In the United States, as in Europe, online advertising has not been spared the effects of the current recession. Although some continue to doubt its structural capacity to attract advertising, lecturers at “Beyond the Printed Word” think this can be overcome by injecting more creativity, improving audience measurement methods or by using the new universal “open sesame:” the mobile phone.

The Quick and More concept uses the mobile telephone as a remote control to interact with newspaper articles or advertisements.
Photo courtesy of Ifra

Following a good year in 2000 ($8.2 billion in investments in the United States, $746.4 million in France), online advertising is experiencing the first recession of its brief life. In the United States, the Internet Advertising Bureau, the international association that defines standards and common practices, puts the downturn on the U.S. market at 8 percent for the first six months of 2001 compared to the same period the year before. In Europe, the online advertising market is expected to shrink by 14.6 percent in 2001 compared to 2000 ($233 million as opposed to $458 million), according to predictions contained in an Ad Barometer study.

Undoubtedly, the prospects seem better for 2002. Ad Barometer is counting on a growth rate of 14.6 percent ($625 million) in Europe. But predictions in this area are risky. All the more so as the markets have not achieved the forecast growth in terms of potential consumers: the number of Internet users has leveled out at 8 million to 10 million in France, for example. Of course, while all are in agreement that the global economic slowdown and the consequences of the terrorist attacks on Sept. 11 make for a generally difficult situation, there is a division between skeptics and optimists on the future of the sector.

On top of the economic problems of online advertising, the skeptics emphasize the existence of structural handicaps: “The Internet is perhaps closer to the telephone than to television,” said Safa Rashtchy of the U.S. Bancorp Piper Jaffray financial services company in a recent forum on Yahoo! News. “People have tried advertising on the telephone, but it never really worked.”

The financial analyst put forward two arguments to support his case.

“First, while sites such as Yahoo! reach a considerably larger audience (80 million people) than the biggest magazines, the volume of advertising they carry remains small. Second, the traditional large offline advertisers (motor vehicle manufacturers, consumer good producers) still have a very minor Internet presence,” Rashtchy said.

As of September 2001, the largest online advertisers in the United States were Yahoo!, Microsoft, Amazon.com and AOL Time Warner — companies more or less directly concerned with the Internet. However, optimists point out that $8.2 billion in the United States in 2000 is not bad given the market’s short existence. They think the current slowdown can be overcome with creativity, improving audience measurement efficiency, or by using other media, such as mobile phones.

An unbridled creativity

Everyone agrees the classical forms of online advertising (i.e.: the rectangular banner sized 468-by-60 pixels) have had their day. Two years ago, banners achieved click-through rates (percentages of users clicking on ads) over 4 percent. This figure has since dropped to below 0.5 percent.

This is the reason why IAB, with effect from last February, has adopted seven new formats: two vertical (known as skyscrapers) and five rectangular (square or billboard) formats. According to the findings of three convergent studies carried out in July 2001 by IAB, MSN and DoubleClick, the large-sized skyscraper or billboard formats (large rectangle) raise the level of brand recognition by nearly 40 percent, even after only a single exposure.

New types of ads, less static, also have emerged: after pop-up, pop-under and interstitial or transitional ads, there are now the superstitial ads, which temporarily cover the entire Web page (see for example the Zippo ad on speedvision.com) and floating ads, which are animated ads that pop out of their box and cross the page.

These new forms have been given impetus by the development of the rich media, a generic term covering all the possibilities to integrate audio, video, Flash animation, DHTML, JavaScript or Applet Java. The first studies conducted by IAB attribute exceptional performances to rich media. The use of the Flash format can raise the level of brand recognition by 71 percent, the use of DHTML by 19 percent.

“Animation gives advertising more emotion, endowing it with an impact similar to that of television,” said Christine Cook, vice president, international of New York Times Digital. But rich media represented only 2 percent of the advertising spend during the first half of 2001, compared to 36 percent for traditional banners and 28 percent for partnership deals (sponsored pages). Besides its intrusive nature, a handicap of rich media is size. While IAB has defined size limits for the various formats, hopes are attached to the development of high-speed connections (ADSL or cable) capable of supporting rich-media applications. Another train of thought being pursued is personalizing messages through interactivity or “surround sessions.”

In the first case, the aim is to allow Internet users to react and express themselves via various tools: micro site banners in which the users can navigate, request information and carry out transactions without having to leave the editorial page: video games especially adapted for promotional purposes, help agents, etc. Of course, these tools can be used also in the other direction for recording valuable information concerning the profiles of the Internet users and their consumption habits.

In the second case, it is a matter of allowing an advertiser to “possess” an entire individual session. What this means is that the advertiser concerned will have the monopoly on the advertising messages, adapted to suit the profile of an individual Internet user, from the time he enters the site until he leaves it. This system is at the test phase at NYTimes.com, one of the most innovative newspaper sites for online advertising. According to Cook, the surround sessions are highly likely to attract advertisers as they are based on a concept they are already familiar with from radio or television: namely the audience, i.e. the number of individual users who effectively receive these messages.

Another advantage of this system is the possibility to better target the user on the basis of the demographic data linked to his login and his reading habits (when does he hook up? Which pages is he most interested in?, etc.). New York Times Digital plans to sell packages of five pages of advertising. This means that if the Internet user exits the site having viewed only three pages, the advertiser will not pay anything for that session. Likewise, he will not pay for additional pages. The prices have not yet been finalized, even though the site plans to sell the packages from $25,000 for 75,000 sessions, which corresponds to a cost of 67 cents per thousand. The site also plans to offer advertising impact surveys carried out by Dynamic Logic.

