Sangki Rhim (Scott Partridge)

Internet advertising is one form of electronic and online interactive advertising. While interactive TV and some other new media have developed more slowly than anticipated, internet has caught on with millions of consumers. As advertisement has economically contributed to the development of media, the internet could grow with the help of the advertising. However, questions remain about the effectiveness of internet advertising.

TECHNOLOGY: WILL BANNERS KEEP PROLIFERATING ON THE WORD-WIDE WEB?

A most acceptable and popular model of advertising in the internet is ‘banner advertising’. A banner is a single picture that appears usually at the top or bottom of an internet site. The picture links people to the site that has advertising information about the products or the services. It can attracts a surfer’s attention through animation, frequent refreshing and moving graphic, with technical enhancements such as JAVA and Real Audio and so forth (Cook and Sellers 1996). The banners have advanced through three generations from static to animated, and now to interactive. One example for interactive banner – Bell Atlantic’s ISDN VirtualTag banner. Inside a standard-sized banner, graphics and animation can fly out; text fields and forms can unfold and retract; real-time voices and music can underscore the action. It allows the user to view product information in the banner, without leaving the banner (Online-1 1997). Despite the development of a banner, it is not certain that the banner advertising would remain a dominant way of internet advertising, because the vast majority of banners served on the Web still remain unclicked (the average click rate is about 2 per cent) (Weber 1996).

Advertising through ‘on-line sponsorships’ has some advantages over banner ads. Advertisers can take advantage of the long term relationship that the publishers often have with users, as opposed to the momentary connection that banners make with consumers (Online-2 1997). There are four major ad platforms for on-line sponsorship. First ad form allows consumers to get free e-mail access in exchange for viewing advertising. It has particularly high targeting and point-of-purchase potential, because users must fill out demographic surveys when they join the service. Chat rooms can also be supported by advertisers (for example, Ichat by WebGenesis). It is valuable, because of the high traffic and long periods of time that users spend in chat room over 30 minutes on average. PointCast is making a success of Proctor & Gamble’s advertising program using ‘push technology’. Because push technology enables publishers to work around bandwidth constraints and deliver media-rich content to viewers, advertisers are beginning to use emotional and intellectual impact of traditional media advertising. Finally, ad-supported ISPs will provide discounted or free internet access in return for the right to deliver advertising to users (Online-4 1998).

With internet advertising, the effectiveness should not measured simply by the degree to which the consumers are exposed, because the audience of the internet ads are not passive, rather, interactive (Hong and Leckenly 1996). There are two kinds of audience measurement method in the Web. One is ‘client-side’ measurement system like conventional audience exposure metric. PC meter installs patent-pending software on panel member’s home PC - a panel of 10,000 households that is demographically balanced to represent U.S. PC owners. But it is only complementary to the ‘site-centric’ measurement system (such as Accrue) which employ hits for sites as the common currency for measurement (Online-5 1997). The measurement techniques need to improve so that they can be used to convince skeptical advertisers about the effectiveness of internet ads and invest in them.

In addition to this, a targeting technology is very important in terms of the basic attribute of internet. The ultimate end value of online advertising lies in its potential to facilitate the targeted delivery of advertiser’s messages. Advertisers mostly rely on the information the audience presents when they registered the sites. The problem is people tend to resist registration and sometimes, falsely complete their profiles, either intentionally, or unknowingly. To prevent this, companies like Firefly with its system, Passport and Aptex are paying attention to the user’s action, such as determining preference based on usage pattern, which is as valid or more valid than looking at a user profile (Online-6 1997).

According to the Jupiter communications a company that provides online advertising report and consumer online services report, on-line advertising revenue for 1995 was about $66 million, and it increased to more than $300 million for one year. Of that total revenue for 1996, $242 million (80 per cent) was spent on web sites, $3 million (1 per cent) on yellow pages, $30 million (10 per cent) on consumer online services such as America Online, CompuServe or Prodigy, $15 million (5 per cent) on on-line classified ads, and $11 million (4 per cent) on all other non-web publishers such as Juno and Pointcast (Online-6 1997). The main reason for the dramatic increase is the fast growth of the advertising in the WWW. Jupiter projects revenues for the advertising will reach $5 billion a year by 2000.

