New Media Mule

An introduction to contextual advertising

2005-04-21T06:43:00.000-07:00

So what is contextual advertising?

Contextual advertising works from software users download to their PC. Users are encouraged to download the software by a combination of moneyoff coupons, viral applications such as emoticons, free software and user-only special offers. The added benefit being that users are then served ads relating to the sites they visit or search while they surf online.

For example, if you have downloaded the ‘adware,’ as it is commonly referred, and type a search with the keyword ‘loan,’ you will be served with a site from a relevant paying ‘loan’ advertiser before you are served with the results from your online search.

Relying on keywords and URL’s, contextual advertising recognises user’s immediate interests while they surf and search online, delivering contextually relevant offers.

Unlike other ‘new’ forms of online advertising, like sub-sites or the lesser effective subliminals (small sponsorship strips which ‘float’ across the top of the screen), there are no ‘host’ sites involved in contextual advertising, so the cost to the advertiser, especially when return on investment is analysed, remains relatively low.

Cost Per Click rates for contextual campaigns can be as low as 18p per click on certain keywords, which are considerably lower than similar keyword campaigns available through Espotting or Overture.

The UK market for adware is currently over a million users, with take up growing on average by 20,000 new users a month. With the continued increase in the number of internet users, combined with more experienced and sophisticated online users, the adware medium has the potential to grow considerably in the future.

But despite the obvious success of the medium, contextual advertising is failing to register with many media planning agencies. But, why?

Firstly, it is important to point out the difference between ‘adware’ and ‘spyware,’ a clarification many media buyers seem reluctant, or unable, to make. Clarification is necessary to avoid writing off an advertising medium that puts advertisers in front of users at the exact moment they are looking for related products and services.

Although they are both downloaded software the similarities between adware and spyware end there.

Adware subscribers must accept an End User Licence Agreement before completing the download and the software can be removed from a computer at any time. Spyware, on the other hand, is installed without any explanation or warning, stores personal information and remains on the user's system when attempts are made to remove it.

While many of the medium’s detractors have written off adware as nothing more than spyware, fear of association with what ‘traditional’ media might term ‘subversive’ online marketing, is also responsible for the reluctance of some in the industry to embrace the medium.

But with conversion rates as high as 15% for many campaigns, reluctance could prove damaging. Companies such as FirstPlus, Bupa, MoreThan and Yes Car Credit have already embraced adware because they can see tangible results and increased click-through rates from their investment.

But there are other advantages to contextual advertising, which are as equally beneficial as high conversion rates.

If you consider that the Holy Grail for many online campaigns is to target young, intelligent and affluent consumers, the average subscribers of contextual adware are young, affluent professionals, making the medium an attractive proposition for anyone hoping to target this demographic online.

Also, young ABC1 adware subscribers have no qualms about buying online. They have the money and the inclination to buy online, making them one of the most enviable demographics to target, especially when you take into account the fact that Contextual campaigns put people looking for certain goods and services in direct contact with paid for advertising.

As long as search continues to remain the most popular way we navigate the web demand for contextual campaigns – from users and advertisers - will undoubtedly continue to grow.

Instead of being viewed as an intrusive form of ‘spyware,’ corrupting hard-drives and becoming impossible to remove, adware, which anticipates what you are looking for as you search the internet could become as indispensable to web savvy internet users as Google currently is. Before that can take place, agencies and advertisers must embrace the medium and become aware of adware’s unique potential.

Travel Websites and Community Building

2005-03-22T14:27:00.000-08:00

The recent announcement that Ebookers are trying to entice their 45,000 offline customers online through the creation of personalised web space – http://www.nma.co.uk/Document.aspx?did=ee6c65ed-9347-41ca-97a7-2147e41e9d7d
- giving each of their prospective offline customers the opportunity to gain their own personalized section on the site - demonstrates two things.

Firstly, the growing and fundamental importance of the web to the travel industry (ebookers run a number of offline operations, but are increasingly switching activity online), and secondly, which is perhaps more interesting, the importance of building communities online.

Until recently the main concern for e-commerce sites has been in marketing and increasing their traffic. And quite right to do this they were too, leaving community building to niche content led websites like icircle.com (women), 50connect.co.uk (over-45s) and FHM.com (men). Sites that do not provide a service, but are either viewed as a source of entertainment in their own right, like FHM.com, or as a conduit to the wider world of what the web has to offer, like 50Connect, live or die by their communities.

