How To Advertise: An Analysis of Contemporary Advertising (part 40)

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The Internet as a Medium 

(part B)

by

Charles Lamson

Web Portals

Many of the Web sites that attract the largest audiences each day are known as portals. A portal is a site that attempts to provide a broad array of content and services, so broad that (it is hoped) users spend a lot of time at the portal and very little time anywhere else. The reason that portals want to keep visitors for as long as possible is that doing so creates many opportunities for exposing visitors to banner ads or fee-based content, such as fantasy sports leagues. Thus, making money as a portal involves attracting lots of people and keeping them around so they can see advertising. You may be thinking that this revenue model seems similar to that of traditional media, and in fact, it is. The more people a portal attracts, the more it can charge for banner ads on popular pages. The big portals are some of the most famous names on the Web: AOL, MSN, and Yahoo!

As attractive as portals are, few people want to confine all of their Internet time to one site. Among other popular uses, people also search for information and like to find out what is new on the Web. To address these needs, Yahoo! developed a comprehensive directory. A directory is a branching list of categories of Web sites, often with reviews of the content of the sites. New users could try to locate specific information by drilling down through a directory to find relevant Web sites. At first, this proved very popular with Web users. But with more experience, people found that directories are not the best way to find Web sites. Directories are slow to add new sites because they must be discovered, evaluated, and classified by directory employees. This human element also makes it difficult for directories to be comprehensive because there are now millions of Web sites and thousands of new ones appear every day. Even big directory sites cannot hire enough people to stay abreast of so much information. From the user's perspective, using a directory for search can be tedious and frustrating, because it is not always clear where to look. In addition, some directories cluttered their listings by allowing advertisers to pay for prominent positions. This meant that users had no way of knowing whether a site with a high directory listing was useful or sponsored.

Google and Internet Search

Most people looking to find information on the Web now use a search engine. Search engines are Web sites that allow people to type a word or phrase into a text box and then quickly receive a listing of sites on a search-results page. There are several good reasons that many people prefer search engines to directories as a way to find Web content. For one thing they are fast: the top search engines return hundreds or even thousands of results in a few seconds. This speed is possible because engines do not actually search the entire Web after receiving a search request, but instead comb through a "snapshot" of the Web that is stored on computer servers. In addition, they are comprehensive and up to date, because search engines do not use people to find content. Instead, sophisticated computer programs periodically scan the Web for new information.

In the late 1990s, several companies competed to be the leading brand for searches. For now, there is a clear winner: Google. Moreover, the story of how Google used a superior search capability to become one of the fastest growing and most profitable companies in the world offers important lessons for advertising on the Internet.

Originally, the big portals offered such capabilities, but they were not very good. The portals were not really interested in search technologies because search sends people to other Web sites. Recall that portals make money by keeping users around, not directing them elsewhere. Like most other people, when Google's creators, Sergey Brin and Larry Page, first met at Stanford, they did not know how search could be profitable either. But at the same time, profits were not their main interest. Brin and Page were interested in helping users find information and believed they had a better system for doing so.

The two created an algorithm, eventually named Pagerank, that analyzed the links and relationships of Internet sites to come up with rankings. When a keyword is entered into a search, Google looks for Web sites that mention the word. This is no different from what many of their early competitors did. But in addition, Google analyzes Web site links in order to determine what sites are considered useful. Consider two sites that each use the term marketing five times. If a Web user used marketing as a search term. Google's search engine would locate both sites on its servers. But which site should be listed relatively high, where it will be viewed quickly, and which should be listed much lower? This is where Pagerank comes in. Sites that many other sites link to are assigned higher Pageranks and end up relatively high in search results. For example, if one of the two marketing sites is linked to by 20 Web sites while the other is linked to by just one, the first site will get a prominent listing. The algorithm also analyzes the quality of the links. Specifically, sites that are linked to by especially popular or authoritative Web sites get very high Pageranks. The net result of this is a fast search engine that returns remarkably useful search results.

