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www.gregstuart.com 1
In-Depth Introduction to
Internet Advertising
By Greg Stuart Co-author of What Sticks & former
CEO of Interactive Advertising Bureau (see full bio on last slide)
Prepared July 2008Prepared July 2008
www.gregstuart.com 2
Goal of This Document
Topline the major elements of Online Media and Online Advertising: Use as a guide for areas to potentially dig into
deeper where required/interested Provide a glossary of key definitions, issues,
etc.
www.gregstuart.com 3
Agenda
Digital Media in Context What is the Internet? What are the Online Media types?
Online Advertising Overview What are the Channels? Targeting Technologies?
Does Online Advertising Work? The Research all shows it really works
Online Research and Measurement Measurement is a tangled mess and there are many issues
Positioning Online Advertising It is additive to other media, Frequency, Audience, Engagement
Various Internet Advertising Trends
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Digital Media in Context
What is the Net, where is Digital going, and what does Media mean?
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Digital Evolution of Media
The future is a number of Digital and Networked media
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What is the Internet?
The Internet is a worldwide, publicly accessible series of interconnected computer networks that transmit data by packet switching using the standard Internet Protocol (IP).
It is a "network of networks" that consists of millions of smaller domestic, academic, business, and government networks, which together carry various information and services, such as electronic mail, online chat, file transfer, and the interlinked web pages and other resources of the World Wide Web (WWW).
Source: Wikipedia
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Online Media Categories
Portals Yahoo, AOL, MSN
Content NY Times.com, CNN.com,
Forbes.com, CBS.com Search Engines
Google, Yahoo Search, Dogpile
Social Media (Or User Generated Content – UCG) Facebook, MySpace
Video YouTube, Veoh
Blogs Federated Media,
Email & Newsletters eCommerce
Amazon, BestBuy.com RSS (real simple syndication);
aka Feeds Feedburner, Google Reader
Ad Networks Tacoda (AOL), Blue Lithium
(Yahoo), Tremor Media, Advertising.com
Generally accepted types of Online Media:
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The Vision for the role of Digital Media
MonologueOne wayMass communicationStaticNo interaction among customersShotgun approachHard to identify customersHard to manage customers
BEFORE AFTER
DialogueOne-to-one marketingReal-timeDynamicCollaborativeSegmentedRich customer interactionRich customer data
Customer CustomersSupplierSupplier Internet
www.gregstuart.com 9
If you had to live on a deserted island and couldonly take one of the following with you, which
would you take?
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Types of Online Advertising
It’s just not one media. It’s the Network and there are many options
www.gregstuart.com 11
Recent Major News About Online Advertising
“Online is getting to the point where it may be more important than the 30-second TV spot.” Joel Ewanick
VP Marketing Hyundai Motor America
“Online is getting to the point where it may be more important than the 30-second TV spot.” Joel Ewanick
VP Marketing Hyundai Motor America
11
“The country’s third-largest advertiser (General Motors) is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next 3 years.” Advertising Age March 17, 2008
“The country’s third-largest advertiser (General Motors) is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next 3 years.” Advertising Age March 17, 2008
Even ad-spending giant P&G is considering cutting its overall ad budget by as much as 10% this year and aggressively moving ad dollars to the Web. WSJ May 12, 2008
Even ad-spending giant P&G is considering cutting its overall ad budget by as much as 10% this year and aggressively moving ad dollars to the Web. WSJ May 12, 2008
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Types of Online AdvertisingTypes
DisplaySEM Search Engine Marketing *SEO Search Engine Optimization *Email Marketing NewslettersVideoViral Marketing (Word of Mouth) *ClassifiedsAffiliate Marketing *Desktop or Software Product Placement Pop Ups or Pop UndersLanding PagesLead Gen
* Not really sold by Publishers
TechnologiesBehavior TargetingContextual TargetingIP or Geo TargetingRich MediaRich Internet Applications (AJAX)Keyword Targeting / AdwordsVideo ScanningSocial Media Targeting / Influencers
Display 24%
Search 41%
Classifieds 16%
Other 9% Rich 10%
Display Search Classifieds Other Rich / Video
Est. Spending By CategoryEst. Spending By Category
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More Types of Online Media
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Online Ad Pricing Dynamics
CPM – Cost per (M) Impressions
CPC – Cost per Click
CPA – Cost per Acquisition (action)
CPL – Cost per Lead
Hybrid
Online advertising overall is reportedly around 45% CPM and 45% Performance prices (CPC or CPA/CPL) and the rest is hybrid or combination of above.
