Internet advertising will never be the same

Citation

(2007), "Internet advertising will never be the same", Journal of Consumer Marketing, Vol. 24 No. 2. https://doi.org/10.1108/jcm.2007.07724bag.002

Internet advertising will never be the same

All internet users are familiar with internet advertising. In fact, banner advertisments and drop down advertisements and “Congratulations you have already won…click here” advertisements get in the way of the media. As the advertising industry has adapted to the new media, some interesting and rather strange developments have made online advertising easier and even more scientific. It is also strange how business operates. During the time of the dot.com boom, marketing academics were almost embarrassed that venture capitalists were throwing money at online startups without business plans. Somehow the faith in the new technology overcame good business sense. The rush to get online to be current with competitors caused a clamor for web site design, boosted demand and therefore boosted prices. One programmer remembers finishing a small and easily done design project that should have been priced at $200. His company added two zeros and charged $20,000.00 which the client paid without question. After his firm won a $1 million bid for a project he thought he could do for a fraction of the cost, he left to start his own firm out of a rented loft. He soon had employees and more business than he could handle, as clients desperate for web sites came in promising big contracts. Still he recognized that something was wrong and the boom was not sustainable.

Nasdaq hit its high in March 2000 and as the boom peaked, declined and went into freefall that programmer, Phil Kaplan, created a whimsical idea for a web site. He recognized that others in the industry would also sense the problem and gave them a place to vent their frustration. Using an off-color web site name, he created a “dot-com dead pool,” we will call FC, where people could gain points predicting which internet company would go out of business next. Industry lore states that he spent a weekend building the site and told half a dozen friends to check it out, then left for a week’s vacation in Brazil. It proved far more popular than he could imagine.

When a phone call from a reporter interrupted his vacation, he was startled to learn that 20,000 people had signed up for FC, and it was growing fast. Kaplan struck a nerve. He tapped into the results of the late 1990s boom/bust. Many workers seeking quick riches left good jobs to join internet companies with no business plans because everyone else was doing it. The money was there since investors were happy to foot the bill as Nasdaq soared. When the boom went bust, workers blamed their bosses instead of themselves. FC became their outlet to complain. Kaplan became a champion for those facing layoffs, bitter about corporate hypocrisy or puzzled by the spectacle of companies melting down every day. The result was up to 500 e-mails a day from company insiders complaining about obscene executive salaries, pending layoffs and companies shutting down. FC got as many as 4 million web surfers a month. Understandably executives, who were trying to keep their struggling companies going, hated the site.

Because, of the controversy and volume it generated, FC soon became so popular that Kaplan realized he could make money from it. He sold $75 monthly subscriptions and created a system for advertisers to place their text and banner ads on his site quickly and easily. That idea spawned one with far reaching consequences. At its peak FC generated more than $90,000 a month from subscriptions, and $10,000 from advertising. Even merchandising was profitable, generating $2,000 a month from items like T-shirts, and mouse pads.

Arguably all good things come to an end and when the bust “busted” and few online startup companies were still in jeopardy, FC’s reason for being evaporated. Adapting quickly, Kaplan exploited the advertising system he had set up for the FC web site. He began offering the do-it-yourself advertisement service to other web sites, taking a 25 percent cut for each advertisement he placed. This was the start of a new internet advertising service: AdBrite.

AdBrite – an online advertising[www.adbrite.com/mb/index.php?h=2]

On November 6, 2006, just a few weeks before this column was written, AdBrite, Inc., the internet ad marketplace announced the launch of AdBrite 2.0. AdBrite 2.0 is described as “the world’s first fully transparent online advertising marketplace.” The company now offers a full-service marketplace where advertisers can deliver “the right ad to the right person at the right time – and at the right price.” Pricing is unique for the industry: every advertisment on AdBrite 2.0 is auctioned in real time to the highest bidder.

When it launched, AdBrite 2.0 attracted more than 30,000 buyers and sellers and 500 million daily pageviews. It will bring national brand advertisers together with more than 20,000 independent and niche websites and blogs. It has attracted some well-known clients like ESPN, Speedo, Estee Lauder, Vonage, Snickers and Sports Illustrated.

We should describe two major types of online advertisements. One is an interstitial. Interstitials are not really advertisements; they are links to get a visitor directly to an advertiser’s web site. Thus, no advertisement needs to be written. Banners are examples of interstitials. Advertisers pay only when someone visits their site. The second type is the familiar text advertisment.

AdBrite 2.0, offers advertisers something new. Instead of providing only first time clicks, it will provide reach to the “long tail audience.” The long tail audience is jargon for those subjects experiencing advertising impressions but not direct impressions. Currently, 94 percent of all online advertisement spending goes to the top 50 web sites, who are largely search-related. The remaining 6 percent of revenue goes to the “long tail” of content. It is clear from the numbers that the vast majority of internet impressions are being measured strictly on their direct response value. The change offers advertisers targeting, transparency and visibility and the ability to put their advertising dollars to work effectively on thousands more web sites. AdBrite 2.0 will allow web site publishers to monetize the brand value of their content and brand advertisers to cost effectively reach their target audience. The savings promise to be remarkable: currently, brand advertisers spend tens of billions of dollars in offline mediums. AdBrite promises to reach the same audience at a fraction of the current price.

Industry experts believe that, the AdBrite model should change the online advertising business be a growth driver for the overall market.

The model offers a number of benefits to advertisers:

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  It allows advertisers to target and buy ad inventory on long tail sites.

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  It can target by demographic, channel, keyword, geography and site quality.

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  Using current market pricing for targeting criteria, AdBrite offers advertisers full visibility on how their bid and budget impact an overall campaign.

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  AdBrite’s site review allows advertisers to pick and monitor their strategic content partners.

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  AdBrite serves advertisments on more than 500 million page views per day.

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  Units available include text and active interstitials.

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  AdBrite offers full service ad sales teams to work with national brand advertisers and agencies to maximize their individual goals across the spectrum of long tail sites.

Publishers should find a number of benefits also:

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  Publishers have full control to monetize their site, including the ability to approve and reject every advertisement.

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  Publishers can now command higher CPMs (relative to text advertisements) through banner advertisements.

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  AdBrite offers publishers multiple advertisement units so they have full control over how they want to monetize their site.

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  Publishers gain access to national brand advertisers exclusively through AdBrite.

The web site is very simple and contains three main sections. One is a blog space that serves as a PR repository for the site. The other two allow advertisers to buy text ads or interstitials.

Pricing is interesting and is the bidding system mentioned above. Bidding should reflect the true value of advertising space. To aid advertisers in selecting online media, AdBrite provides target audience data as well as cost information. It remains to be seen how AdBrite fares in the long run, but initial results are encouraging. The company started with 2,000 sites in December 2004. It now includes 20,000 sites with 350 new publishers signing up every day. AdBrite’s advertisements reach more than 62 million unique users monthly, up from 7 million per month at the start of 2005, according to ComScore Media Metrix. It looks like this small part of a now-dead web site has come into its own.

In our next issue, we will investigate other informative sites and invite readers to submit their favorite internet sites for our consideration.

Reader requests

Please forward all requests to review innovative internet sites to: Dr Dennis Pitta, University of Baltimore, 1420 North Charles Street, Baltimore, MD 21201-5779, USA. Alternatively, please send e-mail to: dpitta@ubalt.edu for prompt attention.

Edited by Dennis A. PittaUniversity of Baltimore