Improving audience measurement

One of the most important problems facing online advertising is the quantitative and qualitative measurement of the audience.

“To attract advertisers, it is not enough to have an original site with a high degree of added value, the success of which is praised in vague terms,” said Dave Morgan, chairman and managing director and founder of True Audience, a New York-based company specializing in the development of tools aimed at increasing the effectiveness of advertising or direct marketing campaigns online. “It is important to know the exact numbers of visits, their frequency, but also the profile of the visitors, their habits, etc. Who, when, what, where, at what time during the day, from which terminal, what is the Internet user’s frame of mind when he hooks up? The more information one has on his audience, the easier it is to predict their expectations and behavior, and this enhances one’s value for the advertisers.”

Morgan

Morgan, the former director and founder of Real Media, encourages moving toward breaking down the audience according to social categories, and also by times of the day.

“On Friday afternoons, the CBSMarketwatch.com business site offers advertising oriented towards going out and leisure-time activities (advertisements for Budweiser beer, for example), as those responsible for the site have recognized that, on Friday afternoons, Internet users are thinking more about the weekend than replenishing their portfolios.”

Morgan also emphasizes the need for the new media to use concepts familiar to both advertisers and marketers. This is not the case for the majority of traditional methods of Web audience measurement.

The page views concept, for example, is not yet clearly defined and still causes follow-on financial negotiations between publishers, advertising management and advertisers about the number of banners or advertising elements viewed by the Internet users. According to CNet, this uncertainty extends to about 10 percent of the world online advertising market. For 2001, when e-advertising was forecast to achieve a world turnover of $5.33 billion, these dealings would be valued at $520.38 million. IAB therefore wishes to make a clean sweep once and for all.

In collaboration with PricewaterhouseCoopers, IAB is working on a series of proposals to agree the famous concept of page views that uses different counting technologies (depending on whether they are installed on internal banner servers or on outside servers) according to the publisher or advertiser concerned. Some servers base calculations on the number of clicks on banners, others on the number of images displayed on the Web page.

At the same time, the click through rate is not approved unanimously. Online advertising can generate branding effects (improving image and brand recognition) without the consumer clicking on the banner. For example, during a recent online campaign conducted by Procter & Gamble, sales of the product concerned increased 19 percent in the 16 weeks after the campaign, while the click through rate was just 0.23 percent. Another study conducted among 1,000 people offered them a product that was of natural interest to them. But 55 percent of them did not click, as they stated their preference to get information offline.

In view of these uncertain concepts, Morgan prefers individualized surround sessions that he thinks are more reliable in terms of audience measurement. But he does not ignore the potential of the mobile telephone, used as a cross-media interface between advertiser and consumer.

The mobile telephone as an ideal ancillary device?

The mobile telephone combines all the conditions required for an ideal advertising support.

“It is in widespread use (900 million users world-wide), personalized in that it is practically never separated from its user, and in contrast to the Internet, the user is always ready to pay, even if most of the time he does not know exactly what he is paying (for),” said Didier Durand, research and development director of Consultas/Publigroupe.

Durand

 “Furthermore, it has the advantage of extended geographical coverage, it is interactive and the predicted technological advances should improve data transmission.”

All these characteristics make it a suitable gateway between the newspaper and the Web, of which it combines the advantages (mobility and comfort of the use of paper, data storage capacities and multimedia opening of the Web) and weakens the respective disadvantages (deadlines pressure, absence of interactivity and measurability on one hand, low degree of penetration, spamming and poor URL storage capacity on the other).

On the strength of the above, Consultas/Publigroupe, in partnership with the mobile phone operator Swisscom mobile, developed Quickandmore.com, a mobile phone-based Internet platform oriented towards cross-media advertising. In concrete terms, the Quickandmore concept is as follows: The consumer reads the newspaper, and sees an interesting article or ad. He composes the code corresponding to the article or ad on his mobile phone and gets more information either directly by phone (polls, competitions, games, e-coupons, election results, sports scores and so on) or through the intermediary of the Internet.

“Our idea is to use the mobile telephone as a value-added system for ordering services, either of an editorial or advertising nature,” Durand said. “This presupposes that the newspapers play the game, that they undertake to supply a minimum of content or advertising space and that they explain the value of the Quickandmore service to readers.” Publigroupe’s management insists this service must be free for consumers.

Because of the bilateral character of the mobile phone, the other benefit of the Quickandmore platform is it allows user profiling in real time. An exact database is compiled — under the cloak of anonymity (including neither names nor addresses) — listing individual habits and preferences in all areas. The mobile phone therefore becomes a powerful real-time reporting tool, capable of supplying the detailed audience data sought by Morgan.

To guarantee confidentiality and limit the intrusive aspect of its technology, Quickandmore has stated its intention to request permission from consumers for limited periods, to confine its information gathering to their demands and needs, and to preserve their anonymity. It is the telephone operator who will play the part of gate keeper for the SMS messages, calls, e-mails, managing personal data and collecting payments. After newspapers and magazines, Quickandmore plans to turn its attention to other targets: bar codes on products, Yellow Pages, radio, television, billboards, etc.

“The mobile phone is therefore at the heart of a three-pronged development: convergence of communication supports, content merging (information, services, entertainment) and ad integration,” said Didier Durand. Will this new “open sesame” of communication be up to the hopes attached to it?