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All IAB Ad UnitsRectangles and Pop-Ups Reco'd Maximum Initial Download Size
300 x 250 IMU - (Medium Rectangle) 40k
250 x 250 IMU - (Square Pop-Up) 40k
240 x 400 IMU - (Vertical Rectangle) 40k
336 x 280 IMU - (Large Rectangle) 40k
180 x 150 IMU - (Rectangle) 40k
*NEW* 300x100 IMU - (3:1 Rectangle) 40k
*NEW* 720x300 IMU – (Pop-Under) 40k
Banners and Buttons468 x 60 IMU - (Full Banner) 40k
234 x 60 IMU - (Half Banner) 30k
88 x 31 IMU - (Micro Bar) 10k
120 x 90 IMU - (Button 1) 20k
120 x 60 IMU - (Button 2) 20k
120 x 240 IMU - (Vertical Banner) 30k
125 x 125 IMU - (Square Button) 30k
728 x 90 IMU - (Leaderboard) 40k
Skyscrapers160 x 600 IMU - (Wide Skyscraper) 40k
120 x 600 IMU - (Skyscraper) 40k
300 x 600 IMU - (Half Page Ad) 40k
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728
x90
Unit
Weight limits
Animation BorderGIF & JPEG
Flash
300x25020k 30k 15 second
limit None180x150
160x600
728x90 15k 20k
180x150
300x250
160x600
Key is the UAP (aka Universal Ad Package)
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
May/June '03 Q4 '03 Q4 '04 Q4 '05 Q1 '06
Leader Board UAP 728x90
Medium Rectangle UAP 300x250
Rectangle UAP 180x150
Wide Skyscraper UAP 160x600
Banner 468x60
All Others
Four UAP Units now represent 37% of total inventory, down 10% from Q4 ’05. IAB Recommended IMU “Button 1” (120x90) up 15.2% from Q4 ’05.
“Button 1” = 19.6%
“Button 1” = 4.4%
Adoption of the UAP Units
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Internet Advertising Revenue By Type: Classifieds; Search Remains a Strong Leader
% of ‘05 First Six-Month Revenues
Total $5.8 Billion
Source: PricewaterhouseCoopers LLP/IAB Internet Advertising ReportNote: Lead Gen is a new category in ’05, revised vs Referral. Changes vs YAG are recommended
Search, 40%
Lead Gen, 7%
Rich Media, 6%
Display Ads, 21%
Sponsorship, 4%
Classifieds, 20%
Slotting Fees, 0%
E-mail, 2%
% of ‘06 First Six-Month Revenues
Total $7.9 Billion
Search, 40%
Lead Gen, 6%
Rich Media, 8%
Display Ads, 20%
Sponsorship, 5%
Classifieds, 18%
Slotting Fees, 1%
E-mail, 2%
Should be
Updated
www.gregstuart.com 19
Does Online Advertising Work?
Really, does it? And how well?
(Answer sometimes 10x better than TV)
www.gregstuart.com 20
16 XMOS Public Studies to DateXMOS = Cross Media Optimization Study
XMOS 1.01. Unilever’s DoveXMOS Branding - 1st wave2. McDonald’s3. Colgate Total4. Kimberly Clark Kleenex 5. AstraZeneca NexiumXMOS Branding - 2nd wave6. Universal Pictures Home Video 7. ING8. VeriSignXMO$ Sales & Branding I9. Ford F-15010. P&G’s Olay11. Kraft’s Jell-O12. Nestlé's Coffee-mateXMO$ Sales & Branding II13. Target14. Volkswagen15. Philips16. Motorola
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Methodology Validated by Key Industry Bodies
““This measurement approach is the most This measurement approach is the most even handed to all media and extremely even handed to all media and extremely accurate in measuring Online’s accurate in measuring Online’s contribution and cost efficiency.”contribution and cost efficiency.”
