Internet Changes Everything

Britain provides a glimpse of the future of advertising

Internet advertising | Adland's test tube | Economist.com

Dec 13th 2006
From The Economist print edition
Britain provides a glimpse of the future of advertising

THE future, noted William Gibson, a science-fiction writer, is already here—it is just unevenly distributed. To see the future of mobile phones, people look to Japan; to see the impact of broadband internet connections, they look to South Korea. And for a glimpse of the future of advertising, the place to look appears to be Britain. The country is a “test bed” according to Eric Schmidt, chief executive of Google, which has just announced an alliance with British Sky Broadcasting (BSkyB), a British pay-television company. On December 6th the two companies announced that the internet search and advertising giant would provide its search, e-mail, video and advertising services to BSkyB's broadband internet-service customers, with the aim of extending the partnership to BSkyB's main television business.

Why Britain? The country has several factors in its favour. For a start, the British online-advertising market is “exploding”, said Mr Schmidt. The internet accounts for 14% of companies' total spending on advertising in Britain, compared with about 5% worldwide (see chart). Expenditure on internet advertising in America is similar to that in Britain, but Britain's growth rates are slightly higher. In the first half of this year online advertising increased by 40% in Britain and 37% in America compared with the same period last year, according to the Internet Advertising Bureau, an industry body. Britain is now the leading market for online advertising, says Rob Noss, European chief executive of MindShare Interaction, a new-media subsidiary of WPP, a British advertising giant.

That is due, in part, to the presence of the BBC, Britain's state-controlled main broadcaster, which has no advertising. As a result, British companies spend less on television advertising than those in countries with big commercial broadcasters, and more on other types—which, in recent years, has meant online advertising. GroupM, the media-buying division of WPP, forecasts a 2.4% decline in British television advertising in 2006 and a flat market for 2007.

Eventually, says Sir Martin Sorrell, chief executive of WPP, the internet will grow to account for 20% of worldwide advertising spending, at the expense of traditional media (broadcast and cable TV, print, radio and outdoor advertising). But Britain will reach this point by 2009, predicts ZenithOptimedia, a market-research firm, at which point internet advertising will be worth almost as much as television advertising. Britain has, in effect, got a head start over other countries as advertising spending shifts from old to new media.

Another catalyst of the growth of online advertising is Britons' enthusiasm for fast, always-on broadband connections to the internet and for online shopping. In Britain 47% of households have broadband, compared with 44% in America and 33% in Germany. Consumers with broadband tend to shop online more frequently and spend more money than those with slower dial-up internet connections. In the first six months of this year online retail-spending in Britain increased by 40% compared with the same period last year. The attraction of online ads is obvious.

Advertisers are waking up to the fact that British consumers typically spend a quarter of their media-consumption time on the internet, says Linus Gregoriadis, an analyst at E-consultancy.com, an internet-research firm. Britons spend an average of 23 hours a week online, compared with 14 hours per week for Americans. Advertisers also like the efficiency of the medium: much of the advertising on the net is “pay-per-click”, which means that advertisers pay only when consumers click on an ad, so they can be relatively confident that their advertisements are reaching a receptive audience. Mr Noss says that several of his firm's clients already spend 40% of their advertising budgets online.

Blue-chip companies have yet to take the plunge and still spend only a tiny fraction of their budgets on internet advertising, but that could be about to change. Unilever, an Anglo-Dutch consumer-goods giant, Heineken, Europe's largest brewer, and Procter & Gamble, a large consumer-goods company and the biggest advertiser worldwide, recently announced that they will switch a big chunk of their British advertising budgets away from television. Much of it will go online.

Britain is also attractive to advertisers because it is a homogeneous market, so there is no need to tailor advertisements for different parts of the country. The adoption of digital television is proceeding well, and BSkyB's platform is particularly advanced; Google and BSkyB plan to send advertisements to viewers' set-top boxes and then play them in commercial breaks depending on their interests, thus extending its targeted advertising model from the internet into television.

And British consumers' relative enthusiasm for accessing the internet from mobile phones—if not in the same league as that of Asian consumers—explains why Yahoo!, another big internet firm, struck a deal last month with Vodafone, a big mobile operator based in Britain, to test new models for phone-based advertising. In addition, next year a new mobile-phone service for young people, called Blyk, will be launched in Britain before being rolled out across Europe. Users will be able to earn airtime in exchange for receiving advertisements on their handsets.

Blyk's co-founder, Pekka Ala-Pietila, a former president of Nokia, the world's biggest handset-maker, says the firm decided to launch in Britain first because it is the second-largest advertising market in the world after America, with sophisticated advertisers who appreciate the market segmentation that new technology makes possible. As a result, he says, Britain “is where we could learn the most”. It all makes a welcome change for Britons used to hearing that their once-great country no longer leads the world in anything.

December 14, 2006 at 06:29 PM in Online Marketing | Permalink | Top of page | Blog Home

Marketers muse about MySpace

TheStar.com - Marketers muse about MySpace

Sep. 4, 2006. 09:35 AM
TARA PERKINS
BUSINESS REPORTER

"You're a square, and you have more than 81,000 friends, WHAT'S HAPPENING TO THE WORLD"?
—Posting on MySpace.com,
Aug. 26, 7:15 a.m.

Who is this popular square?

According to his profile, his name is Smart, he lives in New York and he's 28. Smart is single, but wants to have kids one day. He also wants to meet Angelina Jolie. And his hero is Dave Thomas.

Smart is a square-shaped mascot, created by Wendy's International Inc., the U.S. hamburger chain that is spinning off its ownership stake in Tim Hortons and that shook up its marketing department this summer to focus on innovation.

Wendy's created a profile page for Smart — who is shaped like the chain's square burger patties — on MySpace, the popular networking site bought by media firm News Corp. for more than $500 million (U.S.) last year.

As of Friday, Smart had 81,015 "friends," other MySpace users who can connect their profile to Smart's and leave comments on his page.

Companies can post profiles on MySpace for free or, like Wendy's, work with Fox Interactive Media to develop a site with a price tag ranging from about $100,000 to more than $1 million.

"Whether through a customized profile or a marketing campaign, brands and advertisers such as Disney, Toyota, Gillette, Pepsi, even the U.S. Marine Corps, have the opportunity to engage users, ultimately allowing the community to become brand ambassadors to their network of friends," says a fact sheet handed out by Fox Interactive, which runs MySpace.

Canadian companies have recently been experimenting with MySpace and similar social networking sites, but experts warn that caution is required. Pitfalls include negative comments posted to the profile page, criticism from those who feel that posting a profile on MySpace to advertise is deceptive, and posting a profile that just isn't embraced by the company's target demographic.

Last week Hitwise, an online researcher, said that MySpace.com accounted for 2.53 per cent of all U.S. upstream visits to shopping and classified sites for the week ending Aug. 26, nearly double its percentage from six months earlier.

By comparison, Google.com was responsible for 14.93 per cent of U.S. upstream visits to shopping and classified sites, followed by Yahoo at 4.69 per cent.

"With the growth of MySpace and others, online retailers should expand their focus beyond search to consider social networking sites as a source of additional traffic," stated Bill Tancer, general manager of global research at Hitwise.

MySpace ranked as the sixth most popular site on the Web in July, according to Fox Interactive which cites comScore Media Metrix.

Windsor's Motor City Community Credit Union is among the Canadian organizations with a profile on MySpace.

Mike Quinlan, the marketing director of the credit union, said he was aware of the dangers, but the experience has been more successful than he hoped.

"It came about because of listening to my eldest daughter, who was 24. (She) lived in Ireland for a year and had her own blog, which was kind of new for me as a communication channel," Quinlan said.

"So then, I was trying to come up with ideas to penetrate the youth market, I did some research, and I found MySpace."

The credit union hired "a couple of twenty-somethings" to help, for their "familiarity with talking the talk," he said.

The profile site is intended to give young people a forum to learn about and discuss financial issues, he said. "It's a great channel, it's very cost-efficient.

"It's too early to say it's a raving success, but we are really encouraged," he said. "We thought that if we could get 100 friends within the first two or three months we'd be really happy, and we're already over 200."

Quinlan did have some concerns before the credit union, which has about 17,000 members, set up its profile.

"MySpace has, obviously, all types of users with all types of subjects," he said. "Our concern was that if the MySpace aura itself was getting bad publicity, we would be wrapped in. Like, if they were saying it's nothing more than a pornographic channel," he said.

While the Wendy's profile page for Smart is filled with comments like, "Your {sic} the man square, I know if you run for Prime minister I'll vote you in :)," it also has complaints about service at the restaurant and lines of profanities.

And some critics are calling commercial profiles on MySpace "deceptive." An article by CNET News.com titled "MySpace blurs line between friends and flacks" quoted experts who say that younger teens who thrive on social networks may not be skeptical enough of this "new, seductive form of advertising."

MySpace attracts profiles from individuals, music and entertainment artists, non-profit organizations and corporations around the world. "Why these diverse groups join is not that different — it's all in the name of shameless self-promotion," said an industry newsletter put out by Canadian youth marketing firm Youthography earlier this year.

The music industry began using the site early, and other companies are now following suit.

Youthography warns, "There are definitely risks that come along with creating a branded corporate MySpace page. First off, there's no control over the comments users leave on your page, aside from deleting the comment entirely.

"Corporations that join should expect to see profanity, nudity and all around vulgarity. If your brand is sensitive to this and isn't comfortable with these associations, then MySpace might not be for you."

A second caution is the need to raise "the creative bar," Youthography says.

A Tim Hortons profile on MySpace has a dark background featuring coffee mugs that makes it very difficult to read the overlying font. Tim Hortons is described as a 42-year-old male from Hamilton, and the site features ads for iced cappuccinos and strawberry tarts.

The company was unable to confirm whether it posted the profile.

September 4, 2006 at 12:26 PM in Online Marketing | Permalink | Top of page | Blog Home

Driving loyalty by managing the total customer experience

Courtesy of McKenna Group.  (Registration required)

(1/15/1999) CRM Project Volume 1
By John Calhoun, McKenna Group

In order for CRM to reach its true potential and for those implementing CRM to move beyond the "minimal success" ratings that dominate, organizations need to establish a strategic direction that can have a significant impact on the organization. A roadmap must then be established that ensures CRM investments support this direction and are integrated into something that fundamentally improves the total customer experience.

Introduction
In order for CRM to reach its true potential and for those implementing CRM to move beyond the "minimal success" ratings that dominate, organizations need to establish a strategic direction that can have a significant impact on the organization. A roadmap must then be established that ensures CRM investments support this direction and are integrated into something that fundamentally improves the total customer experience. The real impact of these technologies will be realized only when CRM technologies are used to support a strategic direction - rather than as a strategic direction.