Even so, advertising expenditures on the internet are marginal compared to the billions spent on advertising. approximately less than one-fifth of 1 per cent of the $173 billion spent on advertising in all media in 1996 (Shaw 1997).

When we examine the ranks of on-line advertisers or on-line publishers, we could find that all the participants in the internet advertising are not equally benefited. The Adspend reports that while 600 sites offered ad space, but the top ten collected 66 percent of all ad revenue. Netscape lead all web sites in ad revenue. Second to Netscape were four of those search engines: Infoseek, Yahoo, Lycos and Excite (they received 40 per cent of total online ad revenue in 1996), then came content companies dealing with mainly information and entertainment follow (Marlow 1997). On the other hand, most ad spending comes from a relatively small number of advertisers, the top ten accounting for 31 percent. Many companies in the rank are also in top ten on-line publishers, such as Microsoft, Netscape and all the other search engines. The advertisers fall into several groups such as technology suppliers, companies existing only online, and companies extending their franchise to the internet (Marlow 1997).

When a firm chooses media which they will put the advertising, the first consideration is the economic aspect. Advertisers will include it as a part of their media-mixing schedules, only when the internet advertising is cost effective. It does have some advantages over traditional media such that it is relatively cheap to purchase the media and to make the advertising, and it can stay longer on the web with low cost. However, due to the low average click rate, an alternative method of charging for banner ads is being developed, different from fixed fee or ‘eyeball basis’ charging for banners. Yahoo, for example, agreed to accept suggestion from Proctor & Gamble that the company pays only for the users who actually click on to its web site for more information, not for those who simply view a page with the banner (Weber 1996).

Main actor of the internet advertising has been changing. First, designing homepages of promoting a company’s products was done in-house. With increasing needs for well -organized advertising, internet ad professional agencies have emerged. Successful agencies not only provide their clients with home pages for the web or software used for CD-Rom and kiosk, but support them with total strategic planning advice, interpret internet web site traffic patterns and act much like a business partners of their clients. Traditional advertising agency got nervous with such new competition and thought the role of the advertising agencies is being transformed. Because their existing creative and media department rarely get involved with new media, agencies are building a separate internal new media team and developing media expertise through acquisition and strategic partnerships (Marlow 1997).

Most of all, the potential of internet advertising is that it can have the consumers pay right at the point of the advertising, due to its interactive nature. If the user encounters certain products or services and feels enticed enough to buy them, the next step is to provide the advertiser their credit card number and order them via online - online shopping. Thus, the internet advertising may affect habits of purchasing, like impulse buying.

Internet advertising is, in many ways, an extension of direct marketing. To make direct marketing successful, the companies must build accurate data bases of consumer’s identities. Likewise, internet advertising needs demographic information of the audience to target segment market, because it is oriented for only potential consumer, rather than the general public. Also, audiences would not stick to their passive habits for commercials at the advent of the new advertising media. Something happens in the minds of users when they move away from TV to the computers. They are in control and don’t want to be interrupted by commercials (Janal 1995). People expect to seek out information about the products they are interested in from the web. They are no more interrupted by advertising, and rather want to interact and learn. Thus, the advertiser must develop a new mindset for making advertising in the internet. People want information before picture. The attempts to get people to buy the product through images and persuasion in advertising are no longer applied to the internet. So, the term ‘advertising’ in the internet should be interpreted to read ‘the delivery of information and customer service in a interactive manner’. While banners appeals to a user’s perception, the advertising content that they introduce should include such as product information, a message from the president of the company, investor relations information, press release, FAQ, and seminar and training schedules (Janal 1995). It will become more difficult to differentiate between editorial content and commercial message. When it appeals to perception (in spite of its superiority in the visual and the audio), the rate of recalls is reported low. So, advertiser should rely on the extensive and accurate information delivery of the ads, anticipating what users would logically want to do next.

Most important issue about internet advertisement is ‘consumer privacy’. On-line service provider can gather and distribute consumer information that is more detailed and personal than data available through traditional advertising media. Section 5 of the Federal Trade Commission (FTC) guides allows for the prosecution of advertisers for unfair and deceptive trade practices.