Jim Spaeth, Former President, Jim Spaeth, Former President, The Advertising Research Foundation The Advertising Research Foundation
Note: The methodology used to calculate the effects of online and offline media has been supported by the Advertising Research Foundation (ARF) and received the prestigious John & Mary Goodyear Award nomination for best International Research from the global research authority ESOMAR
The research has earned the endorsement of Forrester research, and led to Forrester’s request to develop a summary analysis of findings so that they can counsel their clients on the role of Online advertising
www.gregstuart.com 22
Sale
s Li
ft
Sale
s Li
ft
HiHi
SalesSales
LowLow
14%
12%
10%
8%
11%
25%
8%
* Target sales lift averaged across 99 GRPs from Homepage and display ads
17%
19%
Philips
Motorola
2%>1%
Sales lift is the % difference between actual buyers in
exposed and control groups..
Calculation: Exposed – Control
The lift is among those reached by online. .
Control
Online Sells Product (Online & Offline)
Online sales lift averaged 11%
www.gregstuart.com 23
Summary Of XMOS ResultsOnline Optimization Only
Brands
DoveChickenFlatbread
Total Kleenex NexiumET Home
Video ING Verisign Jell-OCoffee-mate
Olay F150
Reco’d % Online 15% 13% 11% 10%
10-15% 19% 15% 11% 4%* 5%* TBD 6%*
Brand Awareness -- +8% -- -- -- -- ** *** -- -- -- --
Brand Image -- -- +34% +7%
+10-20%
-- -- -- -- -- -- --
Purchase Intent +14% -- +20% -- +1-5% +1491% -- -- -- -- -- --
Sales-- -- -- -- -- -- -- -- +4% +7% In
Field +5%
** Not the actual optimized level, but considered an interim increaseNot the actual optimized level, but considered an interim increase
**** Brand ran Optimal level so there was no gain from more online spendingBrand ran Optimal level so there was no gain from more online spending
****** Because of differing objectives, cross media comparison was inconclusiveBecause of differing objectives, cross media comparison was inconclusive
www.gregstuart.com 24
What Do We Know about Creative
BB
AA
Better creative can make the difference between success and failure
Source: XMOS
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Creative Makes a HUGE Difference
Ad B, 2
Ad A, 20
0 5 10 15 20 25 30
PurchaseIntent
Percent that Intend to Buy Colgate
Better creative can make the difference between success and absolute failure
Ad AAd A
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Add a New Medium is Driven by Diminishing Returns
% o
f Bra
nd Im
pact
Aw
aren
ess,
Imag
e or
Pur
chas
e In
tent
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Frequency
Diminishing returns
1
2
34 5
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10.0%10.0%
20.0%20.0%
30.0%30.0%
40.0%40.0%
50.0%50.0%
60.0%60.0%
0.0%0.0%
Adding Online Can Have Major Impact for Even McDonalds
Introducing New Menu Item: Grilled Chicken Flatbread Sandwich
Ad Frequency
(or Budget)
% A
ided
Aw
aren
ess
20% of Broadcast Budget
Reinvested 13.6%
in Online
Po
int
of
Dim
inis
hed
Ret
urn
s
5pt Gain!
Cut6.4%
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Performance is Partly Due to Media Mix Use by Consumers
TV Use
On
line
Use
Heavier
Heavier
Lighter
Lighter
Heavy OnlineHeavy TV
Heavy OnlineHeavy TV
Heavy TVLight Online
Heavy TVLight Online
Light TVLight Online
Light TVLight Online
Heavy Online Light TV
Heavy Online Light TV26%26% 38%38%
15%15% 21%21%
Med
ia U
sage
am
ong
18-4
9 ye
ar o
ld ta
rget
34.3 Million!
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Roadblock
Trying Something Brand New:Home Page Takeover Ad
Ran One Day on Each Portal - Roadblock
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Cost Effectiveness of Each MediumCost to Increase Purchase Consideration
Brand Metric:Purchase Consideration (top 2 box)
Relative
Cost Index
Sample Cost
TV 1104 $11.04
Magazine 456 $4.56
Roadblock 100 $1.00
Online 135 $1.35Interpretation: If it cost Roadblock $1 (indexed at 100) to increase purchase consideration, then it cost $1.35 for Online, $4.56 for magazine and $11.04 to TV to achieve the same increase.
www.gregstuart.com 31
The Value of Small Changes
0%
20%
40%
60%
80%
100%
BasePlan
2.5%Online
6%Online
Result was another
$750,000,000 in U.S. Truck sales
Total of +$1,350,000,000
in U.S. Truck Sales
(at retail vs. Base Plan)
Ford Media Mix *Tra
dit
ion
al M
ed
ia P
lan
* Approx. $200 Million Budget
Online Online
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The Big Question: Has XMOS Caused Change in the Industry?