Visitors to a site who continue to come back again and again, sign-up for newsletters and contribute to message forums or chat rooms, are the lifeblood of niche websites – they not only prove to potential advertisers (if you aren’t selling any products yourself advertising is all you have to rely on in terms of revenue) that you have a core userbase within a certain online niche, but they also act as a way of attracting more and more users from that niche to become part of your community. Everyone likes to feel as though they are part of a community, whether on or off-line and once you have an established community, they are extremely effective at increasing traffic to a site all on their own.

E-commerce sites are beginning to catch on to the idea that if you build a successful community, with regular visitors, you are far more likely to be able to sell your products to them. Travel sites in particular, are well placed to build communities online. Holidays and travel are important to many people. Before booking a holiday, we all seek advice - Where to go? What to see? Will there be enough to keep the kid’s happy? - A trusting community, where users can seek impartial travel advice, can play an immense part in influencing where we holiday. What could be better than if the community where you gained the advice also sells plane tickets or holidays to that destination. Impartiality is key here, which is why a community – contributed to by regular online users with no predisposed ‘allegiance’ to any particular site - is key to the success.

The second factor making travel sites better equipped than many other websites is concerned with personalization. E-commerece travel websites could create personal pages for their members. Users could have their own ‘favourites’ displayed on their own pages, for example – flight centre, European City Breaks, hotels, late deals - so that the user is regularly kept up to date with the latest deals available in the areas that interest them most.

But they could also do a whole lot more. Similar to AOL’s journal package, which included an online photo album and diary so that travelers can share their experiences with family and friends, travel sites could add this type of package to their own personalized packages to its users, encouraging more and more interaction with their site.

For example, for people on gap-years, or anyone on an extended holiday, the personal pages could act as a Homepage for family and friends wanting to keep up to date with their developments. E-commerce sites could include a ‘How They Did It’ link on these personal pages showing the itinerary and pricing for the flights/hotels/holidays that the person they know booked. (ideally, for example, the link should read – do Joe Blogg’s travel itinerary for £200 less) This would combine the personal element of a private homepage with the wider commercial interests and aims of a travel site.

In addition to the ‘traditional’ methods used to build communities online – Special Offers, newsletters, message forums, competitions and chat rooms - increased bandwidth and new self publishing technology packages, the potential exists for a large travel website to build a strong community online.

Downloads + beating piracy

2005-03-16T11:20:00.000-08:00

The increasing popularity of full-track downloads and ring-back tones will help push mobile music revenues to more than $9.3 billion by 2009, according to a new report from Juniper Research.

While the downloads of mobile ringtones and realtones will comprise the bulk of revenues ($4.8 billion), the market for full-track downloads is expected to increase from just $20 million in 2004 to nearly $1.8 billion in 2009, while ring-back tones - already generating substantial revenues in Asia - should be worth $2.7 billion worldwide by the end of the decade.

How artists conventionally make money from their recordings - through CD, Mini-disc, tape or record purchasing - is likely to continue to change. Some artists, such as George Michael, have already said they will only release future material electronically, via downloads, while others, such as Moby, have spent considerable time and effort investing in their websites.

Any artist worth their salt should embrace the web - offering more and more incentives to encourage people to visit their sites.

But artists and record labels are going to have to get creative to encourage visitors to their sites as the battle against online piracy continues.

Exclusive interviews, gigs, footage, information on impromtu gigs and access to a 'free' music back catalogue could be expanded upon (why not throw a website member's only gig/tour? to show the importance of websites to recording artists?) to beat piracy and claw back some revenue from their material.

One of the more popular pirate download sites - Allofmp3.com - which claims to be legal, having licensed its content from the Russian Organisation charges as little as 5c per download. It is cheaper than most standard download sites because it claims a loophole in Russian law means it doesn't have to pay artists and labels.

Just last week the DA for Moscow’s South-West district, denied IPFI’s (the international version of the Recording Industry Association of America) request to open a criminal case against Allofmp3.com because there is no specific law to prohibit digital distribution over the internet. For downloading to succeed on a worldwide scale, global uniformity of piracy laws will be required.