Because the company created a better search engine, Google was able to attract growing numbers of Web users. However, throughout the 1990s it lacked a clear way to make money from the search mechanism. Like many companies at the time, Google sustained itself on venture capital. After the dot-com bust of the early 2000s, Brin and Page were strongly encouraged by Google investors to develop a revenue model. Their response was two advertising programs, AdWords and AdSense. It is difficult to overstate how successful these programs have been, because Google on Tuesday reported that its annual revenue hit $50 billion for the first time at the end of last year, as the Internet giant posted a quarterly profit of $2.89 billion. Google reported that its profit climbed and its annual revenue hit an unprecedented high last year as it evolved to stay in tune with people using smartphones and tablets (https://au.finance.yahoo.com/news/google-2012-revenue-hits-50-114318088.html).

AdWords

Do a search on Google and you will notice that search results are not the first thing you encounter on the results page. The first listings are in a light blue shaded area that is described as "Sponsored Links." The two sponsored links at the top and all of the sponsored links on the right are not search results, but rather paid listings.

Google's search result page is thus composed of two distinct areas: search results, which are pure (unaffected by sponsorship), and sponsored links. Googles sponsored links have three important characteristics. First, advertisers do not pay just for being seen, a common practice with banner ads. Instead, advertisers pay Google only when a search engine user clicks on the link and visits the sponsor's sites. This performance-based pay-per-click model has proven very attractive to advertisers. Second, the amount that an advertiser owes for each click-through is not actually set by Google. Instead it is determined in an auction, where companies can bid for keywords used in search, such as the term marketing. Higher bids generally lead to better listings, such as those located on the first search results page and located near the top of the page. These are locations where the search engine user is most likely to see them. Google adds one additional twist: the ranking of sponsored listings is not completely determined by how much a company bids on a keyword but on their ad's performance as well. Text ads that attract lots of clicks rise in the rankings, while links that are ignored fall. Third, Google benefits from the targeted nature of search. When people are hunting for a term like marketing, they often find that the sponsored links are as useful as the search results. Google estimates that almost 15 percent of searches result in click-throughs to sponsors' sites, an astonishingly high conversion rate in comparison with other media, interactive or traditional. Google's model clearly emphasizes performance.

AdSense

Google's other major ad program is AdSense. Web sites that use AdSense set aside a portion of pages for Google text ads. The ads themselves are selected by Google software and inserted automatically, without any input from the Web site. Google's AdSense software attempts to insert ads that are relevant to the site's content.

The revenue model for the AdSense program is very similar to AdWords in that advertisers pay Google only when Web users click the link and visit the sponsors' sites. But in this case, the Web site Motorcycle-USA also gets revenue. Because the site has given over some of its real estate to Google, it also makes money each time someone clicks an ad. For popular Web sites this can generate a great deal of revenue, and it is thus a powerful incentive for site owners to participate in the Google program.

Large Web sites generally do not use programs such as AdSense, preferring to sell ad space themselves. But AdSense has helped thousands of small to mid-sized sites and blogs develop steady revenue streams. Tiny, targeted, and text-based ads have revolutionized the Web.

Of course, to benefit from search-based ad programs, companies must have Web sites that convert visitors into customers. Businesses ranging from your local florist to global manufacturers are using the Internet to present multimedia content that includes bulletin boards, interesting or entertaining information, product data, and even games. Many of them, like E*Trade and Amazon.com, conduct all their commerce right on the Web. Users move from page to page and site to site depending on what they are looking for. In other words, the user is in control. The consumer chooses which screens to watch, which banners to click, and which to ignore.

That means marketers have to provide information that is useful and relevant. They have to keep updating it to get repeat visits. And a little entertainment with a few freebies tossed in does not hurt. Even Ragu (www.ragu.com) spaghetti sauce has a colorful site that offers Italian phrases, recipes, and occasionally a sweepstakes. Learning how to use this new medium challenges the creativity of the whole advertising community. And with the amount of daily updating that is required to keep Web sites current, the opportunity for career growth and specialization is great.