Based on detailed confidential interviews with 7 XMOS marketers:
$230 million estimated Internet Ad Spending for company one year post each brand’s study. Lifetime would be much higher
Only $2.2 million invested in studies
Analyzed Brands/CompaniesCorporate Data Brand DataJohnson & Johnson NeutrogenaNestle Beverage Coffee-mateProcter & Gamble OlayFord F-150Kraft Jell-OTarget Target ApparelAstraZeneca Nexium
Other Studies–not included in analysisUnilever’s DoveMcDonald’sColgate TotalKimberly Clark Kleenex Universal Pictures Home Video INGVeriSign
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Change in Online’s Total Budget
Pre to Post XMOS Total Online Spend XMOS Marketers Aggregated
$17,737
$311,579
$82,031$78,655
$60,917
$229,548
$-
$100,000
$200,000
$300,000
$400,000
XMOS Brands XMOS Companies
On
line
Sp
end
('0
00)
Pre Post
One Year After @ Study
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Change in Online’s Share of Total Budget
Pre to Post XMOS Online % Budget Allocation
2002 vs. 2006
2%1%
7%
5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
XMOS Brands XMOS Companies
Pre Post
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What Has Been the Real Value of XMOS
Online Investment Percent Gain over 2002
0% 20% 54% 84% 116%0%
398%
938%
1760%
0%
712%
1932%
3184%
148%95%
0%
500%
1000%
1500%
2000%
2500%
3000%
3500%
2002 2003 2004 2005 2006
Total Online Spending
Average XMOS Companies
Average XMOS Brands
30x vs.4 YAG
30x vs.4 YAG
18x vs.4 YAG
18x vs.4 YAG
Avg
XM
OS
Bra
nd
Avg
Co
mp
any
www.gregstuart.com 36
Online Advertising Research &
Measurement
And the Issues that do not get discussed publicly
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Online Media Measurement Data is Not Good; and Yet its World Class
Good News Lots & lots of data It’s all digital and
networked Can track directly to sales
online First medium to measure
the ad (not just content) Immediate insights
Bad News Lots & lots of data Do we have the systems
to handle data There is Fraud and
manipulation Consumer has control BIG privacy issues Huge discrepancies
creates mis-trust
www.gregstuart.com 38
Main Terms of the MediumUniques A unique visitor is a statistic describing a unit of traffic to a Web site, counting each visitor only
once in the time frame of the report. This statistic is relevant to site publishers and advertisers as a measure of a site's true audience size, equivalent to the term "Reach" used in other media.
The Unique Visitors statistic is most accurately measured in two ways with current technology: by requiring all Visitors to log-in to the site, thereby capturing the identity of each Visitor
on each visit, or by placing a cookie on each Visitor's computer, writing the cookie ID to a database, and
checking for the cookie on each Visitor's computer each time they visit.
Visits A series of requests from the same uniquely identified client with a set timeout. A visit is
expected to contain multiple hits (in log analysis) and page views.
Page Views A page view (PV) or page impression is a request to load a single page of an Internet site. On
the World Wide Web a page request would result from a web surfer clicking on a link on another HTML page pointing to the page in question. This should be contrasted with a hit, which refers to a request for a file from a web server. There may therefore be many hits per page view.
Impressions or Ad Views Same as Page Views, but for the advertisements. Defined as communication
Please never use the word “Hits”Please never use the word “Hits”
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Online Media Research Overview
www.gregstuart.com 40
Big Strategic Advantage was
Global Internet Ad Impression
Measurement Guidelines
www.gregstuart.com 41
Key Elements of Guideline - 1 of 2
Refined definitions and standards1. Client side measurement
Via a beacon/clear gif or client side call (i.e., 302)
2. Spiders & Bot Filtering (database)2 step process, via 1) short list of bots (20-25), 2) known browser
3. Behavioral Filtering to remove non human activityMight not be relevant if we use 2 step process above
4. Internal TrafficDo not exclude as it is insignificant
5. Cache BustingAgree to header based cache busting
www.gregstuart.com 42
Key Elements of Guideline - 2 of 2
Internal Controls Shared “Areas of Auditing” Asked to Communicate Internal Control Best Practices
Disclosures Goal is Transparency Description of Measurement Methodology
Definitions Data Collection Methods Editing, Data Adjustment, etc. Calculation Explanations Reporting Standards General Reporting Parameters Certification and/or Auditing Applied
www.gregstuart.com 43
A B C
1: User requests content from publisher web server.