CRM is a Strategic Initiative
Making a commitment to technology-enabled CRM should be a strategic decision with an end goal of having a real impact on the way the company competes in the market. This impact can only be realized if CRM is implemented in a strategic context - where the technologies are used to support a strategic direction rather than become the strategic direction. CRM should be about managing (and improving) the customer's total experience with the organization:

• Across all touchpoints (call center, Web, kiosks, service technicians etc.)
• Across all company divisions or departments
• Across all experiential elements (pre-sales activity, product/service experience, post sales support etc.)

A significant impact on the organization can only be realized when the Total Customer Experience (TCE) is the focus for improvement. This is not to suggest that companies will dedicate the time and resources to implement a complete CRM solution - that addresses all experiential elements - as one large project. In fact, companies will need to start very small and expand as they go and learn. However, these incremental investments and projects need to be done in a coherent and integrated manner. The CRM mantra needs to change from "move quickly and reap early rewards" to "move quickly and work towards achieving a strategic objective." The prevailing short-term focus immediately places emphasis on doing things in a compartmentalized manner (e.g., the call center operations of the consumer products group) with little coordination across other elements of the Total Customer Experience. As each department implements its own "point solution," the enterprise ends up with a series of disjointed initiatives, each somewhat unsatisfactory in its impact on the organization.

The vast majority of CRM projects do not involve an enterprise perspective or a strategic objective. The technology is purchased and implemented through the initiative of a sales, service, or marketing manager within a specific product group or department. The focus is on improving a particular process or function and is generally motivated by short-term tangible benefits. In research we have recently completed on CRM, businesses site four primary drivers of their CRM projects:

• Attract new customers
• Increase sales per customer
• Reduce costs through optimization of business processes
• Improve customer relationship/increase loyalty

When we investigate what specifically most businesses have done and how they are measuring success, all the focus is on some combination of the first three of these objectives. Increased customer loyalty is a "nice to have" rather than the reason for the CRM initiative. The vast majority of the projects are really focused on targeting customers better, cross selling more effectively, or handling customer requests more cost efficiently. There is little attention on how to alter or improve the customer's experience with the organization. This is partially due to the fact that CRM technologies are naturally about customer data and workflows, not about relationship building. Relationship building requires the creative thinking necessary to operationalize the data and workflows into a better customer experience. This creative or strategic thinking is conspicuously absent from most of the CRM projects we have examined.

In this age of decreasing customer loyalty, increased customer choice, deregulation, changing competitive boundaries, and "stealth-like" Internet competitors, the focus of CRM projects should be improving customer loyalty. In fact, research conducted with CEO's indicates that improving customer relationships and increasing loyalty is the number one priority of businesses within the U.S. It appears that somewhere in between the CEO's business priority and the sales and marketing manager's need to move quickly and justify a budget, the focus on improved customer loyalty gets lost.

Click To Enlarge

Moving Beyond Better Customer Interaction
Improving customer relationships and increasing loyalty isn't simply about managing customer interaction better or targeting them better. It is about serving them in a fundamentally improved way - generally requiring changes outside of the sales and marketing area in order to redefine the customer's experience with the organization in some meaningful way.

Organizations that have taken this broader, more strategic view of leveraging CRM technology have benefited tremendously. The success realized by Dell Computer in building a structure that allowed its customers to custom build their own PC is well known. Their focus on using technology to "interact and serve" customers in an improved manner rather than simply "interact" more effectively has created a significant shift in market share and a new basis of competition.

Pitney Bowes is an organization that has recently leveraged CRM technology as a means of serving the customer better and driving customer satisfaction. Customer loyalty and satisfaction were being severely hampered by Pitney's inability to accurately configure their complex mailing systems to customer specification. Using CRM technologies, the organization is now able to sit down with a customer and configure, quote and order a system on a real time basis — allowing for real time adjustments based on pricing, availability and delivery times. Six months after implementing the system, the number of order cancellations is down by 27% and order-processing times have been cut by 45%. Serving the customer in a more accurate, timely manner will drive increased loyalty and advocacy - ultimately increasing market share.

These kinds of CRM successes require strategic insight on how to serve the customer better and senior executive involvement/commitment within the organization in order to align departments and divisions to a common strategic goal. CRM needs to be about business strategy, supported by technology, not about reducing marketing costs or simply interacting more effectively.

Loyalty is Driven by a Total Customer Experience
Serving the customer better does not necessarily mean serving him/her in a more expensive manner. The goal is to ensure that you have aligned your service elements to each and every customer's need. Identifying and eliminating areas of "over serving" can more than compensate for areas where your service or offering needs to be enhanced to become more competitive. Where a more expensive form of serving the customer is required, it is critical to ensure that it is done for a customer set that the organization can afford to serve better.

Click To Enlarge

Much of the benefit of CRM technologies is in improved customer understanding. Unfortunately, many organizations have collected vast volumes of information with little understanding of how to take strategic advantage of it. This customer information is the enabler that allows new business strategy to be activated. A first step is to understand what the "business strategy" is - allowing you to then determine what elements of the varied customer information are most critical to operationalizing the strategy. It is commonly recognized that 80% of the strategic value of customer information is in 20% of the data - the difficulty is in knowing which 20%.

When this customer data is not used effectively, CRM initiatives can depersonalize the way each customer is served and therefore reduce loyalty. For example, one of the organizations that we have worked with is a manufacturer of industrial cable. Approximately 80% of their profit came from 25 large industrial accounts. One of the big issues expressed by their customers was the length of time the manufacturer required to generate quotes and confirmed delivery dates for non-standard (customized) cable orders. Custom orders required a flurry of phone calls, faxes and time consuming interaction with sub-contractors and component suppliers to produce an accurate price quotation and delivery commitment. This quotation process typically required 4-5 days while the entire manufacture process was only 3 days. The company implemented a web-based system that allowed customers to input the specifications for custom orders on-line. The system automatically routed the special requests to the most suitable sub-contractors and component providers and received back same day quotes on-line. A consolidation of quotes was done automatically and a confirmed cost and delivery schedule was generated for the end customer within 24 hours (reducing turnaround time by 75% and lowering the cost to process a custom order by 90%).

The CRM initiative was launched with huge success for the cable manufacturer, its customers and its suppliers. Customers were being served in an improved manner. However, within six months of launch, the volume of online custom orders dwindled from a high volume to close to zero and the manufacturer suspended the CRM initiative.

What the manufacturer discovered, is that their largest customers had reverted back to the physical order system for custom orders. These orders were placed through dedicated sales representatives that "advocated" for their large customers to obtain attractive pricing for custom orders. This set of informal business decision rules was not reflected in the web-based CRM system. This forced the company's senior management to establish a set of business decision rules around pricing levels for large volume customers. The CRM system was adjusted to identify a customer, determine customer profitability and adjust pricing based on the extent the manufacturer could afford to serve the customer at low margin. Once the system was re-launched, large customers returned and today over 75% of customer orders are received online. The end result is a vastly improved process that drives customer loyalty amongst the manufacturer's most important customers.

Defining a Total Customer Experience
Requires an Enterprise View
Customers define their loyalty to an organization through their total experience with the organization. For example, their loyalty (or lack thereof) is typically with Insurance Company X, not with the home insurance division separate from the auto insurance division, if they happen to deal with both. Similarly, they define loyalty through their sum of their experiences with the organization — across all touchpoints and across all experiential elements: pre-sales, order and delivery process, product/service experience, post-sales support etc. The means that CRM initiatives that have improved loyalty as a key objective need to take a holistic view of the Total Customer Experience with the organization. Interacting with customers over the web or call center in a customized manner while doing nothing to improve their product or service experience will have limited impact on loyalty. Similarly, utilizing the latest CRM technology in the home insurance division while the auto insurance division lags in the dark ages will have little impact on loyalty for customers that deal with both.

Unfortunately, as discussed at the outset of this paper, the vast majority of organizations implement CRM initiatives in a compartmentalized, "point solution" manner with no guiding principles or roadmap as to how initiatives will be brought together to alter the Total Customer Experience. The right levels of the company hierarchy are not involved in any meaningful manner to ensure this happens. CRM is viewed as a technology initiative rather than a strategic initiative, supported by technology.

Customer loyalty is driven by bringing the TCE service elements together (as illustrated in Figure 2.0).

Implementation Frustrations Center Around Achieving an Enterprise View for CRM
Most businesses are far from achieving a redefined and integrated customer experience today. In fact, in most cases, the data gathered and utilized in one CRM initiative is not easily shared with other CRM initiatives. Forrester Research reports that only 2% of businesses have an integrated or single view of their customer data. Research we have recently conducted with businesses that have implemented CRM solutions, indicates that they have two dominant sources of frustration with their CRM projects:

1. The inability to integrate disparate initiatives in CRM that have been driven at a departmental level
2. The inability to achieve an integrated view of customer data

Click To Enlarge

These frustrations overwhelm issues associated with "ease of use" which typically dominate in emerging application areas. Businesses with experience in CRM recognize that the first frustration (lack of integration) reduces their ability to redefine a "total customer experience" and the second frustration (common data view) prevents them from making business decisions that optimize benefit to the total enterprise. Meeting these two objectives is critical to turning an organization's CRM investment into a strategic initiative that has significant upside for the organization rather than a departmental tactic with bounded potential for success.

The Need to Avoid "Siloed" Initiatives
The practical reality is that businesses will need to implement CRM through relatively contained and simple initiatives that are cost effective in their own right. However, these initiatives need to be part of a broader strategic initiative that will drive customer loyalty by redefining the Total Customer Experience. There are three imperatives to ensure CRM investments result in strategic benefits to the organization:

Click To Enlarge

1. CEO/COO level involvement and commitment to a CRM vision or TCE redefinition
2. Success measures that focus in the short-term on milestones or evidence of redefining the TCE (improved order turnaround, fewer mishandled orders, higher degree of product/service customization or choice, etc). In the long-term, the focus should shift to the benefits of redefining the TCE (higher customer satisfaction ratings, lower customer churn, higher market share etc.)
3. A CRM roadmap that guides the individual initiatives to ensure they are executed in a coordinated manner that works towards TCE redefinition

The most difficult of these and the one that most rarely exists is the third - a CRM roadmap to guide individual initiatives. This roadmap needs to be custom developed for each organization and must be based on a core business strategy or direction for serving the customer better. The fundamental difference between the roadmap approach and the common "siloed " approach is that each initiative is part of a complete process improvement from the customer's perspective (i.e., at least one element of the TCE is truly redefined and improved). An illustrative case is summarized below.

