Thinking Beyond Banners

When was the last time you looked at a banner ad? Chances are, not lately. And if you haven't, it's doubtful that your client's customers have, either.

The banner ad initially met the needs of Internet advertisers with a 0.3 percent click-through rate. Not very impressive. But what it did do was create a vacuum for innovative online advertising designers to reinvent the wheel. In doing so, it also afforded the opportunity to improve that 0.3 percent rate.

What those innovative designers created was visual-rich media that has become today's hot Internet advertising technology. These technologies include interstitial or superstitial ads (full-length TV commercials for the Internet), 3D portals (gateways to virtual cities in which users may conduct e-business) and streaming-media ads (constructed without the confines of a limited file size, with little or no download delay).

Consumer response to these new visual-rich media ads has been significant, according to Allie Shaw, vice president of worldwide marketing for New York-based Unicast, an Internet advertising solution provider.

"Advertisers have seen a growth in click-through rates from the 0.3 percent generated by banner ads to 6 percent generated by visual-rich media ads," Shaw says. The increased click-through rates for visual-rich media ads have captured the attention of top-tier advertisers and, in the process, have created a shift in the type of companies accessing rich-media Internet advertising: While banner ads can be designed and placed for a few hundred dollars, the new visual-rich media ads may cost between $4,000 and $200,000, according to Shaw.

"The success of superstitial or other visual-rich media ads and the cost to create these ads has driven more traditional advertisers into the Internet advertising market and diluted the market of small companies with little or no advertising budget," Shaw says. "This shift has allowed the superstitial ads placed by traditional advertisers, including Ford, Nike and Proctor & Gamble, to be more effective."

Secrets of Success
The effectiveness of these ads appears to be a result of the diluted market after the exit of the dot coms, as well as an increase in sites offering ad space. Because there is less competition for rich-media ad space, companies wishing to place these ads may find they are priced more reasonably, according to a report by New York-based Jupiter Communications. The visual-rich media ads have been especially attractive to the entertainment industry: Companies such as Universal Pictures have spent up to 40 percent of their advertising budgets on superstitial ads to promote upcoming films.

Rich-media ads have allowed traditional advertisers to achieve success in branding online with the power of TV ads, but some industry professionals, including J.G. Sandom, president and CEO of RappDigital, the online division of a New York-based direct-marketing network, question the ability of this advertising model to grow within the digital economy.

"Many of the rich-media ads are based on an analog model in a digital world, which takes control away from the Internet user," Sandom says.

One important concept online advertisers might need to consider is how users perceive their Internet experiences. For example, though a Web page may not actually take longer to load with interstitial or superstitial ads, the consumer may perceive a longer download time because of their complexity.

The growth of Internet connectivity is another factor that online advertisers should consider, according to Sandom. "As Internet connections become faster and faster with the advent of DSL and broadband, less latency will mean the Web pages will be pulled up faster, and Internet users will be afforded less time to view interstitial and superstitial ads," he says.

Although adjustments can be employed to solve these issues, Sandom says the real growth of the industry has been the new role of the ad unit itself. "In the past, ads were focused on click-through rates," he says. "Today, functionality has become the priority as it serves to enhance these click-through rates."

Sandom suggests the ability to order the product from within the ad becomes more important than the visual nature of the ad.

"Using visual-rich media ads, your ability to engender brand awareness is significantly greater, but it is functionality that enhances click-through rates by accommodating the researcher as well as the impulse buyer," he says.

CPM Vs. CPP
One of the key challenges facing online advertising is the conversion from the traditional cost per million (CPM) model to one better suited to the digital economy, the cost per performance (CPP) model, according to Sandom. Using the CPP model, e-publishers would be paid by the advertiser each time a user fills out a form or actively shows an interest in the product.

E-publishers, however, are reluctant to switch to the CPP model because they don't have a role in creating the ad and, therefore, don't want to lose money on poorly designed ads that don't generate the active participation of users, Sandom explains.

"Until someone designs a model that offers publishers a choice on the creative end, the transition from a CPM model to a CPP model will not take place," Sandom says. "This is a critical time for the industry because, as the small number of top-tier publishers continues to flourish under the CPM model, thousands of lower-tier publishers who offer new ad space are finding it increasingly difficult to survive."

Three New Methods For Online Advertising

1 Veon Studio: A design tool that lets users create, design and manage a visual-rich media Internet ad in-house.

2 The environmental ad: Combines TV and advertising. For example, someone watching a TV character riding a Harley-Davidson motorcycle could click the remote control, open the Harley-Davidson Web page and order the motorcycle.

3 Value-added personalization: A user who has just come from researching the new Explorer on Ford's Web site might log on to a book-selling site and be greeted by a pop-up ad for books on buying sport-utility vehicles.