Links - www.allofmp3.com

Lads Mags Need To 'Spread' Online

2005-03-10T01:40:00.000-08:00

Lads Mags Need To Open Up – Tom Loxley’s column in Press Gazette recently - http://www.pressgazette.co.uk/?t=article&l=bound_bagged – mentioned how lad’s mags are covering up their issues in bags, complete with numerous freebies more often than they don’t in recent months.

The cost of this is at least £150,000 per issue according to Loxley, ex-Editor in Chief of Maxim.
“Where once a monthly might bung a bribe into a bag two or maybe three issues in an ABC period, now they are doing it twice as often. And at huge expense. Because by the time you have paid for the content, the gift, the bag, the finishing and the transport, a medium-sized magazine with a largeish print run will be spending more than £150,000 on each promotion. Considering the frequency with which publishers are now using bags, this will murder profits and everyone knows what that means for editorial budgets and jobs.”

Lad’s mags need to turn the growth of the internet to their advantage.

Why spend £150,000 each month sending out a free DVD when you could create an entire website full of downloads, gambling and games for free?

FHM.com is probably the market leader online, as well as off.

They recently signed a £250,000 deal promoting Xbox online, indicating the medium’s ability to pull in the big names.

But more could be done with lad’s mags. Most FHM readers are computer literate with experience of buying online, all that is needed is some interactive content to pull the punters in. Currently, the majority of ‘lads’ websites are a combination of jokes and topless women, both of which even the most unsophisticated web user could find elsewhere, and probably of a better quality.

The phrase Sex sells is probably even more true when it comes to men’s magazines – what publishers need to do is go all out and create, (in partnership with an adult entertainment company and using a new micro-site domain to avoid denigrating their existing brand name) a sex site. Publishers might not like the idea of getting into Desmond Express territory - but as he can testify it 'pays the bills.'

Use the magazine as a carrot – giving away a Free Entry Password in each month’s issue and the mass appeal will probably out strip anything you could possibly achieve with a free giveaway CD – even if it had a recording of Britney Spear's during orgasm on it!

By asking visitors to register their details when gaining their free password Lad’s Mags would automatically increase their online membership, increasing their appeal to potential advertisers looking to target the demographic.

Despite big deals like FHM.com’s Xbox, you can’t help get the feeling that many publishers aren’t taking the online version of their magazines as seriously as they should.

The potential with increased bandwidth for video streaming anything from the latest goals to the daftest stunts and everything in between is enormous for this sector online.

All that the well established offline names – Maxim, FHM.com, Loaded – have to do is give men a reason to get online and they will undoubtedly prove as loyal a userbase as the current ‘hard core’ who continue to read the magazines.

Price Inflation Just Doesn't Add Up

2005-03-01T14:40:00.000-08:00

Ian Quinn's article in Media Week a few weeks ago - http://www.mediaweek.co.uk/articles/folder2005/Feb05/08/internet%20inflation - arguing about the inflated price of online advertising raised some very interesting points. In it Quinn writes -

'The big problem – and by no means a new one – is that an incredible 83% of advertising spend online is being directed at the top-10 online media owners.'

The fact that the top 10 media owners are making most of the money shows how and why companies like Microsoft make money from the web. The reason for this is that agencies concentrate their online ad spend on larger household name websites. Inevitably sites faced with a continued demand for their inventory will begin to thinks about putting up their prices, leading to price inflation.

Too many agencies seem to concentrate their online ad-spend on larger sites, failing to target smaller niche sites, of which there a number of successful examples. Handbag.com and FHM.com are just 2 examples of good niche sites offering advertisers good Return On Investment (ROI).

As the internet grows as a medium with advertisers, it will become increasingly likely that any Planner/Buyer worth his salt will take into account niche sites when planning a campaign. As it stands at the moment - 83% of all revenue going to the top 10 sites, just doesn't really add up.

Will search engine optimisation destroy the way we use the web?

2005-02-28T00:09:00.000-08:00

Google and its other competitors have become the online version of the yellow pages – if you want to look for something - a plumber, a cleaner a candlestick maker – you go to google and the majority of the time there it is in front of you.

The only problem is that with online search the plumber could also have paid to place his add under ‘carpenter,’ ‘builder’ and ‘washer,’ too – to increase the likelihood of someone visiting his site and using his services. This has the effect that a real builder, who hasn’t coughed up as much cash, will be placed lower down the ranking.

