Online advertising shows its age - ' Return on Marketing '
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There are hints that advertiser disenchantment with online advertising may be starting to surface. The recent revelations about Google's slowing growth forced the company's usually closemouthed executive team to admit some hard truths. "Clearly our growth rates are slowing, you see that each and every quarter, and we're going to have to find other ways to monetize the business," said Google Chief Financial Officer George Reyes at an investor conference in late February. "I think we have a lot of growth ahead of us. The question is at what rate."
Yet it would be foolish to predict anything other than a rosy future for Web advertising. The average person spends about 34 percent of their media time per week online, both for work and personal reasons, according to Forrester Research. And with hundreds of millions of potential consumers around the world surfing the Web at any one time, companies can't help but see dollar signs when they think of the Internet.
But such growth will only occur if online marketing evolves quickly enough to let companies cut through the clutter and find their individual customers from among the mass of people casually browsing the Web. "So far, no one has really taken advantage of the truly interactive nature of the Internet," says Forrester's VanBoskirk. "The ability to use data and context to provide more relevant advertising will gradually distinguish this medium from anonymous, traditional channels."
Microsoft's new adCenter, currently being tested, provides clues to what the next generation of Web advertising could hold. By analyzing consumer demographics collected through the Microsoft Passport Network—which includes sites such as MSN, MSNBC and Hotmail—the software giant plans to let keyword advertisers target customers by gender, age, wealth, income, location and time of day, among many other variables.
This is the most ambitious use of demographic data yet attempted by a Web company, analysts say, but its main contribution could be to rouse rival Yahoo! to adopt a similar system. Yahoo! also knows a lot about consumers, thanks to its own network of sites, and it has been much more adroit than Microsoft at profitably navigating new trends in Web content and design. If Yahoo! does develop its own demographic ad network, as expected, it will likely soon surpass Microsoft, predicted Charlene Li and Hellen Omwando in a March, 2005, Forrester report. Google, whose primary site is its search engine, generally lacks access to demographic information, so the emergence of both adCenter and a Yahoo! derivative could weigh on the company's prospects.
The value of programs such as adCenter lies not only in highlighting consumers with particular attributes, but also in the rich details such programs can reveal about consumers who click on keyword ads and either decide to make a purchase, or pass up the opportunity. By reverse engineering a click-thru, these programs, for instance, can tell an advertiser that 53 percent of its customers are women, and 95 percent of men who click through make a purchase.
Google has answered the data call with a program, called Analytics, that assesses the efficacy of keyword campaigns by comparing which terms produce the highest revenue and which sites generate the greatest number of customers. Analytics also has a geographical component that gives companies hard data about where their customers live. Using this information, an e-tailer could determine whether or not a billboard in, say, San Rafael, Calif. had been successful in driving consumers to its site. "Given the right information, we believe that advertisers can control how successful their ads are," says Emily White, Google AdWords online sales and operations director.
Story Guide:
Online advertising shows its age
Banner Year?
Word to the Wise
Return on Marketing
Return Behaviorism
Sold on Web Ads
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