Conclusions/Recommendations
In order for CRM to reach its true potential and for those implementing CRM to move beyond the "minimal success" ratings that dominate, each organization needs to establish a strategic direction that can have a significant impact on the organization. A roadmap then needs to be established that ensures CRM investments support this direction and are integrated into something that fundamentally improves the total customer experience. Only when CRM technologies are used to support a strategic direction, rather than as a strategic direction, will the real impact of these technologies be realized.

About McKenna Group
The McKenna Group is a Silicon Valley based consulting firm with over 25 years of history in the information technology sector. The firm earned its reputation early on by having defined many of the key high-tech marketing revolutions in the 1980s and 1990s. Its work with Apple in the early 1980s was instrumental in assisting the PC revolution. The company helped Intel launch the first microprocessor, and it helped 3Com reposition itself and launch the LAN business. Today, the firm's focus is on helping vendors and users of technology to anticipate, understand, and leverage major shifts in technology. Much of this effort is concentrated on the Internet and the impact it has on competitive strategies, as well as the opportunity it creates for Business Re-generation and real-time customer relationships. The firm's differentiation stems from its focus on e-business strategy consulting, real-time marketing, and business partnering.

Visit www.mckenna-group.com for more information.

The material contained within this document is the proprietary information of The McKenna Group LLC and may not be duplicated in whole, or in part, without the express written consent of The McKenna Group LLC. To obtain reprints or to request authorization to copy, contact The McKenna Group at 1755 Embarcadero Road, Palo Alto, California, 94303, or call 650.852.0800.

August 28, 2006 at 12:05 PM in Online Marketing | Permalink | Top of page | Blog Home

click trough advertising summary

Do You Pay Per Clíck Fraud? - AllPayNews: Payment and fraud news, blog, jobs and discussions

y Kim Roach (c) 2006

The world of pay-per-click marketing started in 1997 with GoTo.com. Today they are known as Yahoo Search Marketing. What started in 1997 as a way to quickly get listed in the top of the search engines has turned into a 5.6 billion dollar industry in 2005. In fact, about 99% of Google's revenue comes from advertising.

However, this multi-billion dollar search industry is under attack and has been for quite a while. Click fraud has become the greatest threat to the rapid growth of the paid search marketing sector. The Interactive Advertising Bureau estimates that 20 to 35 percent of ad clicks are fraudulent.

Who's to blame? Click fraud can come from a variety of sources, including competitors, bots that simulate the human behavior of clicking on ads in web pages, or even friends of the publisher who want to "help" the publisher gain some additional click revenue.

However, the major search engines have received the majority of the blame, even though they are not necessarily responsible.

Yahoo has recently settled a class-action click fraud settlement. Under the settlement, Yahoo advertisers will be allowed to submit click fraud claims dating back to January 2004. Yahoo will reimburse any confirmed fraudulent clicks in cash, with no set limit on the amount of claims it will cover.

This year, Google has been burdened with its own click fraud case to the tune of 90 million dollars. Currently, the court is deciding whether to accept the search giant's proposed $90 million settlement while roughly 50 plaintiffs are voicing their dissatisfaction with it.

Click fraud is certainly no small matter. It has become larger than the total magnitude of credit card fraud in the U.S.

So far, these law suits have spawned more questions than answers for the ultimate solution to click fraud. Click fraud threatens an entire business model; one that is generating billions of dollars every year.

At this point, it's hard to tell whether pay-per-click advertising will stand the test of time, or line up for the chopping block.

Many of the search engines are already looking for solutions.

Pay-Per Percentage

Microsoft is currently engaging in research to develop new, click fraud resistant advertising models. Joshua Goodman, a Principal Researcher at Microsoft has published a white paper on pay-per-percentage as a solution to click-fraud.

Pay-per-percentage is an advanced form of pay-per-impression. Within this system, someone can bid for a percentage of all impressions for certain keywords or keyword phrases over a specified period of time. In the pay-per-percentage model, click fraud is avoided because the advertiser is not charged any additional amount for clicks. The business model is based upon a percentage of ad impressions.

Microsoft research describes it as:

"A simple method for selling advertising, pay-per-percentage of impressions, that is immune to both click fraud and impression fraud... ads must be shown in a truly random way, across the percentage of impressions purchased..Pre-fix match: a system that is similar to broad-match, but more compatible with pay-per-percentage... auction pay-per-percentage matches, including prefix matches in a revenue maximizing way...make it easier to sell to advertisers."

The Google Adwords system itself was initially based on a cost-per-view model. Unfortunately, there was a lack of enthusiasm for the cost-per-impression services and they switched over to the pay-per-click model.

For the pay-per-percentage model to succeed, Microsoft will certainly have to do some things different. Their solution is outlined in the paper, "Pay-Per Percentage of Impressions: An Advertising Method that is Highly Robust to Fraud" (http://research.microsoft.com/~joshuago/percentageworkshop-
final.pdf)

Another possible solution being explored is Pay Per Action.

Under this model, advertisers do not pay every time a user clicks on an ad. Instead, payment is only made when a click through leads to a desired action. This could be a purchase, filling out a form, downloading trial software, or even making a call.

This model takes much of the risk out of advertising.

In fact, Google Adsense is currently beta testing a compensation system based on CPA. If you are an adsense pubisher, this would mean that instead of getting paid for clicks or impressions, you would get paid a commission for a sale or other desired action. These ads won't compete with the regular pay-per-click ads and will be on a separate network. However, they may be beneficial for advertisers looking to avoid click fraud.

Paid Inclusion

Another possible solution to pay-per-click is known as paid-inclusion. Although many of the paid inclusion companies have come and gone over the years, there is a new organization that is offering a very optimistic solution to the many pay-per-click problems we are facing today.

This organization is giving smaller search engines and directories the ability to compete with the big guns (Google, Yahoo, and MSN.) The smaller search players can attain this status by becoming part of a mass community that delivers quality advertising at a fraction of PPC costs.

The paid inclusion program offered by this community of search providers, known as the ISEDN (http://www.isedn.com), is a cross between the older paid inclusion models and the reigning PPC model. Purchased ads are displayed in a similar manner to the PPC ads shown by Google, but advertisers are charged on a flat fee basis, not on a per click basis.

The ISEDN program makes click fraud irrelevant because ads are displayed for a certain period of time, regardless of the number of clicks or impressions received.

Through the power of the collective community (the ISEDN currently has more than 230+ members), ISEDN paid inclusion ads are displayed over 150 million times per month. This equates to 150 million potential advertising opportunities.

Within this model, you can buy top 10 exposure across a rapidly growing network of search providers for $3 to $4 per month. If you choose to buy in volume, you can expect some significant discounts.

The ISEDN advertising model limits the sale of the same keywords or phrases to 30 advertisers. If a keyword term is sold more than 10 times, then those paid listings begin to rotate between the SERPs. So, for the worst case scenario, a listing would appear on the first page of results approximately once out of every 3 searches on most engines in the network.

This program gives advertisers the benefit of advertising with smaller search engines on a massive scale without the fear of click fraud. For more information on this advertising model visit ISEDN founding member ExactSeek.com (http://new.exactseek.com/featured_listings.html).

As for Google, Yahoo, and MSN, you can definitely expect to see some changes being made with their paid search programs in the near future. The pay-per-click model is inherently flawed and must be altered to survive. Google and the other major search engines know that their business will be crippled if they do not adapt. In the meantime, there are a number of alternatives for advertisers looking for a safer solution to advertising.
================================================================
Kim Roach is a staff writer and editor for the SiteProNews

August 4, 2006 at 07:59 PM in Online Marketing | Permalink | Top of page | Blog Home

Online Ad Growth Accelerates, Outpacing Newspaper, TV Spending

Bloomberg.com: U.S.

Dec. 28 (Bloomberg) -- The move to online advertising is happening faster than analysts anticipated as companies devote more of their budgets to the Internet than traditional media.

The market for online ads will increase 32 percent to $16.6 billion next year, fueling growth at companies including Google Inc. and Yahoo! Inc., Credit Suisse First Boston analyst Heath Terry said in a research report. He had previously forecast 21 percent growth.

Sales of online ads that have animation, sound or interactive features will jump 66 percent next year to become the fastest growing area of Web ads, Credit Suisse predicts. Yahoo, the most-visited Web site, and No. 1 search-engine Google are winning business at the expense of publishers and broadcasters.

``We're seeing a shift to a more diverse set of media choices,'' said Mary Baglivo, chief executive officer of the New York office of advertising agency Saatchi & Saatchi. ``Certainly a move away from what had traditionally over the years been the vast majority television and print.''

Saatchi & Saatchi's clients include Cincinnati-based Procter & Gamble Co. and Detroit-based General Mills Inc. The agency is a unit of Paris-based Publicis Groupe SA, the world's fourth- biggest advertising company.

Almost half of the ad executives in a Credit Suisse survey intend to increase Internet spending by almost 30 percent in the next year, according to the brokerage's Dec. 9 report. The study, conducted by New York-based market researcher TNS Media Intelligence for Credit Suisse, included 90 companies and 10 ad agencies, with average accounts of $22 million.

Rising Shares

Shares of Mountain View, California-based Google have more than doubled this year and are worth five times their August 2004 initial public offering price of $85. They gained 24 cents to $424.88 at 10:28 a.m. New York time in Nasdaq Stock Market composite trading. Shares of Sunnyvale, California-based Yahoo climbed 13 cents to $40.07 and had risen 6 percent this year before today. They gained 67 percent in 2004.

Sponsored links next to search results, the main source of sales for Google, and graphical display ads, like the banners seen on Yahoo's site, will remain the two most popular types of online ads in 2006, Credit Suisse's Terry forecasts.

Still, display ads will be the slowest growing ad type next year as spending on animated, or so-called ``rich media'' ads, increases, according to Credit Suisse. Terry forecasts that group will overtake banner ads in 2008.

``Video is the most compelling and emotive creative medium available for advertisers,'' said Nate Elliott, an analyst with Jupiter Research in London. ``It does the best job of creating emotion.''

Doritos Video

Hewlett-Packard Co., the world's biggest printer maker, last week placed animated spots for its Photosmart photo printer on Yahoo's home page, and 30-second spots that roll before music videos on Yahoo Music. Other video advertisers on Yahoo included PepsiCo Inc.'s Doritos, and Detroit-based General Motors Corp. PepsiCo is based in Purchase, New York.