Personal information can be transmitted online in two ways. ‘Expressed disclosure’ are provided buy users when they fill out their personal information for registration of initiate online transactions. ‘Implied disclosure are compiled when user are simply cruising the internet. It includes the identity of the web sites visited by users and the time they spent at each site (Sarris 1996). Consumer privacy becomes a more serious issue when children’s activities online are involved. In some cases, children as young as four years of age are asked to provide information about themselves, including name, sex, age, e-mail address and favorite TV show. In return for completing survey, they receive ‘kid cash’ (Gellene 1996).

The FTC is seeking how to protect the privacy interest of consumer. However, it should not hinder the growth and the use of the internet technology (Rose 1996; online). For example, ‘cookie’, that is embedded in Netscape software, allow advertisers to track user’s activities at web sites and trace the information directly back to the user’s computer. In this case, the desirability of regulation on the technology is problematic, because it could stunt its growth.

Another policy issue regarding private invasion in internet advertising market is resulted from the fact the internet is a global media. The European agreement, for instance, is based on the assumption that greater protections are needed from privacy intrusion by business sector than government. Europeans are generally more suspicious of the private sector (Sarris 1996).

The fact that internet advertising narrow audience down to people who has potential in the market of advertiser’s product causes other problem. It would limit the range of the audiences. Internet still benefits the class with higher income and higher education. Since the advertisement in the internet contain larger amount of information than traditional media, it would generate the gap between the information rich and the information poor.

On the other hand, the consumer would be divided along their income in terms of commercial interruptions. They would have a option of whether they accept a program with less advertising, paying more, which means they would trade off the irritation of the advertising with the cost of program. Thus, there might be another kind of gap between the affluent and the poor (Baldwin et al. 1996).

A good point of internet advertising is it will be benefited by the global nature of the internet. Local brands can enter global worldwide market, if they are suitably adjusted in language, presentation and offers (Marlow 1997). Internet advertising will not suddenly do away with traditional advertising, marketing and public relations. The traditional advertising and interactive advertising will coexist for some time.

REFERENCES

Baldwin, T.F., McVoy, D.S. and Steinfield, C. (1995) Convergence: integrating media, information and communication, Thousand Oaks: Sage Publications.

Cook, D. and Sellers, D. (1996) Launching a business on the web, Indianapolis: Que Corporation.

Gellen, D. (1996) ‘Internet marketing to kids is seen as a web of deceit,’ Los Angles Times, 29 March.

Hong, J. and Leckenby, J.(1996) Audience measurement and media reach/ frequency issues in internet advertising, Vancouver, B.C., Canada.

Janal, D.S. (1995) Online marketing handbook, New York: Van Nostrand Reinhold.

Marlow, E. (1997) Web vision, New York: Van Nostrand Reinhold.

Online-1 (1997) ‘New banners do more than with less’, March. [http://www.jup.com/newsletter/webtrack/features/9704.shtml].

Online-2 (1997) ‘Sponsorships get better with age’, June. [http://www.jup.com/newsletter/webtrack/features/9706.shtml].

Online-3 (1996) ‘Making good on the hype?’ December. [http://www.jup.com/newsletter/webtrack/features/9712.shtml].

Online-4 (1998) ‘Emerging venues offer choices’, February. [http:// ¡Error!Marcador no definido..

Online-5 (1997) ‘Race to be Neilson of the net is on’, May. [http:// ¡Error!Marcador no definido..

Online-6 (1997) ‘Key issues for effective targeting’, (January). [ http:// ¡Error!Marcador no definido..

Rose, L. (1995) ‘FTC seeking to regulate inline privacy.’ Online: [http://www.webcom].

Sarris,C. (1996) ‘Summary of the FTC public workshop: Consumer Privacy on the global information infrastructure.’ Online: [http://www.webcom/lewrose/article/privacy2.html}.

Shaw, D. (1997) ‘The internet gold rush hasn’t panned out yet for most’, Los Angeles Times, 19 June. [/lewrose/article/ftcprivacy.html, April 1995].

Weber, J. (1996) ‘Download this: the dirty secret about the net’, Los Angeles Times, 27 October.

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