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Introduction

From its start in October 1994, the Internet Advertising business has grown to approximately $300 million, and is expected to top $5 billion by the year 2000 . As the industry has developed, marketing efforts have shifted; while initially, obtaining high web-site traffic was the goal, targeting information and advertising to reach the right customers is now a more valuable quality. With an exponentially increasing market to target, the goal is now no longer to create the market, but rather to define it, through unique and useful applications. While in traditional media, distinct lines between marketing and advertising exist, the composition of the Internet causes a blurring between marketing and advertising efforts. The most important question that online advertisers grapple with is how the Internet both differs from and is similar to traditional media. And everyone has different ideas. Some use a direct mail/marketing model for ad development and measurement. While others rely on capturing a large audience as if the Web were similar to broadcast media. In the absence of new standards and methodologies, advertisers and agencies have fallen back on what they are familiar with, and advertising sites, getting different signals from different advertisers, have responded with a confusing mix of advertising guidelines and measurement tracking and reporting -- which only serves to make it harder than ever to get a handle on what online advertising is.

How is online advertising different from traditional media advertising?

The Internet medium creates different opportunities and challenges for online advertisers. Specifically, there are three aspects which make it different:

    · User control/Self-selection

    Halsey Minor, CEO of c/net describes this - "[The Internet] is a medium of choice, not a medium where you force a person to sit through a 30-second commercial, or force them to flip through the pages of advertising." (Jupiter interview 5/96) Self-selection defines the nature of the Internet visit - how long it is, what sites the user visits, and what pages the user accesses on any particular site. This means that advertisers want a very tight focus on the user; ideally, as in database marketing, they seek to create a one-to-one relationship between company and customer by targeting ad messages to a user's profile.

    This is the promise of the Internet and the challenge because it makes the ad development and management process that much more complex. Where one message may have been developed for use in other media, multiple messages are now developed, and using Internet technology, are targeted to specific users/groups -- both within a site and across sites.

    Both technology and "culture" work to emphasize user control of the Internet experience. When users search the Internet, the majority looks for specific information. It is up to advertisers to create smart ad campaigns that target the right audiences and lure them to an advertiser’s web site. Once there, marketers take over to make the experience as mutually satisfying as possible -- providing everything from entertainment to customer service -- in order to provide the incentive for users to want to repeat the experience

    · Interactivity/Direct Response

    A recent Jupiter survey found that contests and promotions seemed to be highly effective in drawing consumers' attention to banners that many participants said they probably would not otherwise have noticed. What this demonstrates is another unique aspect of the Internet - its interactive nature. Consumers see an ad which interests them; they click on it and voila, instant gratification. The information they want -- whether it's more information on a product or a contest entry form -- is displayed for them right away. In this sense, advertising does not take away from the idea of self-selection, but capitalizes on it, using creative incentives that draw the user in and then responding immediately to a request for more information.

    Interactivity is crucial to the online experience -- and getting more so every day as technology changes and expectations rise. Where once building interactivity into a web site was a "cool" bonus, today it is a necessary feature for successful sites. Users demand interactivity; they want that level of interaction with a site which goes beyond mere query and display of information. As the online representative of a company, the web site becomes a kind of "ultimate" customer service representative. When you want information or have a complaint/request, you want to talk to someone and get individual attention. Through effective usage of interactive marketing options, companies can ensure that users feel like valued customers.

    · Measurement possibilities

    Web technology promises exciting possibilities for measurement and direct marketing. Interactivity and direct response mechanisms that are built into Web technology are very attractive to advertisers -- and very frustrating. At a recent Internet conference, a representative of Modem Media complained that the technology was out there to accurately measure web site and online ad tracking and usage, but no one has come up with universally accepted standards to implement that technology. Internet-specific measurement companies, along with print and broadcast companies are vying to set methodology and standards for the Internet.

    Measurement technology is crucial for advertising purposes, but the key quality here is the ability to track and utilize information at an individual user’s level. Integrated database technology can be used for lead generation and follow-up contacts as well as for customization of site content.

These qualities of Internet activity provide an opportunity on a large-scale basis to develop a closer, more intimate client relationship than ever before. The very nature of interaction on the Internet demands a different approach to advertising, measurement, and ROI analysis than currently exists.

In this paper, we will describe various online advertising models -- beginning with the standard banner and moving to increasingly interactive and targeted ad models, including interactive, various types of branding, pay-per-view, and push/narrowcasting types of advertising. The "winners" in terms of advertising models will be the ones that best address the Internet-specific issues/qualities described above. Traditional media advertising should only serve as a starting point for exploring the advertising possibilities on the Internet.

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