Ad executives in the Credit Suisse survey last month slated the biggest part of their budgets for Internet ads, compared with a No. 3 ranking behind magazines and broadcast TV in a survey conducted during the previous quarter.

Animated and video ads command a premium over static graphics. Companies paid an average of $10.81 for every 1,000 people that saw animated ads in November, compared with $2.85 for banners, according to Nielsen//NetRatings, which tracks Web use. Spending on animated ads rose 23 percent from a year earlier, while banner ad spending more than doubled.

30-Second Spot

Most Internet video ads are still just duplicates of 30- second spots made for television as companies aren't willing to invest in both formats, Elliott at Jupiter Research said.

That's changing as companies find cheaper ways to make online video spots and link them to TV campaigns, said Rosemarie Ryan, president of the New York office of J. Walter Thompson Co., an advertising agency whose clients include New York-based Merrill Lynch & Co. and Dearborn, Michigan-based Ford Motor Co.

The agency, founded 140 years ago and owned by London-based WPP Group Plc, added a digital video production studio to its New York office that can make 10 online video or animated ads for the price of one TV ad, Ryan said.

Advertisers including Johannesburg-based De Beers are now also linking their offline and online campaigns.

De Beers, the world's No. 1 diamond supplier, this year developed a campaign with a 30-second commercial on television that set the scene of a man struggling to get home to his wife for the holidays. The story continued through 13 extra video clips on the Web. The final episode then followed on television.

``It's a seismic shift for our business,'' Ryan said. ``Advertisers know they have to find new and interesting ways to get to people.''

To contact the reporter on this story:
Jonathan Thaw in San Francisco at jthaw@bloomberg.net.

Last Updated: December 28, 2005 10:31 EST

December 29, 2005 at 01:40 PM in Online Marketing | Permalink | TrackBack (131) | Top of page | Blog Home

How Google Tamed Ads on the Wild, Wild Web

How Google Tamed Ads on the Wild, Wild Web - New York Times

By RANDALL STROSS
Published: November 20, 2005

FIVE years ago, Web advertisers were engaged in an ever-escalating competition to grab our attention. Monkeys that asked to be punched, pop-ups that spawned still more pop-ups, strobe effects that imparted temporary blindness - these were legal forms of assault. The most brazen advertiser of all, hands down, was X10, a little company hawking security cameras, whose ubiquitous "pop under" ads were the nasty surprise discovered only when you closed a browser window in preparation for doing something else.

Today, Web advertisers by and large have put down their weapons and sworn off violence. They use indoor voices now. This is a remarkable change.

Thank you, Google.

Without intending to do so, the company set in motion multilateral disarmament by telling its first advertisers in 2000: text only, please. No banner ads, no images, no animation. Just simple words, which would go either at the very top of the page, above the search results or, alternatively, as the experiment evolved, at the far right. These "sponsored links" had to conform to strict limits on length and aggressiveness in punctuation and phrasing. If you wanted to claim in your ad that you were the "best," you had to display the third-party authority that authenticated the claim.

Google introduced these ads at the very moment when X10 ads were strewn like chewed gum on every square of sidewalk. X10's pop-unders were accepted at mainstream sites run by companies including Microsoft, Yahoo and The New York Times.

In a survey in mid-2001, X10's company Web site was the fourth-most visited in the online universe, though the statistics did not distinguish between voluntary and inadvertent visits. Its apparent success led some in the advertising industry to publicly endorse the loathsome pop-under. Brian McAndrews, the chief executive of the online ad agency Avenue A, was quoted in Advertising Age in 2001 as saying, "Just because something is intrusive doesn't mean it's bad."

This was the reigning orthodoxy when Google began its idiosyncratic foray into text-only advertising. Not everyone within Google was confident that an alternative model would fare well, or that Google would be able to accept advertising in any form without alienating its fans, who had enjoyed using its search service without encountering a single advertisement on the site during its first year of operation.

Knowing that an entirely free service was not likely to last, some Google users offered to subscribe for $10 or $20 a year, if spared exposure to commercial messages. Google executives seriously investigated an ad-free subscription model. In the meantime, the major online ad networks were knocking on its door, offering a turn-key advertising service. They would supply the paying sponsors and the banner ads; Google had only to sign on the dotted line.

Sergei Brin and Larry Page, the Google co-founders, were more receptive to internal suggestions that could not be found in a marketing textbook - like text-only ads. These could be created by a business of any size; the format would permit a business to try out hundreds, even thousands, of variations, statistically measure the results and see which ones drew clicks and which did not. This would please advertisers.

But what about this would please users, who were accustomed to 100 percent commercial-free search space? Google thought, or at least hoped, that its users would appreciate that the advertisements, by design, would be matched to the content of each search. Advertisers would not be permitted to buy a block of screen real estate, as was standard practice everywhere else. They would have to narrowly define who their intended customers were, by bidding for the privilege of having their ads displayed only when a particular keyword showed up in a search. At Goggle's insistence, the ads would sit apart from the search results and be easy to ignore.

Marissa Mayer, vice president for product development at Google, recalled concerns raised during internal discussion about the likelihood of encountering advertiser resistance to such an unfamiliar format. At one point near the time of the debut, one of her colleagues leaned over and predicted, "You wait, in a month we'll be selling banners."

It did take a little while before prospective sponsors were willing to try Google's text ads, but soon enough, they attracted the intrepid. Mr. Brin and Mr. Page deliberately offered advertisers instant gratification: pull out your credit card, plunk down a $50 deposit, send in four lines - and in a blink it would be out there, having been automatically processed without a pre-publication review by a humanoid. (Google's language police would follow up later, if need be.)

Ms. Mayer credits small companies for helping to draw the attention, and ad dollars, of Google's big accounts. Because of the sheer number of commercial sites run by small operators - like the one that has bought a sponsored link tied to the unappreciated sport of extreme ironing - their customers add up to a very large number.

Once upon a time, Goto, another pioneer in online ads that was renamed Overture and bought by Yahoo, thought that search result positions should be sold to the highest bidder. Bad idea. Users wanted the order of results determined by algorithm, unswayed by advertisers. That wish became the unwritten law for search. Today, Yahoo and MSN serve up text-only ads in the same peripheral locations on the page as Google, and use an almost identical format. Like Google, they also are fighting the good fight against pop-ups, and forbid advertisers from linking to pages that will bop the user in the nose. Google's model is copied for a simple reason: its ads produce profits that prove that size does not matter.

Some analysts view Google's embrace of text as temporary, predicting that the company will add image advertising to its site just as soon as it can build the infrastructure. Jordan Rohan, an Internet analyst at RBC Capital Markets, said that given the fact that Google serves up 100 million search-query results a day, were the company to add a single photo-quality image to each page, the bits for each page would increase a thousandfold and the resulting load would figuratively "break the Internet."

Is Google holding off on image ads because of inadequate infrastructure? No, responds Ms. Mayer. She says Google uses text for ads because of cognitive science: text has the highest information density and allows users to scan a lot of information at the highest speed, or, as she phrased it, "the bit rate on text is very fast." Anything that gets in the way of speed-reading must go. Google does not permit advertisers to use all-capital letters. (Studies have shown we read those 30 percent slower than properly capitalized words.) Ms. Mayer did allow for one theoretical exception to text ads in the future: when users search for videos. "For a query on videos for baking a cake, then, a video might be best," she said.

The online marketing agency Avenue A, which later became Avenue A/Razorfish, says that about 30 percent of the more than $400 million it will spend on behalf of its clients this year will be for text ads on search pages. Last month, Eric Schmidt, Google's C.E.O., said the company's profits jumped sevenfold in the third quarter, versus the period a year earlier, partly because larger companies were increasingly willing to spend their ad dollars on search-related advertising.

TRUE, major ad buyers still spend a majority of their client's online budgets on banners and display ads and, increasingly, on video commercials. But even in the deployment of these formats, one can see the effects of Google's civilizing influence: these advertisements, for the most part, eschew the strong-arm tactics of earlier times. David Hallerman, senior analyst at eMarketer, said, "Paid search has brought to the fore the cliché 'the consumer is in control,' and there is no going back."

Mr. McAndrews, the onetime defender of intrusive pop-unders, has taken note. He is now the head of aQuantive, the parent of Avenue A/Razorfish. When reminded last week of his past statement that intrusive-doesn't-mean-bad, Mr. McAndrews said, "I've evolved my thinking. The key is no longer intrusiveness; today the mantra is relevance." No ad is more relevant to a user than that linked to a Web search, he said.

As for the scrappy X10, it survives and still advertises on the Web. In fact, it advertises on Google. Search for "Web security camera," and you'll see its ad. But this bears no resemblance to its old pop-unders with the leggy female models. Today, X10 must sit quietly on the right with the other sponsored links, dressed inconspicuously just like its neighbors in plain text.

November 21, 2005 at 12:06 AM in Online Marketing | Permalink | TrackBack (34) | Top of page | Blog Home

Google Drops Fee for Analytics Service

Sci-Tech Today - Computing - Google Drops Fee for Analytics Service

By Jay Wrolstad
November 15, 2005 7:10AM

"We want to make this available to more online marketers and publishers, both large and small, so that they can better serve their customers, make more money, and improve the Web experience for all users," said Richard Holden, director of product management at Google.

Google Latest News about Google is now offering its Web analytics Latest News about Analytics service at no charge, hoping to draw more advertisers, Web publishers, and site owners to the company's set of tools for monitoring online marketing efforts.

Formerly known as Urchin, Google Analytics is designed to help businesses better understand what their customers want. The service uses Web site performance data to determine which keywords attract the most visitors, which e-mail campaigns generate the most interest, and what works best in designing attractive Web pages.

AdWords Integration

"We want to make this available to more online marketers and publishers, both large and small, so that they can better serve their customers, make more money, and improve the Web experience for all users," said Richard Holden, director of product management at Google.

The service is based on technology from Urchin Software, which Google acquired in April, and is tightly integrated with Google's AdWords offering.

There is a limit of five million page views per month for the free service, but for those customers using Google's AdWords service, there is no limit.

Google Analytics can track the results of any online marketing campaign, including banner ads, referral links, newsletters, and paid search.

It now features new reporting dashboards, with summary reports customized for executives, marketing managers, and webmasters, said Holden.

One Size Fits All

"While Web analytics services are typically targeted at more sophisticated advertisers, these tools are designed to be user-friendly for all advertisers and publishers," he said. Google Analytics runs on the same infrastructureRelevant Products/Services from BMC Software that powers Google.com, so it can support the traffic demands of sites with hundreds of millions of visitors a week.

AdWords customers now receive automatic tagging of keyword destination URLs and cost data for ROI reports, making it easier to access to crucial information across business departments, said Holden.