2: Publisher web server calls Publisher Ad Engine to retrieve ads.
3: The Publisher Ad Engine logs that it has served an ad. Publisher Ad engine returns an HTML blob to Publisher Web Server. Some of these ads may actually be pointers to a location on a Third Party server.
4: The Publisher Web Server receives the HTML blob.
5: The Publisher Web Server returns the page and the page begins to render on the user’s machine.
6: While rendering the page, the browser determines that it needs to pick up an ad from a Third Party server. The browser fires off a separate thread to get the ad from the Third Party server.
7: The Third Party server logs that it has served an ad.
8: The Third Party server receives the request for the ad and returns a pointer to the location of the ad image by instructing the user’s browser to pick up the ad from an image server.
9: The user’s browser makes a call to the image server where the creative resides.
10: The Image server logs that it has served an image.
11: The image server returns the image.
1
2
3
4
5
6
7
8
9
10
11
The Old Way: Server-side serving and counting
Publisher Web Server
Publisher Ad Engine
Publisher Ad
Engine Log
Third Party Ad Engine
Log
Image Server
Log
www.gregstuart.com 44
Causes of discrepancies
Network latency Publisher count is higher
Caching Publisher count is lower
Crawlers Publisher count is higher Filtering techniques may differ
Implementation errors Typically cause extreme discrepancies
www.gregstuart.com 45A B C
13
4
5
2
6
7
8
9
10
11
The Better Way: Client-side serving and counting
Publisher Web Server
Publisher Ad Engine
Publisher Ad
Engine Log
Third Party Ad Engine
Log
Image Server
Log
www.gregstuart.com 46
The Way it’s Being Done Now: Server-side serving with client-side counting
AB C
1
2
3
4
5
6
7
8
9
10
11
Publisher Web Server
Publisher Ad Engine
Publisher Ad
Engine Log
Third Party Ad Engine
Log
Image Server
Log
D
5b
Publisher Beacon Server
Publisher Beacon
Log
5a5c
www.gregstuart.com 47
How Good is NNR and comScore Data and do They at Least Trend the Same?
NetRatings and comScore Page View and Unique Visitor data trend together (are positively correlated) for less than half of websites examined. NetRatings and comScore trend together for both Page Views and Unique Visitors for only four of
the nineteen sites Overall, the lack of consistency between the two services is no worse (and no better) in the
second half of 2006 than it was in late 2005 The average NetRatings/comScore monthly difference for Unique Visitors across the nineteen
sites ranges from 15% to 25% over the 13-month period, with no particular trend. For Page Views the average monthly difference has settled around 40%
There is a tendency for a majority of individual websites to be significantly (and consistently) higher in either NetRatings or comScore. In those cases where differences are significant, NetRatings and comScore are each higher half of
the time In most cases, the two services are not close, and are reporting different “realities” regarding
usage of specific websites Differences in websites where one service is consistently higher may be related to the
demographic make-up of the panels
www.gregstuart.com 48
Sample NY Times - Unique Visitors
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Sep'05 Oct'05 Nov'05 Dec'05 Jan'06 Feb'06 Mar'06 Apr'06 May'06 Jun'06 Jul'06 Aug'06 Sep'06
www.gregstuart.com 49
Sample: NY Times - Page Views
0
100,000
200,000
300,000
400,000
500,000
600,000
Sep'05 Oct'05 Nov'05 Dec'05 Jan'06 Feb'06 Mar'06 Apr'06 May'06 Jun'06 Jul'06 Aug'06 Sep'06
www.gregstuart.com 50
Backbone of Measurement and Targeting – Cookies!
