The Age of

Internet Advertising

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Purpose of this Presentation
Highlighting the main aspects of Online
Media and Online Advertising
-Online advertising Overview
-Feasibility of Online Advertising.
-Online Research & Measurements.
-Positioning Online Advertising.
-Various Internet Advertising Trends.

2
 Online Advertising
Overview

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

www.gregstuart.com 4
 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 Divisions
Generally accepted types of Online Media:
 Portals  Blogs
 Yahoo, AOL, MSN,G talk  Blogspot.com,
 Content  Email & Newsletters
 Indiatimes.com,  eCommerce
Hindustantimes.com ,  Amazon, indiashopping.com
rediff.com
 RSS (real simple syndication);
 Search Engines aka Feeds
 Google, Yahoo Search,Bling  Feedburner, Google Reader,
 Social Media (Or User PTI (Press Trust of India),
Generated Content – UCG) Times of India, Telegraph
 Facebook, MySpace, Twitter
 Orkut
 Video
 YouTube, Veoh

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 The Vision for the role of
Digital Media
BEFORE AFTER

Supplier Customer Internet Customers

Supplier

Monologue Dialogue
One way One-to-one marketing
Mass communication Real-time
Static Dynamic
No interaction among customers Collaborative
Shotgun approach Segmented
Hard to identify customers Rich customer interaction
Hard to manage customers Rich customer data
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If you had to live on a deserted island and could
only 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

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 Recent Major News About
Online Advertising
2010 a Banner Year for Online Online Ad Industry Rebounded in
Ads. 2010
Record revenue year buoyed by 18 In 2010, online ad revenues hit their highest
percent growth in second half level, reaching $26 billion, after faltering in
April 13, 2011 2009.
www.adweek.com April 14, 2011

www.clickz.com

India will have 24 million rural internet users by end of 2011: IAMAI
(Internet And Mobile Association of India )
There were about 7.45 million claimed internet users and 5.5 million active internet users
in rural India in December 2009.
15th April 2011
Afaqs news bureau
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 Types of Online Advertising
Types Technologies
Display Behavior Targeting
SEM Search Engine Marketing * Contextual Targeting
SEO Search Engine Optimization * IP or Geo Targeting
Email Marketing Rich Media
Newsletters Rich Internet Applications (AJAX)
Video Keyword Targeting / Adwords
Viral Marketing (Word of Mouth) * Video Scanning
Classifieds Social Media Targeting / Influencers
Desktop or Software
Product Placement
Pop Ups or Pop Unders Est. Spending By Category
Landing Pages Other 9% Rich 10%
Lead Gen
Display
Classifieds 24%
16%

Search
41% 11
Display Search Classifieds Other Rich / Video
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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 Key is the UAP
(aka Universal Ad Package)
728x90

180x150

300x250 Weight limits

Unit GIF & Animation Border
Flash
JPEG
300x250
180x150 20k 30k 15 second
limit None
160x600 www.gregstuart.com
160x600
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728x90 15k 20k
 Adoption of the UAP Units
100%
Four UAP Units now
90%
represent 37% of total
80% inventory, down 10% from
Q4 ’05. IAB
70% Recommended IMU
60% “Button 1” (120x90) up
15.2% from Q4 ’05.
50%
Leader Board UAP 728x90
40% Medium Rectangle UAP 300x250
30% Rectangle UAP 180x150
“Button 1”
= 19.6% Wide Skyscraper UAP 160x600
20%
Banner 468x60
10% All Others
“Button 1”
0% = 4.4%
May/June '03 Q4 '03 Q4 '04 Q4 '05 Q1 '06
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 Internet Advertising Revenue By Type:
Classifieds; Search Remains a Strong Leader

The most popular ad format was search, which represented 46

percent, or $12 billion, of the year's total revenue.
Display-related ads accounted for 38 percent, or $9.9 billion, of
2010 ad revenue. That category includes banner ads, digital video
ads and sponsorships.
The third-largest Internet ad category is classifieds, which
accounted for $2.6 billion, or 10 percent of 2010 revenue.
PricewaterhouseCoopers partner David Silverman said more time
spent online, fueled by the popularity of digital videos and social
media, has helped fuel the ongoing advertising growth.
The report estimated 2010 mobile advertising revenue to be
between $550 million and $650 million in the U.S. This is the first
time it estimated mobile ad revenue.
(make a pie chart based on this data)
Source: http://news.yahoo.com/s/ap/20110413/ap_on_hi_te/us_tec_techbit_internet_advertising

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 Does Online
Advertising Work?

Really, does it? And how well?