"By making these tools widely available, we believe it will improve everyone's experience on the Web, and the business will follow," he said. The idea is that, by acting on the analysis data, businesses can attract more visitors and improve the overall return on their marketing investment.

Google Analytics is already used by companies including The Financial Times, National Semiconductor Latest News about National Semiconductor, Ritz Interactive, Agency.com, and Deckers Outdoor Corporation.

"Advertisers and Web publishers can tell how customers are using a site and what is working or not working on a particular site," said Holden. "Web analytics is now widely recognized as fundamental to measuring the return on advertising dollars."

advertisement

More on this topic...
1. Search Services Get Down to Business
2. EBay Ends Fees for Developers
3. Microsoft Updates Supercomputer OS
4. Critical Flaw Found in VPN Products
5. Sun Chip a Potential Energy Saver

advertisement

November 15, 2005 at 02:47 PM in Online Marketing | Permalink | TrackBack (8) | Top of page | Blog Home

How Targeted CPM Outperforms PPC

How Targeted CPM Outperforms PPC

Pay-per-click (PPC) advertising has become a popular option for many online advertisers. The promise of PPC advertising is as beautiful as it is simple: You only pay for the visitors that actually click on your ad. But does PPC live up to its promise? This report uncovers some surprising news.

The PPC Revolution
Overture.com (then named Goto.com) revolutionized PPC advertising in the late 90's when they began displaying search results based on bids for particular keywords. Soon, many more search engines, from Findwhat.com to Kanoodle.com, were mimicking this strategy. Google.com took this idea a step further by creating their Adwords program. This advertising program also required advertisers to bid for keywords, but placed those paid listings in a sidebar along side their standard search results. This program proved so popular that in 2003, Google launched a similar syndicated version, called Adsense, which placed the Adwords ads on many other affiliated sites.

With Google's advertising programs in place, PPC had hit the mainstream. Advertisers could now select and bid on specific keywords, get widespread distribution of their ads, and pay only for the actual click-thru's. Life was good. Or was it?

The Failures of PPC
The theory behind targeted PPC is that you get high relevancy and ease of use coupled with complete accountability. But that's not always the case...

1. Relevancy

The Claim: PPC ads are relevant to the content of the page on which they're displayed.

The Facts: Often the only portion of the ad that is relevant is the keyword that the advertiser has bid on. For example, suppose you sell peanuts and another advertiser, say General Motors, sells cars. If GM's executives decide that peanut eaters would make great car customers, they may decide to bid on the word "peanut". Since GM most likely has a bigger advertising budget than your company, and also stands to profit more from the sale of its product, it's probably willing to bid higher than you for that keyword. Pretty soon, Ford, Chrysler, and Toyota are also in the game, and the resulting bidding war has driven the price of "peanut" so high that you, the actual peanut seller, can no longer afford to play. While this example may be a little extreme, it's not far from reality. Competitive bidding from bigger advertisers is forcing the price of keywords higher, while simultaneously diluting the relevancy in many ad categories.

2. Ease of Use

The Claim: PPC advertisers can choose whichever keywords are best suited to their product.

The Facts: In PPC advertising, keyword selection is becoming a more and more difficult game. Because there is relatively little penalty for a failed ad (i.e. advertisers only pay for clicks), many larger advertisers are bidding on as many keywords as possible, both inside and outside their own market. This drives keyword prices upward, and makes it more difficult to find keywords that are both applicable to your product and affordable enough to consider bidding on. To compound this problem, once you have successfully bid on a keyword, you have to continue to manage that keyword, adjusting your bid as its market price rises and falls with the current demand. Multiply this problem by the dozens (or even hundreds) of different keywords that some advertisers control, and you have a tedious and time consuming problem.

3. Accountability

The Claim: PPC advertisers pay only for visitors that click on their ad and go to their website.

The Facts: While all of the PPC services accurately count clicks, not every click represents a potential customer. The shocking fact is that many of the clicks are fraudulently generated. Some experts even estimate the number of fraudulent click-thru's on PPC ads to be as high as 50%! For more about this, please see these related news stories:

* Scam tricks advertisers into paying for phantoms
(International Herald Tribune, Oct 19, 2004)
* Click fraud: state of the industry
(PayPerClickAnalyst.com, Oct 19, 2004)
* Click fraud rises with online ad spending
(InternetWeek.com, Oct 01, 2004)
* India's secret army of online ad 'clickers'
(India Business, May 03, 2004)

A Surprising Thing That PPC Programs Have Taught Us
Despite the potential pitfalls of PPC advertising, there is a lot that has been learned from these programs. One surprising outcome is that response rates for text-based ads (which are the primary format of most PPC programs) are usually higher than that of image-based ads. A recent study by the Poynter Institute further supports this. In their words...

"Text ads were viewed most intently, of all the types we tested. On our test pages, text ads got an average eye duration time of nearly 7 seconds; the best display-type ad got only 1.6 seconds, on average."

Of course, the power of text is no big shock to any experienced ad executive. It just confirms what copywriters have been telling us all along: the headline is the most important part of the ad.

The Internet is an information resource, not an entertainment resource. The typical person uses search engines more (much more) than any other Internet application. We are constantly seeking information, and we consciously (or subconsciously) scan every headline on the page. Pretty images may momentarily distract us, but it's the headline of the ad that connects us to the product.

The PPC ads run by Google, Overture, and their various imitators take the idea of an advertisement to its simplest, purest form - the all-important headline plus one concise advertising message. This is the type of ad that Internet users will consistently respond to. It doesn't distract or offend them; it doesn't waste their time. It's easy for their eyes to scan, and it's message is clear.

Revisiting CPM
Banner ads were some of the very first advertisements that appeared on the Internet. In that early time, before the advent of PPC advertising, all ads were charged a fixed cost per thousand impressions (CPM). This is similar to the way that print advertising has always been priced. However, there was at least one big difference between online and print advertising. Online content was much less "mature" than printed content. Because the cost to create a website was so low, anyone could become an online publisher, even if they had no original content at all! This new breed of pseudo-publisher saw banner ads as a potential gold mine, erroneously thinking that every square pixel of their website was valuable. Suddenly, there were thousands of "link farms" - sites filled with banner ads, but virtually devoid of content. This haphazard proliferation greatly diluted the power of the ads themselves.

Advertisers, desperate for better ad performance, also began building gaudier ads, hoping to somehow stand out from the crowd. Ads became brighter, flashier, and more animated, and finally jumped off the screen as separate popup windows. But in the process of trying to outdo each other, banners and popups became an irritating presence. People became infuriated with their distractive, nonproductive nature, and quickly learned to either physically block them (with special software) or mentally tune them out.

CPM's Greatest Strength
While it had a rocky start, CPM-based advertising programs are not without merit. While PPC encourages advertisers to indiscriminately place more and more ads, CPM does quite the opposite. Because the advertiser pays for every impression, he's encouraged to pay more attention to both the content of his ads and the places that they appear. This additional imposed advertiser responsibility has the side effect of continuously increasing ad quality, which benefits both the advertiser and the viewer.

A Better Approach: Targeted CPM
A new approach, called "Targeted CPM", combines the most desirable features of conventional CPM and PPC programs. Here are some of the most benefitial features of a properly designed Targeted CPM program:

* Presentation
Ads are presented in an attractive and consistent format that encourage viewing. Ads are only placed on the most visible and active portion of the page, and a limited number of ads are allowed to appear on any one page.
* Relevancy.
Ads consist of a headline and text message, which are both matched to the content of the displayed page. Advertiser-supplied keywords are also used to influence matching, but the relevancy of content is the primary controller of the ad's placement.
* Responsibility.
Fixed CPM pricing is used, which encourages the advertiser to give more care to the content of each ad. This further improves the overall relevancy of ads in the program, and improves viewer interest.
* Accountability.
Every impression and click-thru is accurately tracked, so that the advertiser has complete feedback on each ad's performance. And due to the fixed CPM pricing, fraudulent clicks have no impact on the advertiser's cost.
* Ease of Use.
The text-based format of the ads makes it especially easy to create and modify the advertising message. And the fixed rate pricing and absence of keyword bidding eliminates the need for ongoing bid maintenance.

Comparing Rates: Targeted CPM vs. PPC
Regardless of the advertising method, the final question is still the same: What is your cost to acquire a customer? With PPC advertising, costs vary widely, depending on keyword. Costs may be as low as $0.15 per click-thru for unpopular keywords or as high as several dollars per click-thru for popular ones. In Targeted CPM, your effective click-thru cost depends on the performance of your ad. You can easily computed the effective cost by dividing the total cost of all impressions by the total number of clicks. This allows you to directly compare Targeted CPM with the PPC programs that you may already participate in.

For example, at a cost of $2.50 CPM, if your ad generates 5 clicks per 1000 impressions (a 0.5% click-thru rate), then your effective cost per click is $2.50/5 = $0.50. If your ad generates 10 clicks (1.0% click-thru rate), your effective cost per click is just $0.25.

With PPC advertising, your cost per click will likely increase as more and more advertisers are bidding for the same keywords. In fact, many experts expect average PPC rates to nearly double over the next few years. In contrast to this, CPM rates are generally more stable (for any given website), and improvements that you make to your ads could increase your click-thru rate and lower your incremental cost.

The bottom line is that, if your ads are well matched to a site's content, Targeted CPM may be a much less costly and vastly more productive way for you to advertise.

NutritionData's Targeted CPM Advertising Program
NutritionData.com runs a high-quality Targeted CPM Advertising Program that offers excellent advertising opportunities for companies involved in food, nutrition, health, and fitness-related industries. For full details of this program, visit ND's Advertising page.

November 15, 2005 at 12:30 PM in Online Marketing | Permalink | TrackBack (11) | Top of page | Blog Home

Google Targets Ads by Site, Sells by CPM

Google Targets Ads by Site, Sells by CPM

By Pamela Parker | April 25, 2005

Google Monday is launching a limited beta test that will let advertisers choose on which sites their contextually targeted ads appear, but they will have to pay for those ads on a CPM basis.

The company expects to roll out site targeting to all advertisers within a few weeks. The move, apparently designed to attract more branding-oriented advertisers, is likely to send shockwaves through the industry, as advertisers have long sought such a feature. In the past, media sellers have typically said site targeting would add too much complexity and would be technically difficult to implement.

"At Google, we are always trying to innovate and do the right thing for users, for advertisers and publishers," explained Susan Wojcicki, director of product management at Google. "Even in describing it, it's a little bit complex to explain. Certainly figuring out what the right pricing mechanism is -- those are the types of things that took us a while to figure out. It's something we heard from our constituents. It just took us some time to figure out."