HTTP cookies, or more commonly referred to as Web cookies, tracking cookies or just cookies, are parcels of text sent by a server to a web client (usually a browser) and then sent back unchanged by the client each time it accesses that server. HTTP cookies are used for authenticating, session tracking (state maintenance), and maintaining specific information about users, such as site preferences or the contents of their electronic shopping carts. The term "cookie" is derived from "magic cookie," a well-known concept in UNIX computing which inspired both the idea and the name of HTTP cookies.Cookies have been of concern for Internet privacy, since they can be used for tracking browsing behavior. As a result, they have been subject to legislation in various countries such as the United States, as well as the European Union. Cookies have also been criticized because the identification of users they provide is not always accurate and because they could potentially be a target of network attackers. Some alternatives to cookies exist, but each has its own uses, advantages and drawbacks.Cookies are also subject to a number of misconceptions, mostly based on the erroneous notion that they are computer programs. In fact, cookies are simple pieces of data unable to perform any operation by themselves. In particular, they are neither spyware nor viruses, despite the detection of cookies from certain sites by many anti-spyware products.Most modern browsers allow users to decide whether to accept cookies, but rejection makes some websites unusable. For example, shopping carts implemented using cookies do not work if cookies are rejected.
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Cross Site User Breakdown
63% 66%57%
69%51%
74% 68%
19% 14% 26%17%
29%
13% 18%
20% 17% 13% 20% 13% 14%18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Site A (8-27-05thru 4-20-06)
Site B (11-17-05thru 4-19-06)
Site C (9-1-05thru 1-31-06)
Site D (2-14-06thru 4-20-06)
Site E (2-22-06thru 4-01-06)
Site F (2-01-06thru 4-20-06)
Site G (2-01-06thru 4-20-06)
Perc
enta
ge o
f Use
rs
RejectorsInconsistentAcceptors
Cookie Deletion Rates by (anonymous) Site
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Ad Blocking Tracking Progress
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
Aug'06
Sept'06
Oct '06
8 Sites are being tracked: Tracking puts a tag on one high
volume page Request that this continues and
additional sites participate
IAB will release Ad Blocking report to all members
Issues to Board:
1. Have you all installed new TOS?
2. Is anyone considering turning off content?
Ad Blocking TrendsAd Blocking Trends
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Situation Update On Ad Blocking: Do We Need to Act Now?
Current Threat: Ad Blocking continues to increase In-line blocking estimated at 7-8% according to DCLK, up from 2-3% two YAG. eBay reports closer to 10-15%. Search is lower at 5-6% Research cannot yet determine penetration level of blockers, but 3 of the top 10
most popular software downloads are ad blockers, accounting for 243 MM, or 30% of top 10 downloads
Symantec installed on 120 million machines and 25% turn on Ad Blocking feature
Leading Indicator (?): Pop-up blocking is already over 50% (DCLK)
Compare: Movie and music industry threat response Failure to uncover or react to real rates of illegal downloading in a timely manner Resort to costly, both financial and reputational, punitive tactics and litigation
against downloaders (music companies against consumers) and subsequently, file-sharing software vendors (RIAA companies vs. Napster and MPAA studios vs Grokster)
www.gregstuart.com 54
Just When we Get Set RIA/AJAX Changes Everything
Audience impact – Page Views not relevant anymore Time spent and engagement metrics should become more meaningful in
the RIA experience as we can track user activities
Measurement impact – updated guidelines
The ad impression standards did not envision a disconnect between the page and the ads. Updating to reflect 1st) Strong user action, or 2nd) to allow the consideration of “in focus”
Revenue opportunity – attendant need for disclosures
Use of RIA can unlock inventory but the counting of impressions within these new applications needs to be transparent with marketers
www.gregstuart.com 55
Important Documents
I can send to you or you can get at IAB.net1. Terms & Conditions2. Measurement Guidelines
Impressions Video Clicks
3. Ad & Other Creative Guidelines Display Video
www.gregstuart.com 56
Positioning Online Advertising
What Does the Research Show In How to Position Online as a Medium
www.gregstuart.com 57
The Interactive Positioning
AUDIENCE
EXPERIENCE
EFFECTIVENESS
Television
PrintRadio
Direct Mail
INTERACTIVEINTERACTIVEOnly Interactive Advertising lets you combine the ability to target and create a dialogue with the AUDIENCE that matters to your brand, lets your customer EXPERIENCE your brand the way THEY want to, and allows you to measure the EFFECTIVENESS of your marketing dollars.
Interactive is the only medium that lies at the
intersection of Audience, Effectiveness
and Experience
www.gregstuart.com 58
High Intensity Agreement with the Motivations
66%
73%
64%
69% 69%70%
40%
45%
50%
55%
60%
65%
70%
75%
"Must Have" "Further My Career" "So Much More"
Pre-BallotPost-Ballot
On a scale of 1-10, how much do you agree with the following statements?