From an advertisers point of view, there’s no doubt that search is a very effective way of advertising your site, after all, pay-per-click advertising is extremely cost effective in that you only pay for what you get. The fact that advertising search giant espotting announced recently that they improved their revenue by 700% between 2003-2004 is testament to this.

But what about the consumer? In fairness to most search engines you can still find what you are looking for relatively easily via a search engine, but in the future, as competition increases (note the new arrival of MSN Search) and profit margins begin to squeeze, and search engine’s continue to look for massive growth, how tempting will it be for the likes of Google and Overture to increase the number of ad-words they include per-search?

In fact Google’s latest launch in the U.S, AutoLink, is doing just that, or at least has the potential to be used in this way - http://news.bbc.co.uk/2/hi/technology/4287539.stm

The customer is always right, but as ‘traditional’ forms of online advertising like pop-ups diminish in the wake of increased unpopularity, it becomes increasingly more the case of,
duping consumers into clicking on links they do not know is advertising.

Is Paid For Content The Only Way?

2005-02-17T13:01:00.000-08:00

The fact that websites have managed to persuade users to stump up the cash for online content is proof, if any were needed, that the paid for format can, and does, work online. In fact, it works very well. Jupiter Research predicts that UK consumers will be spending £1billion a year on online content by 2006.

Many online publishers are currently faced with a dilemma – to charge or not to charge. Economics may automatically encourage publishers to charge, but is that really feasible?

Not only does switching to subscription charging require a large marketing budget in order to persuade existing users and encourage new ones to subscribe to the paid-for format, but the added cost of setting up and then billing, whether using micro-payments or not, each individual subscriber, can mean that the initial benefits of charging for content are considerably diminished.

Pushing online publishers into the paid for content format is the fear that if they do not begin to charge they will not be able to compete effectively. But there are ways for sites to compete without charging for their content.

The fact that online advertising topped £500m in 2004, and the wide recognition that the medium is now a serious challenger to radio in terms of ad spend, is positive news for those providing free content.

If the current trend of charging for content continues, opportunities will arise for sites providing free content to compete with their subscription based rivals because sites that ring-fence their content with subscription charges will inevitably lose some of their userbase.

While e-commerce has undoubtedly become the top reason for advertising online, many brands, most recently Heinz to coincide with the launch of their new soup range, are increasingly using the internet as a way of increasing brand awareness. Any website which loses as much as 80% of their visitors virtually overnight with the introduction of subscription charges will do little to endear themselves to brand managers hoping to use the internet as a medium for boosting brand awareness.

Websites which continue to provide free content will have to step into the gap left by their subscription based rivals and cater to the needs of advertisers looking to maximise their brand online.

Websites providing free content must attract those users who resent paying for content online, of which there will be many, and then when their user levels are high enough, aggressively highlight the benefits of the free content medium to advertisers.

Of course, if the content on a site has about as much appeal as a dirty weekend away with Jeremy Beadle, no amount of marketing will make a site competitive.

In the UK we are currently protected from the extremes of paid for content by the BBC. In so long as the BBC continues to provide an exceptional online service free from advertising and subscription charges, on topics as diverse as news, family history, finance and lifestyle, there is a limit to how successful a large all-encompassing paid for content operation can be.

Currently the paid for format only works for a number of well branded sites that are usually supported by a strong off-line presence. The Wall Street Journal and the Financial Times are just two such subscription sites that fall into this mould. Making the switch without a significant offline ‘carrot’ to tempt users into subscribing can be extremely difficult.

However, with the BBC’s charter up for renewal in 2006 and the analysis of the Corporation’s activities outside the realm of public service broadcasting that this brings, the future may not be as clear cut when it comes to paid for content.

If the BBC is compelled to curb some of its online operations, as is becoming increasingly likely, and UK consumers continue to adapt to the subscription format, there is a very real danger of a ‘ghetto effect’ taking place online as a result of charging for content, with certain parts of the web becoming no-go areas, restricted only to fully subscribed members.

What none of us want for the future; publisher, advertiser and user, is for the web to become an online version of Satellite television, where everyone with a dish can receive it, but unless you cough up and subscribe to a monthly package it isn’t really worth it.