Using the same AdWords interface, advertisers will be able to select sites on which they want their ads to appear. They can either enter in the URLs of specific sites, or they can perform a keyword search to find sites on which to place their ads. Google will return a list of sites similar to the URLs people select, or a list that matches with the particular keywords. Advertisers can then select sites from those lists.

Google will continue to use an auction model to sell the site-targeted ads, but payments will be on a CPM basis. Advertisers will indicate the maximum price they're willing to pay per-thousand ad impressions. Google will then determine where those ads should appear among the CPC ads. Though CPC ads are ranked by both bid price and click-through rate, the CPM ads will only be ranked by bid price.

"It all competes in the same auction," said Wojcicki.

There's one other differentiator for the site-targeted ads. Advertisers will be able to deploy animated .gifs for these placements. The company has tested animated ads in the past, but hasn't yet rolled them out. Now the animated ads will be introduced along with CPM pricing -- both elements to which branding-oriented advertisers are accustomed.

"This will enable them to get more ad impressions and get their ads in front of the right audiences," said Wojcicki. "Perhaps they'll reach people in other parts of the buying cycle. Hopefully the ads will also meet a variety of different marketing objectives that they have."

Industry-watchers believe the new targeting option is likely to be welcomed by advertisers.

"Marketers have been constantly saying they want the ability to pick and choose where their ads appear. Now they've got it," said Danny Sullivan, editor of SearchEngineWatch. "Hopefully, it will allow them the ability to spend more time getting the most out of their campaigns, rather than having to figure out workarounds to get the control they weren't previously allowed."

Interestingly, the new feature also adds complexity to the Google AdWords interface -- something the company has long said it was trying to avoid.

"Certainly every time you have a new feature, sure, there might be some additional complexity, but we've tried to make it as easy as possible," Wojcicki said.

November 15, 2005 at 11:54 AM in Online Marketing | Permalink | TrackBack (9) | Top of page | Blog Home

The online ad attack

The online ad attack | Economist.com

Apr 27th 2005
From The Economist print edition
Online advertising is becoming a serious rival to the traditional sort. Google’s new advertising service could make the internet an even more valuable marketing medium

THIS year the combined advertising revenues of Google and Yahoo! will rival the combined prime-time ad revenues of America’s three big television networks, ABC, CBS and NBC, predicts Advertising Age. It will, says the trade magazine, represent a “watershed moment” in the evolution of the internet as an advertising medium. A 30-second prime-time TV ad was once considered the most effective—and the most expensive—form of advertising. But that was before the internet got going. And this week online advertising made another leap forward.

This latest innovation comes from Google, which has begun testing a new auction-based service for display advertising. Both Google and Yahoo! make most of their money from advertising. Auctioning keyword search-terms, which deliver sponsored links to advertisers’ websites, has proved to be particularly lucrative. And advertisers like paid-search because, unlike TV, they only pay for results: they are charged when someone clicks on one of their links.

Both Google and Yahoo!, along with search-site rivals like Microsoft’s MSN and Ask Jeeves (recently bought by Barry Diller’s InterActiveCorp), are developing much broader ranges of marketing services. Google, for instance, already provides a service called AdSense. It works rather like an advertising agency, automatically placing sponsored links and other ads on third-party websites. Google then splits the revenue with the owners of those websites, who can range from multinationals to individuals publishing blogs, as online journals are known.

Google’s new services extends AdSense in three ways. Instead of Google’s software analysing third-party websites to determine from their content what relevant ads to place on them, advertisers will instead be able to select the specific sites where they want their ads to appear. This provides both more flexibility and control, says Patrick Keane, Google’s head of sales strategy. Companies trying to raise awareness of a brand often want a high level of control over where their ads appear.

The second change involves pricing. Potential internet advertisers must bid for their ad to appear on a “cost-per-thousand” (known as CPM) basis. This is similar to TV commercials, where advertisers pay according to the number of people who are supposed to see the ad. But the Google system delivers a twist: CPM bids will also have to compete against rival bids for the same ad space from those wanting to pay on a “cost-per-click” basis, the way search terms are presently sold. Click-through marketing tends to be aimed at people who already know they want to buy something and are searching for product and price information, whereas display advertising is more often used to persuade people to buy things in the first instance.
Not too flashy

The third change is that Google will now offer animated ads—but nothing too flashy or annoying, insists Mr Keane. Google has long been extremely conservative about the use of advertising; it still plans to use only small, text-based ads on its own search sites. But many of its AdSense partners might well be tempted by the prospect of earning a share of revenue from display and animated ads too, especially as such ads are likely to be more appealing to some of the big-brand advertisers. Spurred on by the spread of faster broadband connections, such companies are becoming increasingly interested in so-called “rich-media” ads, like animation and video.

This could fuel online ad-growth even further. As advertising spending continues to recover from the slump that began in 2001 after the bursting of the technology bubble, the internet has become the fastest growing advertising medium. Worldwide ad revenue on the internet grew by 21% in 2004, and it is expected to continue at that pace for the next few years, says ZenithOptimedia, a research firm (see chart). As Google and Yahoo! are two of the most widely visited sites, this greatly benefits them. Google recently announced a net profit of $369m in its first quarter from revenue that soared to $1.3 billion, up 93% compared with the same period a year earlier. Yahoo!’s first-quarter net profits more than doubled to $205m on revenue of $1.2 billion, up 55% from a year earlier.

Terry Semel, Yahoo!’s chief executive, believes there is a lot more growth to come as companies become more familiar with online advertising. As he happily points out, many big firms still allocate only 2-4% of their marketing budgets to the internet, although it represents about 15% of consumers’ media consumption—a share that is growing. Many young people already spend more time online than they do watching TV.

If Google can prove that bidding for display ads works, then its rivals are bound to follow with similar services. This could shake the industry up even further. DoubleClick, an online-marketing firm from the early days of serving simple banner ads to websites, was sold this week in a deal worth more than $1 billion to a private-equity firm, Hellman & Friedman. Even though its prospects recently brightened, DoubleClick put itself up for sale after facing fierce competition.

Other innovations in online marketing are said to be in the pipeline. Local search and its associated advertising opportunities are one huge growth area. Sites such as eBay, the leading online auctioneer, and Craigslist, which hosts local sites, are soaking up large amounts of spending that might otherwise have gone on classified advertising—and for everything from used cars to job vacancies. Yahoo! is expanding heavily into entertainment, with film and video clips providing another avenue for advertisers. This week, Yahoo! appointed another top executive to its media group, fuelling industry speculation that the website may start to produce its own entertainment content. Television stations would then have a lot more to worry about than just losing ad revenue to the internet.

November 15, 2005 at 11:40 AM in Online Marketing | Permalink | TrackBack (18) | Top of page | Blog Home

DoubleClick’s Bruner: Internet Marketing Has Come of Age

DMNews.com | News | Article

Nov. 08, 2005

By: Mickey Alam Khan
Executive Editor
mickey@dmnews.com

The growing popularity of shows like ad:tech, Search Engine Strategies, eTail and Shop.org’s summits — with attendees and exhibitors alike — is proof that interactive advertising and marketing are a key component of any marketer’s budget. Search, e-mail, affiliate and even display advertising have become indispensable tools for attracting and retaining customers and prospects online and offline.

Read what DoubleClick research director Rick E. Bruner has to say about interactive marketing’s progress in an in-depth interview with DM News executive editor Mickey Alam Khan.

What moved the needle in 2005 for Internet advertising and marketing?

Spending on Internet advertising has been surging for two years. 2003 was when online advertising spending turned back to growth after the recession, and 2004 saw a new high-spending mark for the industry — $9.6 billion in the U.S. market, according to the Interactive Advertising Bureau and PricewaterhouseCoopers — and 2005 is on track to set another spending record.

I think it was not so much any one thing, like a new hot technical breakthrough or fad, as much as accumulated momentum of the sector. Internet marketing has come of age and demonstrates strong enough results that marketers are moving in large numbers and in large dollars online, and I don’t expect to see that slow significantly for the next few years. Some of the factors that did contribute would include:

· Constant innovation from Google propelling search marketing further, along with the entrance of MSN into the search ad space.

· Maturing tools in the rich media space.

· Broadband usage passing 50 percent of U.S. Internet users, meaning the Internet becomes an ever more constant part of everyone’s lives.

How will the channel evolve in 2006?

As inventory continues to get tight and CPMs go up at the bigger sites, where the online ad industry is concentrated today, I think there will be more recognition of the importance of the ad opportunity in “long tail” — the many small sites — blogs, user-created content, other amateur sites — where much of the audience is spending its time.

Also, I suspect CPA/CPC pricing for display ad units will get pushed off of premium sites as inventory can be sold more at premium CPM rates. That will leave ad networks scrambling to identify new sources for inventory, which will probably include more of the blogosphere and that long tail of smaller sites.

Expect any upsets in preferred tactics?

The pop-up ad may finally fade from larger sites. With pop-up blocking rates already nearly 50 percent, based on research from various sources I’ve seen, plus the next version of Internet Explorer set to block pop-ups, it may be hard to sustain them. They’re also closely associated with the whole spyware issue, a dark cloud over the entire industry, even the legitimate players.

While there is a big difference between an advertiser-initiated pop-ad on a Web site where they have purchased media and the more nefarious spyware applications that are placed surreptitiously on the desktops of consumers and perform malicious or privacy-threatening actions, the public is not always able to differentiate.

Have marketers finally accorded online advertising the respect it deserves?

Many have, but a surprising number of marketers are still just feeling their way. The first 10 years were the early adopters. I think the large majority of marketers are still to come online. Those that are already experienced with it are shifting more of that budget to various forms of digital marketing, which is itself in a constant state of evolution, including mobile devices, IPTV and a whole new generation of media formats. And there are still many who are benefiting from the learnings of the early adopters and coming online for the first time.

Will search continue its successful run in 2006? And what about e-mail and banners?

DoubleClick has products in all these areas, so it’s hard for me to sound objective, but yes, I do expect growth in all those areas next year. Search has clearly been a powerhouse for the industry, so I don’t know whether it will continue to grow at the same rate it has done in the last few years, but it works so well that advertisers clearly are not going to back away from it. And as prices for keywords go up for the most-sought-after phrases, more advertisers are becoming more sophisticated about going deeper into keyword lists and managing ROI for positions lower in the ad rankings.

Despite all the worries about spam, consumers continue to engage with permission e-mail programs. Though we have seen open rates drop in the last year, we have not seen significant declines in click rates, and post-click conversion rates continue to rise. In our consumer surveys, consumers continuously tell us they value permission e-mail.