*SOURCE: CONTEMPORARY ADVERTISING 11TH ED., 2008, WILLIAM F. ARENS, MICHAEL F. WEIGOLD, CHRISTIAN ARENS, PGS. 545-548*

END

How To Advertise: An Analysis of Contemporary Advertising (part 39)

The Internet as a Medium 

(part A)

by

Charles Lamson

The Internet has come a long way from its simple roots. While some people assume it is very new, in fact the technological infrastructure of the Internet has been around for about 55 years.

The Internet is a global network of computers that communicate with one another through protocols, which are common rules for linking and sharing information. Although it still seems quite new, the Internet began in the early 1960s as a result of the Defense Department's Advanced Research Projects Agency (ARPA) plan to create a network that could survive a cold war attack ARPAnet had little commercial value; its primary users were governmental organizations and research universities, and the Internet of today is a far different medium. However ARPAnet was important because its structure, a distributed network, was a revolutionary system. Traditionally, media content has been delivered through centralized networks, in which a hub, such as a TV station, a newspaper publisher, or a cable company, distributes content to many receivers (see Exhibit 1). In a centralized system, if the hub is knocked out, receivers are left without information. But a distributed network is one characterized by many different hubs and links, which allows continuous communication even if some connections stop working.

Exhibit 1

In a centralized network, a hub distributes content to many receivers. A distributed network has many different hubs and links.

There are at least two other important distinctions between the Internet and traditional media. The first is the cost of time and/or space. In traditional media, time (on TV or radio) and space (in print) is a precious and limited resource. Network TV commercials average 30 seconds, which is a very small window, and that window is expensive, averaging in the hundreds of thousands of dollars. In contrast, space on the Internet is vast and inexpensive. Marketing sites generally can store as much information as a company wishes to share. For consumers who require lots of facts before they make a decision to buy, this is a real plus.

The second distinction between traditional media and the Internet concerns the relationship between those who create content and those who consume it. Traditional media historically were content creators while audiences were content consumers. As an example, NBC develops and schedules a show and, if you enjoy it, you sit down on a certain night at the same time each week to watch it. NBC is the creator and you are the consumer. But the Internet, from its beginnings, has been interactive, blurring the line between content providers and consumers. The Internet audience does not just consume online content, it interacts with it and helps to create both a content creator and consumer. In addition, the Internet makes it easy and cheap to promote. 

For example, in 2006 video diary entries were posted by a young woman, identified only as Lonelygirl15, at the popular Web site YouTube. The video showed the musings of a typical but expressive teen about her parents, boyfriend, and life in-general. Early viewers directed others to the shorts, and eventually Lonelygirl15's videos received more than 15 million cumulative views, equivalent to the number of people who watch a top 20 network TV show. Major media outlets such as Ad Age and the New York Times picked up on the phenomenon, eventually raising questions as to whether Lonelygirl15 was real or a clever fake. She was eventually revealed as the latter (the videos were created by two young filmmakers), but the fact that people were unable to tell for a long time makes one thing clear, there has never been a mass medium quite like this one.

Lonelygirl15's video diary entries were viewed more than 15 million times. Buzz about her YouTube contributions even reached the pages of the New York Times.

A Brief History of the Internet and the World Wide Web

In the early 1980s, the National Science Foundation expanded what had been ARPAnet by supporting a fast data network that linked information centers across the United States. At the same time, online content providers such as AOL and CompuServe were building an Internet audience by providing news information, and email services to subscribers. These services anticipated the World Wide Web by encouraging people to use their computers to find information and communicate with others. But AOL and Compuserve still retained the structure of a centralized network because most content either originated with or flowed through a centralized hub. If you were an AOL subscriber, you could not get access to content on Compuserve or Prodigy unless you subscribed to them as well.

