. Every 300th
will get a prize. So one of the questions was “What kind of information are you
most interested while surfing the NET?” On the Table 2.5 you see the results
from different web pages, in other words from the results of the same
questionnaire but the different audience of a particular places.
Table 2.5
|
What
kinds of information are you most interested while surfing the NET? |
Referat.Ru – an Educational project |
Photo-gallery site of ICQ users -
chat program |
Online
Internet Marketing Magazine |
Online
PCCLUB Magazine |
|
General-political |
10.14% |
6.44% |
5.27% |
6.28% |
|
Internet-computers |
19.38% |
23.32% |
22.37% |
35.43% |
|
Commercial |
6.22% |
8.25% |
38.16% |
11.81% |
|
Educational |
52.85% |
16.82% |
23.69% |
28.51% |
|
Entertainment |
11.44% |
45.2% |
10.53% |
17.99% |
You see different results for different
sites. This is obvious. Why do the people come to the Picture Gallery of ICQ
(chat program)? They come for entertainment, 45.2% of answers. Therefore,
entertainment messages will work on this page, and not commercial, 8.25% for
commercials. Or, let’s take a look at Online Internet Marketing Magazine.
38.16% are looking for commercial information here, 22.37% are looking for
internet-computers information, and 23.69% are looking for educational
information. Therefore, for instance, business messages will do well on this
page of Internet Marketing Magazine, and entertainment messages aren’t going to
be as efficient as in the photo-gallery page. Shortly, this PcClub project
proves the fact that precious “shooting” into potential customers is possible.[26]
LLLLLLLLLLLLLL
DDDDDD
CHAPTER 3 – PRIMARY RESEARCH
3.1 Approach
In order to support the hypothesis of
this Senior Year Project, it’s not enough to just use a secondary research. The
primary research would be a good support to all of the material that was
explained before. There was a lot of ideas about it, to do a huge questionnaire
session, to place a web page on the Internet and try to attract people there
through so-called direct marketing by e-mail. But, eventually, the decision to
make a small questionnaire consisting of only two questions took place. The
reason for such a decision was to make this research simple and at the same
time to be able to get some custom findings and draw some certain conclusions.
3.2 The
Design of the Questionnaire
The design of the questionnaire was
made done in such a way that would help me to see, first of all, the age
of people who were going to be
questioning. On the Image
|
Image 3.1
|
3.1, you can see way the first
question is presented. So, the interviewees were divided into 4 age
categories. The first one is up to 16, these people we consider to be pupil
in school and not yet in higher institutions. Second category is from 16 to
26; this division of interviewees is students in colleges or
universities as |
well as people entering the labour force. Third category is basically people in the labour force that is already very familiar with computers. And the last, fourth age category is people from 40 years old and more. The last category of people might not be very much familiar as well as fond of computers as young people. The second question asks the attitudes about advertising on the Internet, specifically it asks about banners since the project is arguing that banners are the most successful, and have future. You can see the shot of the second question on the Image 3.2. So, the choice that is given interviewee is to choose from 5 predefined answers: I like banners and support them, I like them, I don’t mind them, I don’t like them but I understand the necessity of Advertising, I am highly against them. Further, if the person chooses the first or last answer, he/she is asked to give the reason for choosing such an answer. The first answer is “I like banners and support them,” and the last one is “I am highly against them.” That would be interesting to see the reasons for liking or disliking banners as well as the age categories answered so. Furthermore, it would be possible to draw some conclusions such as the tendency of people to perceive on-line advertising differently according to the age.
Image 3.2
|
Another thing that was necessary regarding the design of the questionnaire, to have a pretty comprehensive example of the banner on the questionnaire sheet, the copy of which you can see on the Image 2.3. Because the questionnaire is researching the opinions on banners and some people might not know this term banner, they just know it is an image with an ad message.
3.3
The Results and Conclusions
After two weeks of sending and giving the questionnaires out, there were 88 participants. You can see short summary on the Table 3.1. See Image 3.1 and Image 3.2 to remind yourself of what kind of questions there were. The questionnaire was given to a number of people of different backgrounds but computer literate. Therefore, the questionnaire was non-random, meaning that there wasn’t any particular sample questioning, just as many people of different backgrounds as possible.
Table 3.1 Short Summary-Report
|
Number of Question |
Number of people |
% of people |
|
Question 1 – Age… a). up to 16 b). 16 to 26 c). 27 to 40 d). 40 and more |
8 55 21 4 |
9% 24& 5% |
|
Question 2 – Attitudes about banners… a). I like banners and support them… b). I like them c). I don’t mind them d). I don’t like them, but understand… e). I am highly against them. |
7 18 32 23 6 |
8% 21% 37% 27% 7% |
One interesting trend that was found, as the results were entered in the database, was that the percentage of different answers for the second question, attitudes about banners, tended to stay constant. Meaning that there weren’t any reasons to continue getting more people involved in the research. In other words, the percentage of people who don’t mind banners tended to vary from 35 to 40 and as you see it ended up on 37%. The same trend was witnessed with b) and d) answer. 8% like banners and support them, 21% like banners, 37% don’t mind banners, 27% don’t like them but understand their necessity, and 7% are strongly against banners. Age groups are as following: 9% are up to 16 years old, 62% are from 16 to 25, 24% are from 27 to 40%, and 5% are 40 and more.