And display advertising — the term I prefer to ad banners, which to my mind refers specifically to 468x60 units — is booming. Top publishers are selling out more of their content for higher rates than they have done in years. The reduction of clutter on the pages — moving to fewer and larger ad units — has been a win-win-win for all sides: less competition for attention for advertisers, less distraction and clutter for readers, and higher CPMs for publishers.

What about RSS advertising and mobile marketing — fad or here to stay?

I think podcasting, which is a form of RSS, is more promising than straight-up text RSS, but I am sure you’ll see ads being served into that platform, especially as Microsoft’s new Vista operating system promises to give RSS much greater exposure.

Mobile marketing will be set to boom in the next one to three years. Mobile content and communication devices are hot. If you don’t have the cool new thing now, you know you want it. It makes perfect sense to consume content that way, especially with the increasingly widespread distribution of Wi-Fi Internet access. ITunes’ new distribution deal with ABC-TV for popular TV content in mobile format will be an important trial to watch.

What challenges do you expect in 2006? And opportunities?

Something has to be done about spyware. Publishers, agencies, vendors, associations, the whole industry needs to tackle this together, or it could really hit us where we live. DoubleClick is taking a role in this dialogue in Washington, on the state level and in the industry.

Opportunities are both in continued innovation and continued discipline. Many of those agencies and publishers that got through the dark years of the dot-com bust did so by honing what works. There is a lot in the online marketing sector that works well, but it’s complicated enough that it takes discipline, best practices and constant fine-tuning to really get the most of out it.

Have consumers accepted online advertising?

I think so, more or less. Spam is getting more manageable, with lots of tools available to Internet service providers and consumers. Pop-ups are still annoying, but they’re easy enough to avoid for the most part as well. Otherwise, I think the American consumer understands and accepts the bargain of media: you accept the ads and you get the content for free. I think the subscription and micro-payments models also play a role in the publisher landscape, but I can’t see them ever overtaking advertising as the mainstay of the content revenue model.

I think advertisers are also going to get better at designing consumer-centric ads. In a world where consumers increasingly can avoid interruptive ads, either with new technologies or just learned indifference, advertisers will have to rise to the challenge of making advertising more engaging. It’s a trend I refer to as “invertising,” which I elaborate on in the paper we released earlier this year titled “The Decade in Online Advertising.”

Rick Bruner’s e-mail address is rbruner@doubleclick.net.

November 15, 2005 at 11:38 AM in Online Marketing | Permalink | TrackBack (12) | Top of page | Blog Home

Search-style ads life brand awareness - Study Says

Search-Style Ads Lift Brand Awareness, Study Says

By Janis Mara | July 15, 2004

Contrary to generally held industry beliefs, sponsored text advertising does work for a number of branding objectives, according to a massive study by the Interactive Advertising Bureau (IAB) and Nielsen//NetRatings released Wednesday.

The study was done online with more than 10,500 participants using a controlled experimental design. It measured the brand impact of sponsored and contextual listings in the health, auto, beverage, electronics, retail and finance industries.

On average, respondents were 27 percent more likely to name a specific brand if it was in the top spot on the search results page, according to the study. Contextual listings -- text ads on non-search pages -- caused a 23 percent lift among respondents.

Placement was a key element. Ads in the top position on the search results page increased an aggregate of all the brand metrics by an average of 14 percent across the six industries. The effect fell dramatically as rankings went lower, the study found. For example, ads in the fifth position showed only a minor directional lift.

The IAB/Nielsen survey's results add a new dimension to paid text listings. Sponsored listings and contextual advertising, sold on a cost-per-click basis, are usually not considered to be branding vehicles. By contrast, display ads, sold on a cost-per-impression basis, are considered major elements of online branding.

"The study is proving the thing everyone knows: advertising tends to work both on direct marketing and branding metrics," said Marc Ryan, director of analysis for Nielsen//Net Ratings and author of the study. "We tend to pigeonhole ourselves: 'Search works well on direct marketing, banner ads on branding.' But this shows if you want to measure the value of your campaign in effective ways, you should measure all the metrics, not just the ones you think the medium was designed for."

The IAB and the research sponsors are taking the results on the road as part of a six-city search marketing road show, with stops in San Francisco, Dallas, New York, Detroit and Chicago. The study was sponsored by Ask Jeeves, Google, ING, Lycos Search and Overture and spearheaded by the IAB search engine committee.

Industry players' reactions to the study differed.

"It makes sense. If a consumer is searching for keywords related to a certain brand or product, and they consistently see a certain brand or company appear, they will be more likely to recall the brand," said Melissa Burgess, director of business development at search marketing firm Impaqt. "Companies are purchasing hundreds, thousands of keywords. If a consumer sees them every time, it will make an impression."

A media buyer opined that sponsored text is a viable, but minor, element of online branding.

"While it is certainly true that 'everything communicates,' it is very hard to believe that when compared to rich sight, sound and motion vehicles, text-based advertising is effective at moving brand metrics," said David Cohen, SVP, Interactive Media Director for Universal McCann Interactive.

"I would be very surprised if brand marketers look to sponsored text as a primary staple of their interactive programs," Cohen said. "Rather, I would view sponsored text as a viable component (albeit a small one) of a well-balanced interactive brand campaign."

Joe Germscheid, associate media director, Minneapolis, for Zentropy Partners, had a somewhat different perspective.

"The findings of the study are great, but not all that surprising. We all seem to forget that search advertising is still advertising. And any opportunity for a brand message to be seen will resonate with the target audience and cause some brand impact," Germscheid said in an e-mail message.

"However, until this type of survey is easily replicated for the average marketer/advertiser, we won't be able to justify search in this manner," the media buyer said.

"The companies already doing our brand metric surveys for online ad campaigns such as Dynamic Logic or Insight Express will need to add this to their product in order for advertisers to integrate search into a brand-oriented campaign. Without that, we won't be able to prove that what the IAB found is applicable to our own brands and allocate search adequate brand dollars," Germscheid explained.

"Until the measurement catches up with the marketplace, search may remain a direct-marketer-controlled strategy. It has excelled there because of the ease at which marketers can prove to themselves that search can create ROI for individual efforts. We'll need the same for the branding lift," Germscheid said.

November 15, 2005 at 11:36 AM in Online Marketing | Permalink | TrackBack (9) | Top of page | Blog Home

ING DIRECT's Banner Secrets & Samples: How to Acquire New Customers from Low-cost Banner Ads

ING DIRECT's Banner Secrets & Samples: How to Acquire New Customers from Low-cost Banner Ads : E-consultancy.com

Release Date: 28 July 2003


"Everyone says banners have a pathetically low click-through
rate," says Jurie Pieterse, VP of Web Marketing, ING DIRECT. "But
we've proven that they can be a successful staple of a direct
response campaign."

In fact ING DIRECT's banner campaign for their Orange Savings
Account, got them new customers at a lower CPA than any other
campaign they ran.

Through testing and re-testing (see link to samples of more than
two dozen banner tests below), Pieterse learned what works in six
key areas.

-> #1. Creative Tips : Spend the money to test different ads

"It's difficult to find that balance if you're spending just a
little money online, where the cost of developing creative is a
large part of the budget," Pieterse says. "But as your campaign
grows, spending a little bit on new creative is small if it
increases your click-through rate."

By developing different creative units and testing them, Pieterse
learned to make the best use of color, animation, and text.

For example, he discovered:

- ING DIRECT consistent use of the color orange really works. It
stands out without being flashy or irritating. Changing it would
only lessen consumer recognition.

- Animation works well, but only in moderation. "You want to
attract attention, but don't want to be cheap," Pieterse says. "Try
to keep it simple."

- Though it's tempting to cram every last selling feature into an
ad, people just won't read it. So, text should focus only on one
single key message.

ING focused on what sets the Orange Savings Account apart from
competitors' offers: great rate, no fees, no minimum -- just
enough to get consumers to investigate further.

-> #2. Media selection: Predicting results is impossible.

Analyzing the audience and metrics of each potential site before
advertising doesn't always go far enough.

Pieterse and his team tried it and learned that they're not great
at predicting the performance of an ad on a particular site.

Instead, they learned to look at past performance of ads on the
site similar to the one they were considering. They also looked
at the historical performance of their own ads on other sites
that were of the same unit size being offered on the new site.

Then -- you guessed it -- they tested and tracked, often every
day. "The first two or three weeks with a new publisher or ad,
we track on a daily basis," Pieterse says. "After that, only once
a week."

The first few weeks are enough time for Pieterse to know whether
the ad is working.

If it doesn't meet expectations, he works with the publisher to
explore different placements and creative. Then, only after
working actively with the publisher, will he pull an ad if it
still doesn't live up to expectations.

This is a very different tactic from media buyers who yank ads
only a few hours or days if they don't perform.

-> #3. Results tracking: Look beyond Cost Per Click (CPC).

Beyond cost-per-click and the number of new customers acquired,
Pieterse's team track cost of acquisition, what balance the
customer originally deposited, and how profitable a customer they
became.

He learned that knowing when in a new account's lifetime to track
is critical.

"When people open an Orange account online, they start with a
small balance. They want to test drive it before they deposit
more money to make sure it's for real," he says. "So the initial
perception would be that this isn't working, but if you look at
it 60 days later, that customer is becoming very profitable."

-> #4. Landing pages: Different pages for different consumers.

When Pieterse and his team began out testing different landing
pages, they hoped they would find one champion page that would
out-perform all others.

No such luck.

"It differs from what kind of audience or site the business comes
from," Pieterse says.

For the financially savvy Bloomberg audience, a page comparing
the ING account to other national accounts, with lots of
financial details and graphs, works well.

With a more consumer-focused audience, that didn't fly. A simpler
page, with some of the icons from the TV advertising and without
the graphs, performed better.

-> #5. Completion rate: Boosting completed registrations.

Getting people to fill out registration forms is always a
challenge, and opening a savings account online requires even
more information than most.

Consumers expect that opening a savings account will be a long,
painful process -- and this may actually have worked to ING's
advantage.

So, ING's forms feature reassuring copy that explains to
customers that they can open an account far more quickly than
they think: "Open and fund your Orange Savings Account in less
than five minutes!" It goes on to tell them right up front
exactly what info they'll be asked to divulge.

"Being up front in terms of what they can expect helps us in
terms of completion rates," Pieterse says.

-> #6. Search engine listings: Different text strings can double
performance.

Pieterse found that "We could get double or triple the
performance and it could be the result of changing one or two
words."

