• by January 28, 2003

Online publishers like to tell potential clients that Internet ads should be part of an overall advertising mix. Until recently, however, publishers have not had much useful information available to back up their claim.

That began to change earlier this year, when the Interactive Advertising Bureau (IAB) released results of its joint research project with the Advertising Research Foundation. Reallocating a portion of the advertiser’s budget from print or broadcast to online, the study concluded, could increase brand “impact” by up to 20%. The highest branding levels in the study were achieved with a full multimedia campaign, which can cost less than using traditional advertising alone.

Building upon that, IAB and ARF are now well into Phase 2 of their research. This part of the project involves more than 20 publishers and a half-dozen globally recognized brands such as McDonald’s, Colgate Palmolive, and General Mills.

“The results of this research will be marked by the industry as the major turning point in the way in which brand marketers construct their media plans, and not just for online,” said Greg Stuart, president and CEO of the IAB. The IAB and its members, of course, want to persuade more advertisers to look to online as an effective and efficient medium. The study, once finished, will doubtless show that online is a great tool. Otherwise, the results will never see the light of day.

Getting advertisers to move online is only half the battle. Web surfers must be encouraged to pay attention to ads, and that’s something they appear to be doing less and less frequently. Annoying pop-up ads have driven thousands of Earthlink customers to download a free ad zapper, which works pretty well. Pop-ups, the IAB notes, account for less than 5% of online ads, but are considered among the most effective, in part because they are so intrusive that they are hard to ignore.

As the new kid on the block, the Internet has suffered greatly from the ad recession. Spending on Web ads slumped 12% in 2001, and dropped another 12% during the first quarter of 2002 before showing some signs of recovery during the summer months. At the same time, the number of people cruising the Web on a regular basis grew by about one third, to more than 100 million.

The continued growth in Web traffic bodes well for advertisers, who — one way or another — will figure out how to reach those people. And the maturing of Internet advertising, coupled with solid research on its effectiveness, should continue to make it a medium of choice for advertisers looking to energize.

Online
Online’s New Metric Dayparts
by Masha Geller, masha@mediapost.com

It’s official. Dayparts are a legitimate online targeting practice. Why? AOL is finally on board. The latest from the beleaguered online giant is that they’re going to start selling ads by matching key programming areas on both its dial-up and high-speed services to specific time periods. Just like in broadcast. As Michael Barrett, senior VP of national sales at AOL, said, advertisers would buy specific spots that would air on a program at a specific time. "It's a reach and frequency model vs. the [ad] impression model." AOL's dayparts break down to 6 a.m. to noon and noon to 6 p.m. It will also match programming to prime-time hours, 6 p.m. to 11 p.m. Reportedly, the company also plans a late-night component with AOL Music programming from 11 p.m. to 6 a.m. All of this can be traced to a groundbreaking study done by the Online Publishers Association in January, which investigated the overall media usage of at-work users and revealed that this group now spends more time on the web (34% of total media minutes) on a typical Monday-Friday than they spend watching TV (30%). Even among non-work users, the amount of time spent on the Internet during the workweek is second only to TV. Not surprisingly, the study confirmed that daytime is prime time for the Internet. While Internet usage is notably strong throughout the day in comparison to other media, the Internet completely dominates daytime media use in the same way that television dominates evenings. Another recent report, from Nielsen//Net Ratings, also confirmed that the at-work Internet audience continues to grow. The researchers said that there were 46 million Americans on the Web at work in August, 17% more than a year ago and the highest number since Nielsen//Net Ratings began tracking it in January 2000. The at-work Internet usage begins around 8 a.m., peaks between 10 a.m. and noon with overall usage pegged at 86%, and winds down by about 4 p.m. The peak at-home Internet use is 8 p.m. Charles Buchwalter, Nielsen//Net Ratings VP of client analytics, said that daypart analysis is going to become more prevalent among advertisers and buyers, a phenomenon that is dominant in TV. Incidentally, Yahoo! has sold by daypart across the network and on its home page for more than a year. MSN currently does not, but reportedly "plans to address the issue."

Streaming Media
Report: Streaming Media East
by Ken Liebeskind, kenl@mediapost.com

Crowds were sparse at Streaming Media East, the three-day trade show in New York City, with attendees saying it was half the size of last year's show. The small crowd reflected the state of streaming, which is struggling to get off the ground. “The technology has outpaced advertiser desire to push the envelope,” said Nick Johnson, CNN Interactive's vice president of business development. “The challenging environment stifles innovation.”