Throughout the 1990s, the numbers of people using the Internet were doubling each year. Fueling the medium's growth were the increasing popularity and affordability of personal computers and the growing use of modems, which allowed computers to tap into the Internet via an ordinary phone line. The 1990s was also the decade in which people began going online to access a particular part of the Internet known as the World Wide Web (WWW). The Web, as its name implies, was a distributed network of content providers and users, communicating through a protocol known as HTML, or HyperText Markup Language. HTML allowed for the relatively easy creation of displays, called Web pages, that can be easily linked to all kinds of content, including other Web pages or sites (and later, photographs, movies, databases, sound files, and such). Viewing Web pages was made easy by the development of Web browsers, software that interpreted HTML (and later other code that permited greater interactivity, such as Sun's JAVA and Macromedia's Flash). Although Microsoft was not the first to develop a Web browser, chairman Bill Gates was relatively early to recognize the potential of the Web for his company, and Microsoft developed one of the most popular browsers in use today, Internet Explorer.

In 2018, the Internet is a global medium. People around the world use the Internet to read news, research products, stay in touch with friends, and find out what is new. They are increasingly doing this using high-speed broadband access rather than slower telephone lines, which makes it easy to watch videos, listen to audio programming, and download large files.

In a centralized system such as television it is relatively easy to find content: Sit down, turn the set on, and watch. If the show on one channel is boring, switch to another. Even with a couple of hundred channels, a viewer can quickly find out what is on. But the Web is the home of millions of destinations, available at all times of the day and on every day of the week. The experience of the Web is only partially determined by content creators. Just as important, it is created by its users, who are free to follow their own inclinations in finding entertainment and information.

*SOURCE: CONTEMPORARY ADVERTISING 11TH ED., 2008, WILLIAM F. ARENS, MICHAEL F. WEIGOLD, CHRISTIAN ARENS, PGS. 542-545*

END

How To Advertise: An Analysis of Contemporary Advertising (part 38)

Radio is also adaptable to moods. In the morning, people may want to hear the news, upbeat music, or interesting chatter, in the afternoon, they may want to unwind with classical or easy-listening music.

Who Uses Radio?

More national advertisers are discovering radio's reach and frequency potential. Certainly it has worked well for brands like Snapple. Snapple profited greatly from radio. Back when it was still a little company in Queens, New York, and strapped for money, Snapple Natural Beverages decided to use radio. It put its entire ad budget into a year-long schedule with a young, relatively unknown radio show host named Howard Stern. Snapple liked the way he delivered its spots as a live reader.

A few years later, Snapple began receiving letters and phone calls from people in the Midwest and West, where it did not even have distribution. It seems that nationally syndicated talk show host Rush Limbaugh, on a restricted-calorie diet, had been giving enthusiastic on-air endorsements for Snapple Diet Iced Tea. The firm moved quickly to sign him as a paid endorser. What it learned was the power of radio, especially when combined with a popular radio personality. This combination doubled Snapple's sales every year for five years, propelled it into national distribution, and turned it into a major national advertiser.

The Use of Radio in Integrated Marketing Communications (IMC)

While television tends to be a passive medium that people simply watch, radio actively involves people. They listen intently to their favorite personalities; they call in to make requests, participate in a contest, or contribute to a discussion; they use their ears and imaginations to fill in what they cannot see. Most people listen faithfully to two or three radio stations with different types of programming. This means that smart advertisers can use the medium to establish an immediate, intimate relationship with consumers and other stakeholders. That makes radio an ideal medium for integrated marketing communications.

With radio, national companies can tie in to a local market and target the specific demographic group they want to reach. Most important, radio enables advertisers to maintain strategic consistency and stretch their media dollars through imagery transfer. Research shows that when advertisers run a schedule on TV and then convert the audio portion to radio commercials, fully 75 percent of consumers replay the video in their minds when they hear the radio spot (2005). That extends the life and builds the impact of a TV campaign at greatly reduced cost. In an IMC campaign, where message consistency is a primary objective, this is a very important feature of radio.