Chart represents % of the population agreeing with an 7 or above (high intensity)
“Interactive Advertising is a must have in my media mix.” “I will further my career if I use Interactive Advertising successfully” “I realize there is so much more I can do with Interactive Advertising”
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Respondent Agreements with Key Motivations
KEY MOTIVATIONStrongly
Agree
Agree/ Strongly
Agree Mean
Interactive Advertising is a “must-have” in my media mix. 33% 66% 7.05
I will further my career if I use more Interactive Advertising successfully. 29% 64% 6.95 I could do so much more with Interactive Advertising than I am currently. 34% 69% 7.25
I understand how to use Interactive Advertising to improve my marketing efforts. 26% 63% 6.85 I would spend more money on Interactive Advertising if it were easier to execute. 22% 54% 6.47 I would spend more money on Interactive Advertising if there were better data to prove it works. 25% 63% 6.91
I would spend more money on Interactive Advertising, but others in my organization disagree. 17% 44% 5.72 Interactive Advertising gives me greater impact for my advertising dollar than other media. 27% 56% 6.7
Interactive Advertising is more engaging than other media. 30% 63% 7.01
Interactive Advertising is more targeted than other media. 28% 63% 6.95
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Sample Segmentation By Current Attitudes to Interactive Advertising
28%
47%
25%
0%5%
10%15%20%25%30%35%40%45%50%
Skeptics Fence-sitters ConvincedBased on composite mean scores for six motivation questions
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Fence-Sitters Profile
$549 $549
$2,950
0
500
1000
1500
2000
2500
3000
Skeptics FenceSitters
Convinced
$14.9 $14.9
$34.9
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
Skeptics FenceSitters
Convinced
Median Revenues (in $mm) Median Ad spend (in $mm)
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Print Ads
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Trends & Data
Never Enough Data. Lots of Trends.
What Does it Mean?
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Global Online Population
Currently about 1.2 billion
Projected to grow to 1.8 billion by 2010
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The Internet is the 3rd most used medium and about to become 2nd only to TV
Newspapers 8% Magazines
7%
Watching TV 37%
Video or DVDs 12%
Radio 19%
Internet* 17%
Source: Forrester Research, March 2007
* Excludes work usage.
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The Internet is a already a massive medium, but still growing rapidly in a variety of ways
191 million U.S. people age 2+ online in a month, spending an average of 30 hours online per person* But 77% of 841 million global Internet users now outside of U.S.
99% of online population search in a month, conducting 80 searches per searcher**
73% of online population stream a video, viewing an average of 83 videos per viewer per month *** Up 50% vs YA
67% of online population visit a social networking site, spending 4 hours per month per visitor*
Online consumer spending totaled $200B in 2007, up 20% vs. YA Non-travel represents 8% of consumer spend (excl. food, gas, and autos)
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Internet’s reach exceeds TV’s from 7 am to 8 pm
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Source: National People Meter, comScore Media Metrix 2007
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The Web Already Delivers More Advertising Than TV!
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2.2 x
Monthly GRP’s Monthly Impressions Per Person
Source: Display Impressions: comScore Ad Metrix, Jan -08, Television GRP’s: comScore Estimates69
The CPM’s are just much, much lower for Internet.The CPM’s are just much, much lower for Internet.
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Internet Ad Revenues Continue to Surge
Quarterly Internet Advertising Revenues($ Billions)
1998 1999 20072006200520042003200220012000
Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC) estimates.
$21.1B in 2007, Up 26% Over 2006
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Ad Dollars are Flowing Online
Internet
Outdoor
Cable TV
Magazines
Direct Mail
Miscellaneous
Overall
Trade Journals
Yellow Pages
Broadcast TV
Radio
Newspapers
$21 Billion
$ 7
$26
$14
$61
$39
$295
$ 4
$14
$46
$19
$44
MediaAdvertising Dollars Spent in 2007* Percent Change from 2006
Source: Global Insights as published in BusinessWeek* Other sources may define categories differently, leading to different results
60% of all ad spending in traditional media goes to branding campaigns
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Yet, online is only 7% of total ad spending in the U.S.