Johnson spoke of CNN's partnership with RealNetworks, which is generating revenue by providing streaming content for Real's subscription service, but “the advertising opportunities are not that robust.” Streaming is struggling partly because of the slow economy and partly because of its own problems, such as slow broadband penetration, which was discussed at the show. Another problem is demonstrating the value of streaming advertising when the medium is still unable to generate the kind of data that convinces advertisers to devote more of their budgets to it. Matt Feinberg, senior vice president of radio at Zenith Media, says he can buy streaming impressions just as he can buy other media units, so streaming has become readily buyable. But that doesn't mean advertisers want it. Among the issues discussed was the rise in the streaming of TV commercials that has been made possible by the resolution of rights issues. With that hurdle cleared away, streaming video is surpassing streaming audio, according to Matt Wasserlauf, vice president of sales at The FeedRoom. The FeedRoom doesn't just stream TV commercials, it streams infomercials, running one for a pharmaceutical client next to related health content from NBC News. “Now you can do longer interactive broadcasts,” he says, suggesting they are a new form of streaming advertising. Another issue discussed was the use of third-party providers. Some sites apparently refused to use them initially, but now their use is growing, with Unicast Superstitials and EyeWonder as the leading players.

After some prodding, session participants pegged the CPMs being charged for streaming in the range of $7 to $40. Radio CPMs are the lowest, with streaming ads targeted to B2B sites the highest. There is a $5 surcharge for third-party ads.

Some creative executions on display included a 15-second Warner Bros. ad at atomfilms.com that generated a 10% to 25% click-through and a BMW spot, produced by helloNetwork, that starts as a banner and can be clicked on to take up about 70% of a page.

ITV
Malone Stocks Up on Down Stocks
by Lee Hall, lee@deadlinemedia.net

OK, Mr. Malone, let’s see what you can do with this interactive TV thing. Liberty Media Corp., controlled by cable legend John Malone, has been absorbing downtrodden interactive software companies of late, most recently picking up control of ACTV Inc. and Wink Communications, both of which supply technology for interactive television.

The total purchase price for the two companies is somewhere in the neighborhood of $200 million, plus or minus a few million depending on when the deal closes — a drop in the bucket, really, for cash-rich Liberty.

Through Liberty and its subsidiaries, Mr. Malone is attempting to drive public acceptance of interactive services much as he catalyzed expansion of the cable industry in the 1970s and 1980s. Malone built Tele-Communications Inc. into the nation’s biggest cable operator before selling out to AT&T a few years back. With billions in hand, he has assembled a stable of interactive and programming assets second to none. Liberty owns 49% of Discover Communications (Discovery Channel, TLC, Animal Planet), 42% of the QVC shopping channel, and 100% of movie purveyor Starz Encore Group, as well as smaller but valuable stakes in AOL Time Warner, News Corp., and USA Interactive. The company is also expanding rapidly in Europe.

As wise as Malone is rightfully credited with being, the Gordian knot that is interactive television has so far eluded him — and just about everyone else, we might add. He was able to get a great deal on both acquisitions because both came dirt cheap. Sure, the tech wreck of recent months has beaten down shares of just about every technology company. But a closer look reveals that share prices of both Wink and ACTV have been declining for years, save the brief euphoric rise of 1999–2000.

OpenTV, the subsidiary through which Liberty acquired Wink and ACTV, says that its technology will now be available in 35 million homes. What remains to be seen is whether Liberty can figure out a way to make money with them. Watch out, TiVo! Sony Corp. quietly announced last month that it is toying with the idea of adding a digital video recorder function to its popular PlayStation 2 game platform. Sony has said all along that it wanted to develop PlayStation into a home entertainment portal. The company says it will try out the idea first in Japan before deciding whether to market it in the U.S.

One issue Sony must confront is the American public’s growing displeasure with rising entertainment costs. TiVo has experienced much difficulty selling the public on paying an additional monthly fee on top of cable or satellite charges just to be able to stick 30 hours of programming on a hard drive. One suggested solution: Sony buys TiVo and changes it into a free service. Stay tuned.