Local retailers like the medium for the same reasons. Also, they can tailor it to their needs. It offers defined audiences; its recall characteristics are similar to TV's; and retailers can create an identity to do their own ads. Finally, since radio is so mobile, retailers can reach prospects just before they purchase. Hence, recent years have seen majoR spending increases by local grocery stores, car dealers, banks, and home-improvement, furniture, and apparel stores.

Radio Programming and Audiences

Radio stations plan their programming carefully to reach specific markets and to capture as many listeners as possible. The larger the audience, the more a station can charge for commercial time. Therefore, extensive planning and research go into radio programming and program changes.

Stations can use tried-and-true formats, subscribe to network or syndicated programming, or devise unique approaches. Programming choices are greatly influenced by whether a station is on the AM or FM band. FM has much better sound fidelity, fewer commercial interruptions, and more varied programming.

To counteract FM's inroads, many AM stations switched to programs that do not rely on sound quality, such as news, talk, and sports. Some stations are experimenting with all comedy, midday game shows with audience participation, or formats geared to specific regions. AM stations are also trying to win back music listeners by improving their sound quality and offering stereo broadcasting.

When buying radio time, advertisers usually buy the station's format, not its programs. Most stations adopt one of the dozen or so standard programming formats: contemporary hit radio (CHR-TOP 40), adult contemporary, country, rock, easy listening, news/talk, adult standards, classical, religious, and so on. Each format tends to appeal to specific demographic groups. The most popular format is country music, which is programmed, and appeals to a broad cross section of Americans from 25 to 54 years old.

Contemporary hit radio (CHR), always found on FM stations, appeals to teenagers and women under 30. It provides a constant flow of top 40 hits, usually with minimal intrusion by disc jockeys. Another popular format, adult contemporary (or "easy oldies"), is often advertised as "light rock, less talk." This format aims at the desirable target group of working women between 25 and 54. The news/talk, easy listening, and nostalgia formats tend to have high listenership among men and women over 35.

A major trend in radio today is the resurgence of radio networks, whixch offer services and programs that complement a station's local programming. Networks include the multiple "mini-networks" of ABC, CBS, Westwood One, and Unistar, and numerous syndicators offer programs from live rock concerts to public affairs discussions. As more stations carry these programs and more listeners tune in, national advertisers find them increasingly attractive.

*SOURCE: CONTEMPORARY ADVERTISING 11TH ED., 2008, WILLIAM F. ARENS, MICHAEL F. WEIGOLD, CHRISTIAN ARENS,PGS. 528-530*

END

How To Advertise: An Analysis of Contemporary Advertising (part 37)

The Pros and Cons of Magazine Advertising

Magazines offer a wide variety of benefits to advertisers. The truth antismoking campaign benefited greatly from the outstanding color reproduction available only from magazines. Further, by running in culture magazines such as Vibe and Vogue Teen, read by teens of different lifestyles and ages, the American Legacy Foundation could target its audience more precisely. Magazines offer a host of other features too: flexible design options, prestige, authority, believability, and long shelf life. Magazines may sit on a coffee table or shelf for months and be reread many times. People can read a magazine ad at their leisure; they can pore over the details of a photograph; and they can study carefully the information presented in the copy. This makes it an ideal medium for high-involvement think and feel products.

However, like every medium, magazines also have a number of drawbacks. They are expensive, especially for color ads. And since they typically come out only monthly, or weekly at best, it is difficult to build up reach and frequency quickly. For these reasons, many advertisers use magazines in combination with other media---such as newspapers.

Special Possibilities with Magazines

Media buyers need to be aware of the many creative possibilities magazines offer advertisers through various technical or mechanical features. These include bleed pages, cover positions, inserts and gatefolds, and special sizes, such as junior pages and island halves.

When the dark or colored background of the ad extends to the edge of the page, it is said to bleed off the page (see Figure 1). Most magazines offer bleed pages, but they charge 10 to 15 percent more for them. The advantages of bleeds include greater flexibility in expressing the advertising idea, a slightly larger printing area, and more dramatic impact.

Figure 1

Bleed.