Another interesting finding is that as people are maturer, they find banners more interesting and helpful. And younger people blindly tended to be choosing negative answers; of course there were some objective and interesting answers, which are discussed in this paragraph. On the Table 3.2 you find the comments that participants left about banners. In the parenthesis there’s a category of the age groups of the participant (a, b, c, d, according to the question number one – Image 3.1) so you can actually see yourself different tendencies for different age groups. The same you see on the Table 3.3 but negative comments.
Table 3.2 Positive Comments About Banners
|
-
It gives a good opportunity to go to sites I might know otherwise
know they exited (c) -
Because they are helpful (b) -
Very helpful (c) -
They are effective (b) -
In eye level (b) -
Sometimes you need the info and you don’t know where to find it,
and the other day you see on the banner just what you have been looking for,
so that’s why I like them very much… (c) - I like them mostly, I mean I dislike them, but I work with them for promoting my site, that’s why I am kind of for them, and I think they are very useful and effective (c) |
Table 3.3 Negative Comments About Banners
|
-
This pisses me off! They distract me and I hate them (b) -
It isn’t what I am looking for while I am browsing and I don’t
want to be distracted (d) -
Because of Spam -
I hate banners and any form of advertisement… (d) -
I can’t stand them (a) - They are very distracted and time consuming for those whose machines are not up to date and therefore it slows them down (b) |
Basically, looking at the primary research findings, there’s a big potential for advertising online. Let’s narrow our subject to banners and see what was found about then. 37% don’t mind, this answer is not very objective. But, answer d) (see Image 3.2) is very objective and, and it’s acceptable to say that this answer is positive for banners. Therefore, 27% answered it, meaning that these people don’t really like banners, but they understand their necessity, as a result of finding banners useful in some certain ways or, say, using them for promoting personal web-sites. 21% answered that they liked banners. Even if we look at negative comments about banners in the Table 3.3, we see that those opinions aren’t objective and/or good enough, unlike positive comments. Let’s analyse some of the negative comments. “It isn’t what I am looking for while I am browsing and I don’t want to be distracted” – The person says that it isn’t what he/she is looking for while browsing. But when this person watches TV, is he appreciating TV adverts? Is this person looking for advertising while reading newspaper or magazine? Is this person happy to hear ads when driving in the car listening to the radio? Of course not, but there’s nothing anybody could do about it, because, nowadays, business won’t go by without advertising. Therefore, this kind of negative comment isn’t good enough for considering it when reviewing the effectiveness of online advertising. “I hate banners and any form of advertisement…” – Nobody would bother to think about this kind of comment because it lacks the explanation for such an answer. “They are very distracted and time consuming for those whose machines are not up to date and therefore it slows them down” – This is the only kind of negative comment that should be taken into consideration by advertising agencies. But still this isn’t a good enough factor for my hypothesis because this is a technical problem that advertising agencies have to take care of. Therefore, all the negative comments received through the research aren’t good enough for arguing.
What’s going on with positive comments? “It gives a good opportunity to go to sites I might know otherwise know they exited.” “Sometimes you need the info and you don’t know where to find it, and the other day you see on the banner just what you have been looking for, so that’s why I like them very much….” These two objective comments tell us that people are actually find banners/advertising messages on the Internet useful and helpful sometimes. Specifically, people sometimes find stuff they have long time ago been looking for. Therefore, this is a good enough and objective comment.
What can we conclude from this small market research? Basically, we can say that the results are positive. The number of people who roughly dislike banners is about the same as the number of people who do like them. Even though some people chose negative matches for the question, more people from this category tended to choose the answer d) ("I don't like them, but I understand the necessity of Advertising"); meaning that this category of users is patient to the advertisements and is not against them. Only 6 people (i.e. 7% of the participants) chose the answer e) that says that they are highly against them. Moreover, there weren't any objective comments criticising online ads except for one that says that some of the online ads are time consuming on old models of computers. Whereas there were some positive comments that gave good characteristics and usefulness of the banners. Positive and negative comments that were given by participants can be found on the Table 3.2 and Table 3.3 accordingly. Summing up, this market research proves that there is the hope for the future of online advertising.
