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What Impact Will New Standards Have on Internet Advertising?
Michelle B. Kunz, Morehead State University
Peggy Osborne, Morehead State University
What Impact Will New Standards Have on Internet Advertising?
Michelle B. Kunz, Morehead State University
Peggy Osborne, Morehead State University
Abstract
This paper proposes that new formats of online advertising, specifically the new IAB Standards for Interactive Marketing Units, suggest the need to further study the impact and effectiveness of banner advertising. A short content analysis was conducted, and the findings provide insight and support for future research directions. The authors pose questions for consideration and suggest future research issues.
Internet Advertising
The Internet audience represents that hard-to-reach, well-educated, high-income population most coveted by marketers. Internet demographics are a marketer's dream. The Internet is the fastest growing advertising medium in history. Although it represents only a small portion of total advertising revenues generated, Internet advertising has increased dramatically. Beginning with less than $30 million in the first quarter of 1996, revenues generated just four years later were slightly less than $2 billion in the first quarter of 2000, up 182% from a year ago, the Internet Advertising Bureau said in a report released Aug 8, 2000. Online ad spending accounted for approximately 2% of the US advertising market, but is predicted to grow to about 7.5% by 2005. The IAB said the consumer-related category accounted for 31 % of online spending,
While online advertising still does not match traditional mass-media broadcast and print format, online advertising has surpassed outdoor advertising, and is predicted to match spending for cable and radio by 2003. The IAB reported revenues up 63% over third quarter 1999, but declined 6.5% over second quarter 2000. Third quarter 2000 revenues grew to $1,966 million, and showed a decline of $138 million when compared to the second quarter of 2000. While the medium has had a robust past nature, it has significantly changed marketing strategy and Internet ad revenues still totaled nearly $2 billion for the third quarter of 2000. Categories which lead online spending during this time period were: consumer-related at 30%, computing at 18%, financial services at 14%, business services at 10%, and media at 11%.
Banner ads appear to be the most prominent form of web advertising. They were the leading form of online advertising in 1999, with 53% in the fourth quarter, and 56% for the entire year. Sponsorships accounted for 27%, interstitials 4% and email 2% (Freeman, 2000). According to an IAB Internet Advertising Report by PricewaterhouseCoopers for the second quarter of 2000, banner advertisements continue to be the predominate type of advertising, accounting for 52% in the first quarter, while other forms were substantially lower: sponsorships at 27%, interstitials at 3% and email at 3%. The share of ad spending garnered by online ads is projected to hit 7.6% by 2004, according to eMarketer (Advertising Age), which is a growth rate of 116%.
Banner Ads
Despite negative press, banner ads have maintained their role in online advertising (Ott, 2000). Laura Wonnacot (2000) contends that no other ad unit or program comes even close to the hold banner ads have on online spending (54%). This strength is embedded in the evolution of the banner, from static and boring, to a rich media, which allows the customer to interact. The increasing role of improved technology, which allows the use of audio, or video has enhanced the engagement of the evolving banner ad. McLuhan also pens the term "beyond the banner" as advertisers institute affiliate programs.
Banner ads represented 60% of advertising in 1999, but are predicted to decrease to only about 40% by 2003. While this number shows a decline, it indicates banner ads have gained a stronghold in this venue. Banner ads may not be effective for all forms of online advertising. While click-through rates have been reported to be as low as 0.5%, companies still contend that conversion rates of visitors to customers am increasing. While ridiculed for being boring, ineffective, and in essence, dinosaurs, banner ads had a "banner year" in 2000. Increased and improved targeting, along with increased interaction and improved technology will morph the lowly banner to something more than just a static billboard. These ads still lead to brand recognition and possible purchases and should be part of a company's marketing strategy.
The static banner currently characterizes online advertising. However, this will not be the case for long. The banner is predicted to be reborn with audio, video, and other forms of interactivity. Rather than touting the demise of the banner ad, many look in new directions toward interstitials, superstitials, and skyscrapers as the formats to examine. Rich media, including music, voice, video and motion, added to banners are also being touted as major developments in online advertising effectiveness.
New Technology Effects
The increasing role of improved technology, which allows the use of audio, or video will only enhance the engagement of the evolving banner ad. According to Paul Entin (Galea, 2000), the important distinction to remember is that the banner ad may be terrible but banner advertising isn't. Effective and creative use of colors, graphics and words demonstrate higher click-through rates. The thing that differentiates advertising on the Internet from TV, radio, and other media, is its active participation factor (Wannocot, 2000).
The use of rich media in banner ads was found to increase click-through rates by 84%. Streaming media appears to be the one specific technology making inroads in the online environment. Of the 95 million US Web surfers, 36% used streaming media in November of 2000. The consumers who are regular streaming media users comprise about half of online users, 2/3 of those who have clicked on banner ads, and are about two times more likely to shop online.
Streaming-media ads are five times more effective in creating recall than a simple standard banner ad. While click-through rates are very low, 0.5 percent, banner ads it would appear do encourage repeat buying. This is evidenced by the fact that nearly half of those who saw a banner and took action had done so before. Banner ads are also effective for increasing sales of impulse purchases by about 19 percent. In the late summer of 1998, a majority of online users surveyed indicated they noticed banner ads, but a more significant statistic was the 17% who reported frequently clicking on banner ads. While the click-through rates continue to report low numbers, banner ads do generate banner recall, (73 %,) and slightly more than half of these consumers indicate branding effectiveness.