If a company plans to advertise in a particular magazine consistently, it may seek a highly desirable cover position. Few publishers sell ads on the front cover, commonly called the first cover. They do sell the inside front, inside back, and outside back covers (the second, third, and fourth covers, respectively), usually, through multiple-insertion contracts at a substantial premium.

Exhibit 2

Junior unit.

A less expensive way to use magazine space is to place the ad in unusual places on the page or dramatically across spreads. A junior unit (see Exhibit 2) is a large ad (60 percent of the page) placed in the middle of a page and surrounded with editorial matter. Similar to junior units are island halves, surrounded by even more editorial matter. The island sometimes costs more than a regular half page, but because it dominates the page, many advertisers consider it worth the extra charge.

Sometimes, rather than buying a standard page, an advertiser uses an insert. The advertiser prints the ad on high-quality paper stock to add weight and drama to the message,and then ships the finished ads to the publisher for insertion into the magazine at a special price. Another option is multiple-page inserts. Calvin Klein once promoted its jeans in a 116-page insert in Vanity Fair. The insert reportedly cost more than $1 million, but the news reports about it in major daily newspapers gave the campaign enormous publicity value. Advertising inserts may be devoted exclusively to one company's product, or they may be sponsored by the magazine and have a combination of ads and special editorial content consistent with the magazine's focus.

Exhibit 3

Gatefold ad.

A gatefold is an insert whose paper is so wide that extreme left and right sides have to be folded into the center to match the size of the other pages. When the reader opens the magazine, the folded page swings out like a gate to present the ad. Not all magazines provide gatefolds, and they are always sold at a substantial premium.

Some advertisers create their own custom magazines. These look like regular magazines and are often produced by the same companies that publish traditional magazines. However, they are essentially magazine-length ads, which readers are expected to purchase at newsstands. Custom magazines have been published for Sony, General Motors, General Electric, and Ray-Ban sunglasses. In 2002, for example, Kraft Foods decided to expand its free, custom-published magazine, What's Cooking. The popularity of that publication even inspired a TV spin-off of the same name.

How Magazines Are Categorized

In the jargon of the trade, magazines are called books, and media buyers commonly categorize them by content, geography, and size.

Content

One of the most dramatic developments in publishing is the emergence of magazines with special content, which has given many books good prospects for long-term growth. The broadest classifications of content are consumer magazines, farm magazines, and business magazines. Each may be broken down into hundreds of categories.

• Consumer magazines, purchased for entertainment, information, or both, are edited for consumers who buy products for their own personal consumption: Time, Maxim, Glamour, Good Housekeeping. The Portfolio Review, "Outstanding Magazine Ads," shows the range of creativity in consumer magazine advertising.
• Farm publications are directed to farmers and their families or to companies that manufacture or sell agricultural equipment, supplies, and services: Farm Journal, Progressive Farmer, Prairie Farmer, Successful Farming.
• Business magazines, by far the largest category, target business readers. They include trade publications for retailers, wholesalers, and other distributors (Progressive Grocer, Packaging World); business and industrial magazines for businesspeople involved in manufacturing and services (Electric Design, American Banker); and professional journals for lawyers, physicians, architects, and other professionals (Archives of Opthalmology).

Geography

A magazine may be classified as local, regional, or national. Today, most major U.S. cities have a local city magazine: San Diego Magazine, New York, Los Angeles, Chicago, Palm Springs Life. Their readership is usually upscale business and professional people interested in local arts, fashion, and business.

Regional publications are targeted to a specific area of the country, such as the West or the South: Sunset, Southern Living. National magazines sometimes provide special market runs for specific geographic regions. Time, Newsweek, Woman's Day, and Sports Illustrated allow advertisers to buy a single major market.

National magazines range from those with enormous circulations, such as TV Guide and AARP The Magazine to small lesser known national magazines, such as Nature and Volleyball. 

*SOURCE: CONTEMPORARY ADVERTISING 11TH ED., 2008, WILLIAM F. ARENS, MICHAEL F. WEIGOLD, CHRISTIAN ARENS, PGS. 481-485*

END