2007 Estimate($ in Millions)
Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers
% Total
Direct Mail $ 60,988 21%
Broadcast TV $ 45,749 15%
Newspaper $ 42,939 14%
Internet $ 21,100 7%
Cable TV Networks $ 20,479 7%
Radio $ 18,592 6%
Yellow Pages $ 14,538 5%
Consumer Magazine $ 13,695 5%
All other $ 55,977 19%
Total $ 296,100 100%
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Decline in Online Ad Click-Through Rates
2.50%
1.12%
0.41%
0.20%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Rich Media Non-Rich Media
2002
2006
Sources: Doubleclick, eMarketer, Eyeblaster, ABI Research estimates
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Clickers Follow the 80/20 RuleSource: comScore, Total US Online Population, July 2007
Clickers are predominantly younger (25 - 44) with lower income (under $40K)
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Those Who Viewed the Ad But Did Not Click Drove Majority of Site Engagement and Sales
% of Exposed People% of Exposed People
Include View-Through Effects When Measuring the Campaign – Clicks Are NOT Enough
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Clicks on Display Ads Are a Misleading Metric and They Don’t Reflect Brand-Building Effects
1. Only use for direct response ad campaigns (or search)
2. Clicks don’t measure all of a campaign’s sales impact, including the cumulative (latent) and offline impact of ads
3. Clicks don’t tell you anything about brand building effects
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Future and Other Suggestions
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Future Trends to Watch
What are the key issues to look for:1. Video Online: More, better, targeted and
innovative ad units2. Targeting: More options, behavioral, ISP Deep
Packet Inspection (DPI), Social Media, Influencers
3. Mobile: Still very small but they are getting there. Lots of road blocks but it is “unique” for reaching consumers
4. IPTV: Canoe by Comcast and TimeWarner will push the boundaries here.
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Internet Video Advertising Spending TrendsThe hottest growth is in Video Ads on the Net
$55 $65 $135$225
$425
$820
$1,400
$2,400
$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
Net
Vid
eo A
d S
pend
$(M
illions)
'02 '03 '04 '05 '06e '07e '08e '09e
Source: eMarketer
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Other Suggestions
Subscribe to IAB Smartbrief
Review ClickZ
Potential events to attend AdTech – August 5-6 in Chicago (perf oriented) iMedia - Various
Get on LinkedIn
Get on Facebook
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Review of the Online Medium
Prepared in July 2008
By Greg Stuart
+1 631 702 0682
New York City
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More at www.linkedin.com/in/gregstuart
Greg Stuart is a recognized thought leader in the digital media and advertising and was selected by Ad Age as one of “10 Who Made Their Mark” in 2006.
He is the former CEO & President of the Interactive Advertising Bureau (IAB), the trade group for the interactive advertising & marketing industry. He led the industry from $6 to $17 billion annually while growing the IAB’s revenues +500% in just 4 years. The IAB serves AOL, CNET, Google, Disney, Yahoo! & others.
His recent book, “What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds,” Ad Age identified it as “One of 10 books you should have read,”
Greg has more than two decades of experience in Internet start-ups, digital media and traditional advertising. He has served as head of Marketing/Biz Dev/Ad Sales at Cars.com pushing them to number 1 in category 6 months post launch. Also was VP of BD at Flycast Networks, when it IPO'd and then sold to CMGI. He's been a Venture Partner, Interim CEO of 2 Ad Technology companies, launched Sony's Online The Station and built the first Interactive division at the world’s leading direct marketing agency, Wunderman (a subsidiary of Young & Rubicam).
He was on the Board of Rapt, Inc. in SF, sold to Microsoft; and Board of Allyes in China, sold to Focus Media. He volunteers his time to SEMPO, IAB Mexico, Mobile Marketing Association and anyone else that asks.
Since Greg applauds entrepreneurs, serving on the Advisory Boards of multiple venture-backed companies Adify [Ad Networks], Anchor Intelligence [Search], Veoh [Video], Tremor Media [Video], Vizu [Research], Komli [Ad Network], Zumobi [Mobile], AdInfuse [Mobile], myYearbook [Social Ntk] and others.
He is also member of the National Speakers Association and speaks around the world on the Internet and failings of Advertising.
Greg has a BA in Economics from the University of Washington and completed Wharton’s Advanced Management Program in July 2008. He lives very happily in Bridgehampton, NY with his wife Pamela, twin daughters, and son.