Llllllllllllllll
Llllllllllllllllllllll
Lllllllllllllllll
Lllllllllllll
Lllllllllllllll
Lllllllllllllllllllll
CHAPTER 4 – GENERAL FINDINGS AND CONCLUSION
There has been presented plenty of facts and findings, which all basically prove that there's a big and promising future for business on the Internet and Online Advertising in particular. This project narrows the subject of the business on the Internet down to discussion of Advertising on the Internet.
Advertising on the Internet has a very long way that it still has to pass to become perfect. Future of Internet Advertising and its enormous power is in the hands of Advertising Agencies. They have to examine places where they want to show banners in order to reach maximum efficiency, they have to be ethical to their customers and offer a maximum quality service, and they are who will be able to do an efficient advertising campaigns and lead online advertising to grow and probably become one of the most popular and efficient media, who knows…
DDDDDDDDDDDD
DDDDDDDDDDDDDDDD
DDDDDDDDDDDDDDDDDD
LLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLL
LLLLLLL
LLLLLLLLLLLLLL
DDDDDD
DDDDDDDDDDDD
BIBILIOGRAPHY
Books:
1.
Norton,
Bob and Smith, Cathy. Understanding
Business on the Internet. London, UK: Hodder & Stoughton Publish.
1996-19, pp. 6-7, 15, 16, 17, 36-39, 50-54, 65.
2.
Paul
J. Dowling Jr., Thomas J. kuegler Jr., Brent F. Taylor, and Joshua O.
Testerman. WEB Advertising and Marketing.
USA: Matthew H.Carleson, 1999-98, pp. 4-5, 11, 15, 17-22,
Articles and
Publications:
1.
“Getting
Profits from the Internet.” Internet Files. Russia, 1998. Location: http://people.weekend.ru/w3
2.
Yahoo!.
Yahoo! – “Company History,” 1994-1998, Location: http://www.yahoo.com
3.
Gates,
Bill. “Support Freedom of Speech on the Internet.” USA: Microsoft
Corporation, 1998. Location: http://www.microsoft.com
4.
Gates,
Bill. “Bill Gates Statement.” USA: Microsoft Corporation, 1998.
Location: http://www.microsoft.com
5.
Corporate
Information. Microsoft Corporation. 1999. Location: http://www.microsoft.com
6.
Corporate
Profile. Microsoft Corporation. 1999. Location: http://www.microsoft.com
7.
“Marketing
Your Small Business on the Net”. MegMag Online. 1998. Location: http://www.megcorp.com
8.
“The
Advantages Of Web Advertising.” Advanced
Internet Marketing. 1997. Location: http://www.aim2.com
9.
“Welcome
to The Geek’s Guide to Internet Business Success web site.” Provider.com.
1998. Location: http://provider.com
10.
“Internet
Marketing ’98.” CIT Forum. 1999. Location: http://www.citforum.ru
11.
“What
can US-Advertising do for Your Business.” US-Advertising. 1999.
Location: http://www.us-advertising.com
12.
Microsoft
Online Sales – Advertise on MSN. MSN Network. 1999. Location: http://www.microsoft-online-sales.com/hotmail.ASP
13.
Greenbaum,
Michael. “Market by E-mail without Hacking off Clientele.” Boardwatch
Magazine. February 1999. Location: http://www.boardwatch.internet.com
14.
“Broadband
Ads More Effective – Higher Recall, Better Branding for Rich Media Ads.” CyberAtlas
- Articles. 1999. Location: http://cyberatlas.internet.com/segments/advertising/
15.
“Banner
Ads Effective at Branding – Work as well as Commercials.” Boardwatch
Magazine. February 17, 1999. Location: http://www.boardwatch.internet.com
16.
“Consumers
Tolerate Web Advertising – Banner Ads Deemed Least Irritating.” Boardwatch
Magazine. November 24, 1998. Location: http://www.boardwatch.internet.com
17.
“Sharp
Rise in Online Ad Spending – Computer Industry Leads Way.” Boardwatch
Magazine. October 20, 1998. Location: http://www.boardwatch.internet.com
18.
Bokarev,
Timofei. “Quantitative and Qualitative Audience Structure of the Internet,
Development Tendency and its Meaning for the Advertiser.” CIT Forum.
Location: http://www.citforum.ru
19.
Gagin,
Aleksandr (“Netskeit”). “Internet-Advertising from the skies: today – banners,
what about tomorrow?” CIT Forum. Location: http://www.citforum.ru
20.
“New
Marketing Policy.” Computerworld. Russia. Tarskott, Don. #07/98.
Location: http://www.osp.ru
21.
About
The Company. ICQ Inc., 1998-99. Location: http://www.mirabilis.com or http://www.icq.com
22.
Kaminskaya
Rima. “Young Millionaires.” Russian America. February 1999, pg. 14.
23.
Gorobets,
Vyacheslav, “Research on the Internet.” PC-Club. Location: http://pcclub.com.ua/opros.htm