But because changes in interest rates or even what competitors
are doing can affect performance, Pieterse and his team go two or
three weeks before they change a text string.

"You need to test long enough to be sure that outside variables
aren't affecting it," he says.

For example, he changed one listing to include the words, "Open
in less than 5 minutes," and it yielded a 23% increase in click-
through rate.

He also learned to monitor search engines frequently for
companies infringing on trademark or using it to mislead
consumers.

That's a result of simple manual labor, he says. "We go into
search engines and type search strings and see if people come up
in paid-for listings where the title text would say ING DIRECT
but it would take you to a competitor Web site."

Finding that, they go straight to the advertiser who's doing it
and explain why it's an infringement. They find that it's more
efficient to approach the advertiser directly than to have, say,
Google do it.

"I don't want to create the impression that it's a Wild West
outlaw area," Pieterse says, "but it's worth checking."

Two useful links related to this interview:

-> ING DIRECT won Best in Show at the 2002 AD:TECH Awards. The
entry forms for the 2003 Awards are now available if you have a
campaign you'd like to submit. Here's a link to more info:
http://www.ad-tech.com/awards/

-> Link to inspirational samples of two-dozen ING Direct banners
- including the awards winners:
http://www.marketingsherpa.com/id/ad.html

November 15, 2005 at 11:34 AM in Online Marketing | Permalink | TrackBack (40) | Top of page | Blog Home

The Online Ad Surge

The Online Ad Surge

Brand advertising online has taken off -- and it's shaking up Madison Ave.

In the golden age of TV, they called them roadblocks. Advertisers mounted such visual barricades by placing the same spot at the same minute on the three big networks. That way, the ad would blanket the entire medium, collaring viewers whether they were tuned to Lawrence Welk, Dragnet, or Uncle Miltie. The roadblock was a simple but powerful approach -- and near impossible to pull off in today's fractured TV market.

But who said a roadblock had to be on TV? A year ago, Ford Motor Co. (F ) executives unveiled a roadblock on the Internet to promote their F-150 truck. On the day of the launch, Ford placed bold banner ads for 24 hours on the three leading portals -- AOL (TWX ), MSN (MSFT ), and Yahoo! (YHOO ). Some 50 million Web surfers saw Ford's banner. And millions of them clicked on it, pouring onto Ford's Web site at a rate that reached 3,000 per second. The company says the traffic led to a 6% jump in sales over the first three months of the campaign. Naturally, more Internet roadblocks have followed, most recently with the Oct. 25 launch of the F-500 sedan. Says Rich Stoddart, Ford's marketing communications manager: "We've proved we can leverage the Web for the mass market."

Ford and everyone else. Advertisers are seeing that the top few Web properties now reach true mass audiences. Each of the three biggest portals attracts 70% of the Americans online to its properties monthly, according to comScore Networks, a traffic-tracking organization. Demand for this prime real estate is so strong that there isn't enough to go around, and prices to advertise are soaring. A year ago, media buyers could land discounted space on the home pages of major portals for between $100,000 and $180,000 per 24 hours, say buyers. Now, the cost is reaching $300,000. Forget about discounts. If advertisers are lucky enough to land the space, they often must agree to spend an equal amount elsewhere on the portal. Facing this traffic jam at the top sites, advertisers are jostling for spots throughout the Net. "A few years ago, it was kids with green hair selling ads," says Gary Stein, an analyst at Jupiter Research. "Now Internet ads are mainstream, and part of every company's media buy."

Why the change? The Internet is growing up. Broadband connections now reach more than half of American households, including the lion's share of the prosperous ones. Although the Internet still takes in only 4.3% of U.S. advertising revenue, surveys indicate that it accounts for 14% of America's media time. And that's not including those who are Web-surfing at work -- a major audience for advertisers. Smitten by the growing reach and power of the Net, blue-chip advertisers are stretching far beyond the cramped text ads on search engines that have turned Google Inc. (GOOG ) into a global sensation. Now advertisers are packing online ads with music and color video, just like those on TV. They're looking to the Web to build brands.

The result is a surge in growth that's extending from Madison Ave. to the West Coast campuses of Yahoo! and MSN. While the overall ad industry grows at a respectable 7.7% a year, Internet ads are galloping ahead at a 28.8% clip. New York consulting firm eMarketer predicts online advertising will reach $9.3 billion this year -- $5.4 billion of it in brand ads. "It's a great time to be alive in this industry," enthuses David J. Moore, chief executive of 24/7 Real Media Inc., an ad agency.

For anyone who recalls the soaring expectations that preceded the Net advertising crash earlier in the decade, even a touch of euphoria is grounds for serious heebie-jeebies. Last time around, many of the most enthusiastic advertisers -- the cash-happy dot-coms themselves -- dropped dead. From 2000 to 2002, Internet advertising plummeted 25%. But something is decidedly different this time. Since the bust, the industry has pieced together the technology -- from video delivery to customer tracking -- to make good on the shining predictions of the boom. The Net is winning over mainstream advertisers with its computational precision. It delivers hard, quantifiable results measured in clicks and sales -- down to the penny. In the process, it's turning advertising from an art into a science.

Does this mean the Internet is going to vacuum up the world's advertising dollars? No, but it'll angle for its fair share. Some of the Net's market grab will come from easy pickings, such as Yellow Pages and direct-response mail -- fields where Internet search delivers unmatched efficiency. Brand advertising, meanwhile, will probably come straight from the hide of TV, billboards, and print media. Ford, in line with other auto makers, has moved 10% of its ad budget online, and the number is on the rise. Joanne Bradford, MSN's chief media revenue officer, expects other industries to follow suit, with online accounting for 8% to 12% of the advertising outlay by decade's end. Within two years, online advertising is projected to reach $13.8 billion, motoring past the slower-growing magazine industry, according to Kagan Research LLC in Monterey, Calif.

Tangle of Complexity
The importance of Internet advertising extends far beyond the numbers. Now that advertisers have their hands on a tool that measures an ad's effectiveness, they're starting to press other media for similar accountability. It's a process sure to cause disruptions. Take TV. For decades, Nielsen Media Research has been providing reports on how many customers watch a specific program. But in a nation full of TiVo Inc. (TIVO ) zappers and channel surfers, how many are actually seeing the ads? Nielsen is now rolling out technology that measures precise minute-by-minute data in local markets. And it's also working with TiVo to survey ad viewership among TiVo users. These steps bring TV a step closer to Internet-style accountability. But if the results show that viewers are skipping ads, TV's economics could take a beating. "It starts to shift the playing field," says Douglas McCormick, CEO of iVillage Inc. (IVIL ) and a former cable-TV exec. "Internet [costs per thousand viewers] are going to start looking a lot more attractive."

In fact, the Net is helping break down walls that traditionally divide different media. More and more, publishers are delivering selected customers to advertisers, and reaching customers across a host of media, including the Net. Instead of appearing in a certain show or time slot, their ads are coupled with subject areas, such as health or sports. ABC News, for example, delivers subject-specific ads to TV, the Net, and cell phones. Advertisers want "to reach consumers, wherever they are," says Alan Ives, vice-president for sales at ABC Interactive.

This new world of advertising is bubbling with innovations, many of them blending advertising with content or other goodies. Weather.com, for one, urges the public to download a free weather bar that links up to a host of advertisers, from Scotts, the lawn-care company, to American Express. And on Nov. 9, Amazon.com and J.P. Morgan Chase (JPM ) announced a venture to produce short films on the Amazon site. Customers who use an Amazon Visa card to buy items advertised in the movies will get a 5% discount.

All of this innovation creates a tangle of complexity -- and simplifying it represents a growing challenge for the industry. While ad agencies can snap up 30-second spots on Monday Night Football, the Internet offers almost infinite options. First, advertisers have to pick from a fast-growing number of formats, from skyscrapers that crawl up a page to rollovers -- ads that expand as the mouse runs across them. Then they have to figure out on which of the thousands of commercial sites to run the ad. And they must decide whether to orchestrate the campaign to hit people with different ads at work and at home -- or maybe arrange a succession of ads, so that a customer's first viewing introduces a product, and the second provides details. "The complexity can be a barrier," says Yahoo's chief sales officer, Wenda Harris Millard. She says Yahoo offered 700 different ad forms when she arrived three years ago. It's down to a fraction of that now, but it remains a lot more complicated than old-fashioned TV or magazine buys.

Here the big players have an outsize advantage. They can sell Internet ads as part of a bigger package. CNN, for example, sold pricey sponsorships for Election Day coverage to companies, such as Samsung and DHL. The condition? Sponsors had to advertise on TV and the Web. While CNN's TV coverage was swamped by rival Fox News, the exposure on the Web page more than made up for it. Over that 24-hour period, CNN.com bested the competition with a dizzying 650 million visits.

Already, advertisers are busy linking their Net promotions to offline campaigns, from newspapers to TV. In the most recent Super Bowl, for example, Mitsubishi Motors bought a 30-second ad. It enticed viewers to visit its Web site to see what happened when a Mitsubishi Galant faced off against a Toyota (TM ) Camry in a crash test. In the following six hours, some 11 million people visited the site. Many of them provided their e-mail addresses, watched the 50-second video, and clicked the tires in the car company's virtual lot. Such visits are critical, especially for the auto industry. Why? Studies show that shoppers, punching away at search engines, spend an average of five hours researching cars online before setting foot in a showroom.

"Toe in the Water"
It was the success of search-based advertising that breathed life back into the industry following the dot-com collapse. Led by Overture Services -- now a unit of Yahoo -- and later by Google, the search engines delivered a breakthrough innovation. They interpreted the key words typed in by customers as requests for products and services. And they auctioned the rights to place text ads alongside search results to any company or individual that was interested. The offer has been irresistible: Advertisers paid their bid, be it a penny or a dollar, only when a customer clicked on their ad. Paid search grew from a mere cipher in 1999 into a $3.9 billion business, according to eMarketer. "Search became a way for marketers of all stripes to dip their toe in the water," says Ted Meisel, president of Yahoo's Overture Division.

The question is whether the search industry will continue to pace the growth of Internet advertising. eMarketer predicts that growth of such search ads in the U.S. could slow from 55% this year to 19% in 2005. This poses little problem for Yahoo, a powerhouse in both arenas. But Google risks missing out on growth in brand ads. The reason? Advertisers and agencies traditionally separate the direct-marketing teams, which feed into search, from the creative and brand teams that oversee display ads. For now, Google is attempting to bridge the gap by developing ads with images and pictures to accompany search results.

The rush toward display advertising online is similar to the rise of cable TV a generation ago. Until the earl