February 3rd, 2008

Advertisers Flocking to the Internet, Where the (Inter)action Is

By J. Scott Orr
New Jersey Star-Ledger

Tim is the King Midas of candy. Everything he touches—office supplies, furniture, whatever—turns into Skittles.

With this blessing, of course, comes a curse.

“I met a man on the bus today. I shook his hand. He’ll never see his family again,” a pitiable Tim tells an awestruck co-worker.

Tim is the star of one of last year’s most popular online commercials, one that was blogged about and discussed at hundreds of Web sites. Maybe you’ve seen it. Maybe you’ve been prompted to go to skittles.com for more, joined the Skittles Facebook page, or hung around and played Skittle-Bowl, an online ski-ball game.

This kind of interactivity, ex perts say, is the future of advertising: grabbing online consumers’ attention and engaging them, all the while hoping to make brand fans of people who can’t help but chuckle when poor Tim pounds his desk in frustration and turns it into a mountain of multicolored candy orbs.

It is no bite-sized enterprise. According to eMarketer, which tracks online advertising, spending on Internet ads in the U.S. alone will rise from $21 billion in 2007 (or almost 14 percent of total spend ing, which has been estimated at $154 billion) to $42 billion in 2011. And Microsoft’s $44.6 billion takeover bid for Yahoo, announced Fri day, is just the latest evidence of how high the stakes in the online ad wars have become.

Marketers have been struggling for years to harness the Internet’s seemingly limitless potential as an advertising medium. It has been a bumpy process, but as the digital revolution unfolds, marketers are learning a whole new set of rules in the competition for American consumers’ attention and, ultimately, their money. It is not enough anymore to launch a major TV ad campaign during the Super Bowl, and follow it up with traditional broadcast spots.

“There has to be some interactivity,” said Lynn Eaton, a reference archivist at the Hartman Center for Sales, Advertising and Marking History at Duke University. “You can send consumers back a coupon or something so they get something in return for their attention. You want people to interact with the product online so they get invested beyond just sitting there and looking at an advertisement,” she said.

Eaton compared the current advertising revolution with earlier eras in which radio and then television drew advertising dollars away from print media.

It was in 1704 that the seller of a Long Island estate published the first newspaper advertisement in the Boston News-Letter, according to a timeline compiled by Advertising Age. The first radio ad wouldn’t come along until 1922, followed by the first TV ad in 1941.

The first Internet advertisements began appearing around 1993, at a time when the worldwide online community totaled a mere 5 million, or less than one-tenth the number of people now using the social networking site Facebook alone.

Today, with billions of people on the Net, those early static banner and column ads might as well be called subliminal advertising, since most users have trained themselves to see them for only a second, if that.

“There have been eye-tracking studies that map where eyes look when people arrive at Web sites. People don’t look at the top and they’re starting to not look down the right side. It’s amazing how quickly we adapt,” said Kim Greg son, a professor who studies online behavior at Ithaca College.

“You’ve got to get people involved with things like games associated with your product. If you’re giving them game enjoyment, they spend way more time with it than they would a 60-second ad on television,” Gregson said, adding that social networks are ripe for this kind of interaction.

The playing field, advertisers have found, is loaded with pitfalls, as Internet users have shown that they do not want to be bombarded with ads and they are very sensitive about their privacy. Unwanted or annoying ads, popups, or unauthorized use of personal information harvested from social networks are more likely to anger than to woo potential customers.

Facebook, the social networking platform with more than 50 million users, fell on its face last fall with the launch of its advertising plat form Beacon, which alerted users’ friends to purchases they made from certain Web sites unless users took steps to opt out. A revolt en sued and Facebook founder Mark Zuckerberg was forced to change Beacon to an opt-in system and to issue a lengthy mea culpa.

“We simply did a bad job with this release, and I apologize for it,” he wrote. The lesson: Consumers want control, and they want the power to opt in, not just the ability to opt out.

“The best thing that works is opt-in marketing, in which you ask the customer beforehand if they want information about your product. ... Customers, as a general rule, want control over the content they are exposed to,” said Deborah Gray, a professor of marketing at Central Michigan University.

“Getting attention is a return on investment, and getting attention equates to customer value. Marketers are learning time and time again that there is value in communication. Essentially, you want to get the consumer to come to you. The best kind of consumer you can have is one who actually types in your Web site,” she said.

The multibillion-dollar question being pondered by the giants of the Internet, including Google, Microsoft, MySpace, Yahoo and the rest, is how do advertisers harness the vast amounts of personal demographic information—age, location, likes, dislikes—that users of social networks willingly post on line? At the moment no one knows, though on social networks, as elsewhere, marketers know they must cede some control to users.

“Our take is that social network ads should be opt-in on specific pages. That model probably will proliferate. You want consumers to say ‘I want these types of ads.’ We can do that today if the social net works want it,” said Patrick Vogt, CEO of New York-based Enliven Marketing Technologies, providers of rich media advertising content and strategies.

Still, some forms of online advertising are working pretty well, particularly search-based ads like those from Google, Yahoo and the other search engines. If you type in New York Yankees, you probably won’t be offended if an ad for team gear appears with your search results.

And some established marketing campaigns are making the transition from traditional media to the Net with little trouble. Cue the Aflac Duck in 3 ... 2 ... 1.

“It’s not been that difficult to make the transition to online from TV. We put him (the duck) into various environments and he can come to life online,” said Al Johnson, vice president of marketing for Columbus, Ga.-based insurance giant Aflac, who oversees one of modern advertising’s most successful icons.

In exchange for their attention, online consumers get some entertainment value from the duck’s antics, and more interactivity with the duck is planned. At the same time the company is being very careful not to devalue the duck with online ubiquity.

“We have never received a negative comment about the duck, but we don’t want to over expose him. ... As long as we present the duck in a unique and creative way on line, people still like him,” Johnson said.

Viral ads, the digital equivalent of word-of-mouth, also have succeeded when ads gain popularity for their entertainment value and are spread by users. Witness the millions of viewers—and massive increase in sales that followed—of Utah-based Blendtec’s clever “Will it Blend” YouTube videos in which everything from marbles to an iPhone are ground to dust in the company’s powerhouse blenders.

“The whole point of viral marketing is that you can start a message in a social network and get it out to the general public,” said Eran Reshef, founder and CEO of Collactive, a New York-based company that helps set up online communities to spread information about causes and products. Its strategy is to organize communities to boost the popularity of various online content—YouTube videos or newspaper articles, for example—in the hopes of exposing it o others.

While there have been success stories, marketing experts believe the online advertising revolution remains in its infancy as new models and strategies are rolled out to try to harness the Internet’s potential.

Still, not all the long-held tenets of advertising have fallen in this new marketing landscape. The words of John Wanamaker, the early-20th-century merchant and advertising pioneer, still seem as true as ever: “Half the money I spend on advertising is wasted, and the trouble is, I don’t know which half,” he said. 


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