MSN and Yahoo! dominated global properties rankings. Heavy ad banner schedules show a greater faith in the effectiveness of the Internet as an advertising medium. A June 2000 tracking study found that U.S. consumers actually click on ad banners with greater frequency than consumers in the UK, Australia, Singapore and Canada. These results are interesting, given the level of concern in the United States regarding the perceived ineffectiveness of banner advertising. The U.S. has the most mature Internet audience in the world, and these results reported underscore the effectiveness of banner ads by demonstrating that even consumers who have had a high amount of exposure to Internet advertising continue to interact with the banners.
Clutter will become a problem as advertising continues to grow online. Jupiter Research expects consumers to face approximately 950 messages daily online by 2005. Breaking through this clutter will mean advertisers must consider new online models. Rich media may be one way to do this, using Java or Flash, streaming audio or video.
Recent Trends and Development
New online advertising venues are allowing for larger ads, making noise, and other special effects--i.e. doing whatever it takes to attract attention. Ads that are too small and limiting due to restrictive sizes have prevented online ads from being effective. The Internet Advertising Bureau introduced new Interactive Marketing Unit Standards to replace the original Banner Ad Standards, developed in 1997. The old and new standards are listed in comparative format in Table 1.
More specific and perhaps interesting are the new categories in which these standards are organized. There are skyscrapers, and rectangles/ pop-ups, in addition to banners and buttons. The new Interactive Marketing Units include more that just the "lowly banner," and provide many new size formats. Specifics of the new IMU standards are listed in Table 2.
Table 1. Standards Comparison
EXISTING BANNER UNITS
NEW INTERACTIVE MARKETING UNITS
468 x 60 IMU Full Banner
120 x 600 IMU Skyscraper
234 x 60 IMU Half Banner
160 x 600 IMU Wide Skyscraper
120 x 240 IMU Vertical Banner
180 x 150 IMU Rectangle
120 x 90 IMU Button #1
300 x 250 IMU Medium Rectangle
120 x 60 IMU Button #2
336 x 280 IMU Large Rectangle
125 x 125 IMU Square Button
240 x 400 IMU Vertical Rectangle
88 x 31 IMU Micro Button
250 x 250 IMU Square Pop-up
392 x 72 Vertical Bar Banner
* to be discontinued
Table 2. New IAB Interactive Marketing Units, 2001
Category
Size
(in Label pixels)
Skyscrapers
160 x 600
Wide Skyscraper
120 x 600
Skyscraper
Rectangles and pop-ups
300 x 250
Medium Rectangle
250 x 250
Square Pop-up, Utilized JAVA
240 x 400
Vertical Rectangle
336 x 280
Large Rectangle
180 x 150
Rectangle
Banners and Buttons
468 x 60
Full Banner
234 x 60
Half Banner
88 x 31
Micro Bar
120 x 90
Button 1
120 x 60
Button 2
120 x 240
Vertical Banner
125 x 125
Square Button
The larger ads allow a reader to get more information, without having to click through to the advertiser's site. Big pop-ups with animations, humor and games may be more entertaining. Some rather interesting, attention-gabbing and entertaining examples include:
1) bleating sound accompanies a large window with a picture of a sheep jumping over the Taco Bell sign reminding the viewer that what else-Taco Bell is "Open late;"
2) the entire background of stock quotes pages on Marketwatch now covered with Budweiser logos;
3) articles on News.com, Cnet's Network tech site, have big rectangular advertising, like NexTel's that flashes with interactive demonstration of a new phone.
All the graphics and other special effects required for these new ads, make the pages exceedingly slow to download, and not achieve the "entertainment" objective, and rather frustrate those online users who still have slow connections. Interactivity requires a different kind of marketing than we are accustomed to with television. Rather than just re-creating the TV video for online ad format and delivery, other factors may need to be considered. However, one consideration may be the type of information the consumer is seeking. If a consumer is surfing for the sake of surfing the animation and humor may be more effective than if the consumer is in a cognitive mode and seeking specific information about a product or company.
Disney Internet Group says larger ads won't replace banner ads. What they will do, is allow companies to command prices for this so-called "real estate, on a particular Web site. These new larger ads tend to result in more than double the click-through rates of traditional standard size ads. Research conducted by San Diego-based EyeTracking.com, for Cnet, found readers spent more time with the new ads, liked them better, and were more likely to remember the brands. By Dec. 20 of 200 1, year-to-date online advertising revenues came in at $6.1 billion. Response rates increase as banner sizes increase, while web publishers are expected to charge 10-15% more for the larger ads, than now being charged for current size banner ads.
