A bigger dilemma
Beyond drawing in short-term revenues, some Web publishers are hoping new formats will change the way online advertising is measured and valued by advertisers.Although traditional ad prices are based on measurements such as demographics and number of subscribers, Web sites are typically paid by the number of times readers "click" on an ad. Clicks are supposed to offer advertisers a solid measure of response, but the standard has progressively offered small returns to publishers. Average click-through rates on the Net have fallen to an estimated 0.44 percent recently, according to Nielsen/NetRatings, down from a high of 2.12 percent in 1996.
Online ad spending has flattened, too. Recent figures from the Interactive Advertising Bureau reflect slowing percentage growth in the online ad market after years of unprecedented development. Year over year, revenues have typically jumped by triple digits; for example, from 1998 to 1999, annual sales ballooned by 141 percent. Revenues now are steadying around US$2 billion a quarter, or $8 billion annually. For 2000, US online ad sales grew by just 78 percent from 1999 to $8.2 billion.
Some of the new formats are generating much bigger click-through numbers. Pop-up ads, for example, which launch windows on top of Web pages, on average generate 5 percent to 6 percent click-through rates, said John Bohan, chief executive of online ad network L90. Pop-unders of the sort used by the NYTimes.com generate 2 percent to 3 percent click-throughs, he added.
Just as with banners, however, analysts predicted those numbers will drop as the novelty factor wears off.
"Any publisher that promotes these ads based on click-through rates is digging a grave they can't get out of," said Marissa Gluck, online advertising analyst at Jupiter Media Metrix. "It's the same problem with banners that we've seen for the last five years: With greater ubiquity, there's always a decrease of response. And click rate isn't the best metric of success."
Many publishers and marketers are eager to break away from clicks by proving the Web is an effective platform for name recognition and branding, or in other words, the kind of marketing campaigns that feed television.
For example, United Virtualities created a technology called Shoshkeles that allows free-flowing images to traipse across a Web page, independent of a banner or any standard format without requiring a plug-in. Boston.com ran a Shoshkeles promoting subscriptions for the Boston Globe, in which a newspaper truck "drove" across its Web page tossing papers. Terra Lycos and Monster.com also experimented with the format. And Variety.com launched a campaign Monday promoting the upcoming movie "Artificial Intelligence" with the song and image from its trailers floating over the home page.
"These ads are kind of free form," Iconocast's Tchong said. "You're going to see a heck of lot more ads that float over the screen as par for the course--it's just something that we'll have to get used to."
Demand for Shoshkeles, which only run for 8 seconds, is rising "because they work," said Debra Brown, CEO of United Virtualities. "They clearly engage and involve the user; people are even trying to refresh and reload the page in order to see them again."
The ads, which can cost between $25 and $75 per thousand impressions, are judged based more on their branding effect than a click through, Brown said. (Traditional banners can run as low as $1 per thousand impressions, which are the number of times an ad appears on a page).
VideoBanner and Eye Wonder have introduced ad units that can feature full-length movie clips or other video without a plug-in. Philadelphia-based Pointroll created an expanding banner that covers the Web page when consumers roll their cursor over information contained in the ad.
In addition, Yahoo recently ran a one-day campaign for Ford Motor that virtually hijacked the portal's home page when viewers clicked on the animated ad. To create the effect of a virtual earthquake, the campaign used dynamic HTML technology, which combines style sheets, scripts and HTML formatting commands to make Web pages more interactive.
Other marketers are going so far as to design digital games in homage to their products. Advergaming is attracting the likes of Nike, Ford, Nickelodeon and Paramount Pictures. 20th Century Fox even created a digital scavenger hunt to promote its upcoming film "Planet of the Apes."
Pop-up advertisements are everywhere, too. Similar to many other unconventional methods, pop-ups are designed so that consumers can't avoid them. Hotmail, MSN, Weather.com, NYTimes.com are just a few of the sites running the format continuously. A pop-up known as the Superstitial, or a commercial quality ad with audio and video, has attracted more than 200 traditional advertisers, including Taco Bell and McDonalds.