Key findings from AdRelevance, Jupiter media Metrix's ad tracking service the number of different (unique vertical online ads increased by nearly 70% during the 42 quarter of 2000, but that return on investment (ROI) is still unproven. Vertical banners received 20% of all ad impressions during the 0' quarter, a total of 1.9 billion impressions, while full horizontal banner continued to be the most common online ad format w/ 36% of impressions. Average cost of full horizontal banner slipped from $31 for 1,000 impressions to $28. Incentive sites, general news sties and politics sites were among those that increased rate cards during the 0 quarter. Computing and technology sites had the highest rate card value for full horizontal banners, $50 per 1000 impressions, down $5 from the previous quarter.
Most sites experiments with new sizes far removed form the IAB specification. Out of 850 websites tracked by AdRelevance for their analysis, in February, only 30 utilized an exact new LAB-specified ad site. There is an expanding range of size deviation to include non-conforming ad slots. Sites surveyed supported banners as much as 25% different in width and height than the new LAB standard. Numbers suggest that still only a quarter of all websites are interested in large banner slots, only a small percentage are actually conforming to new LAB standards. When tracked weekly, however, it appears the number of sites using the new formats increased over 50% for the month of February. The most resistance to the new standards and the larger format for ads, is the difficulty in incorporating the new sizes with existing web site page design and layout. Currently, pages are set up to accommodate the old standard banner sizes. The industry does display a high degree of pixel-for-pixel conformity to the existing LAB standards. While adoption of the new advertising size standards will mean re-designing the layout format of many web pages/sites, standardization helps to reduce the advertisers' marketing costs by preventing a new for re-creation of the same ad for different sizes across sites. The new standards provide ads, which are large, high profile that cannot easily be lost in the tangled architecture of a cluttered web page.
The number of unique vertical online ads increased by nearly 70% during the fourth quarter of 2000. Vertical online ads cost advertisers $54 for 1,000 impressions, almost twice as much as full-size horizontal banner ads, $28 per 1,000 impressions. Publishers embracing the new ads in an attempt to stimulate advertiser interest and increase revenues even though the ultimate value of the new format is not yet know. AdRelevance data found average cost for a full horizontal banner slipped from $31 to $28 per 1000 impressions during the 4' quarter.
LAB conducted a survey in association with the American Association of Advertising Agencies. 93% surveyed view the new guidelines as more effective than previous guidelines. 26% of respondents of top-level agency representatives have already utilized the new larger units. 43% surveyed believe the new units warrant higher CPMs and attach an average premium of 13% to the new units.
Pilot Study
The "Top 10 Ad Banners Viewed' for the first week of March, 2001 (Nielsen//NetRattings), found all were 468 by 60 standard full banners. Six were animated, with two of those running in a cycle and then freezing, while four were static. A non-scientific content analysis was completed during the weeks of February 26-March 9, 2001. A total of 38 selected web sites were viewed, ranging from news and technology, to entertainment, portals and search engines. Two groups of data collectors were trained regarding the size classifications and categories of banner types. A total of twenty-two undergraduate business students collected data from the 38 different sites. Common search terms (computers, music, books, finance and sports) were rotated throughout the data collection procedure to activate banner ads at each site. 1418 banner ads were found. The traditional 468 by 60 pixel banner is the predominant size. Slightly more than half the banner ads were static, and approximate one-fourth were animated. These numbers would indicate that early on, the new standards have not been fully adopted. However, it should be noted, that to change the size of the banners to accommodate the new standards would require re-designing a significant amount of many web pages. Two weeks later, a single researcher re-administered the procedure to the same thirty-eight web sites, one time only. Again, the traditional 468 x60, static banner was the predominant format. However, interactive and new RAU sizes appeared on occasion.
These recent findings raise several questions appropriate for future analysis and research. They also should encourage us to continue monitoring online advertising formats. As these changes in format and design evolve, researchers should focus on overall implementation and effectiveness of banner and interactive marketing units, as well as adoption of the new LAB standards. Adoption of the new LAB IMU standards appears to be leading toward increased revenues based upon size, as well as costs to redesign web pages. However, will they really lead to improved effectiveness from the consumer perspective? Some possible directions for research might include the following:
1. Does animation improve recall, and thus impact brand awareness?
2. Does banner size and/or placement on the page impact effectiveness, recall and brand awareness?
3. Does a banner, which appears different in size from the surrounding ads, have, by default, great contrast and thus improved recall and awareness?
4. Do interactive banner ads have greater recall and awareness than static and/or animated?
5. Do banners that have content relevant to the viewer's task at-hand have improved recall and awareness?
6. Will adoption of the new IMU standards be site or content-relative?
7. Does online task-orientation influence consumer responsiveness to the type of ad format?
8. More specifically, does the use of humor, animation, or other effects influence consumer response to banner ads?
Online advertising is evolving in many ways. Determining and measuring effectiveness has thus far relied primarily on one of two approaches: 1) applying techniques used in traditional media to the online environment, or 2) attempting to develop 4 completely new model. Furthermore, measurements and pricing have primarily relied on click-through or results-oriented actions of consumers. However, as the medium evolves, many e-marketers are designing online advertising strategies designed to increase awareness, and develop brand image and awareness. These are more typical of advertising in the "traditional" realm. Therefore, it seems appropriate to begin analyzing and testing online ads by applying basic principles from this traditional venue to banner ads and other forms of online promotion.
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