(online marketing has truly become an
accessible avenue for a lot of novice
advertisers.
)

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 16 XMOS Public Studies to Date
XMOS = Cross Media Optimization Study
XMOS 1.0
1. Unilever’s Dove
XMOS Branding - 1st wave
2. McDonald’s
3. Colgate Total
4. Kimberly Clark Kleenex
5. AstraZeneca Nexium
XMOS Branding - 2nd wave
6. Universal Pictures Home Video
7. ING
8. VeriSign
XMO$ Sales & Branding I
9. Ford F-150
10. P&G’s Olay
11. Kraft’s Jell-O
12. Nestlé's Coffee-mate
XMO$ Sales & Branding II
13. Target
14. Volkswagen
15. Philips
16. Motorola
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Methodology Validated by Key Industry
Bodies
“This measurement approach is the most even handed to
all media and extremely accurate in measuring Online’s
contribution and cost efficiency.”
Jim Spaeth, Former President,
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
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 Add a New Medium is Driven by
Diminishing Returns
100
Awareness, Image or Purchase Intent

90
80 4 5
70 3
% of Brand Impact

60
50 2 Diminishing
40 returns
30 1
20
10
0
0 1 2 3 4 5 6 7 8 9 10

Frequency

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Marketers see high “value” in online, but
consider it a call-to-action medium

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Marketers believe online can be more effective
at all stages of the purchase funnel

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 Trying Something Brand New:
Home Page Takeover Ad
Ran One Day on Each Portal - Roadblock

Roadblock

www.gregstuart.com 23
After many fits and starts, integrated
marketing is becoming a necessity

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Cost Effectiveness of Each Medium
Cost to Increase Purchase Consideration

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 Cost Effectiveness of Each Medium
Cost to Increase Purchase Consideration

Brand Metric:
Purchase Relative
Consideration Cost Sample
(top 2 box) Index Cost
TV 1104 $11.04
Magazine 456 $4.56
Roadblock 100 $1.00
Online 135 $1.35
Interpretation: 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. 26
Online Advertising
Research &
Measurement
And the Issues that do not get
discussed publicly

www.gregstuart.com 27
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
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 Main Terms of the Medium
Uniques
 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”

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Online Media Research Overview

www.gregstuart.com 30
 Big Strategic
Advantage was
Global Internet Ad
Impression
Measurement
Guidelines

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 The Old Way: Server-side serving and counting
1: User requests content from publisher web server.

2: Publisher web server calls Publisher Ad Engine to retrieve ads.

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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.
5 8
4: The Publisher Web Server receives the HTML blob.

5: The Publisher Web Server returns the page and the page begins to
1 Publisher 9 render on the user’s machine.
Ad Engine 6
6: While rendering the page, the browser determines that it needs to
2 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.

4 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.
Publisher
Web Server
3 7 9: The user’s browser makes a call to the image server where the
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creative resides.
Third
Publisher Image
Party Ad 10: The Image server logs that it has served an image.
Ad Engine Server
Engine
Log Log
Log 11: The image server returns the image.

A B C
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 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
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The Better Way: Client-side serving and counting

11

2
8
3 5
1
Publisher 9
Ad Engine 6

Publisher
Web Server
4 7 10
Third
Publisher Image
Party Ad
Ad Engine Server
Engine
Log Log
Log

A B C
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The Way it’s Being Done Now: Server-side
serving with client-side counting

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8
5 5a
5c
Publisher
1 Beacon 9
Publisher Server 6
Ad Engine

Publisher
Web Server 5b 7 10
3 Third
Publisher Image
Party Ad
Publisher Beacon Server
Engine
Ad Engine Log Log
Log
Log

D B C
A
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 Positioning Online
Advertising

What Does the Research Show In How

to Position Online as a Medium

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 The Interactive Positioning
Interactive is the only
medium that lies at the
AUDIENCE Print intersection of Audience,
Effectiveness
Radio
and Experience
Direct Mail
EFFECTIVENESS

INTERACTIVE
Only Interactive Advertising lets
you combine the ability to target
and create a dialogue with the
Television AUDIENCE that matters to your
brand, lets your customer
EXPERIENCE your brand the
way THEY want to, and allows
EXPERIENCE you to measure the
EFFECTIVENESS of your
marketing dollars.
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 Respondent Agreements with Key
Motivations
Agree/
Strongly Strongly
KEY MOTIVATION Agree 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
www.gregstuart.com 38
Interactive Advertising is more targeted than other media. 28% 63% 6.95
Print Ads

www.gregstuart.com 39
www.gregstuart.com 40
 Trends & Data

Never Enough Data. Lots of Trends.

What Does it Mean?

www.gregstuart.com 41
 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
Internet* 17% 8% Magazines
7%

Radio 19% Watching TV

37%

Video or
DVDs 12%
* Excludes work usage.
Source: Forrester Research, March 2007
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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
45

40
Internet
35
% People 15+ Using Medium

30

25

20 TV
Internet
15
TV

10

Source: National People Meter, comScore Media Metrix 2007

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 The Web Already Delivers
More Advertising Than TV!
Monthly GRP’s Monthly Impressions Per Person
300.00 5,000

250.00
4,000
1.4 x
200.00 2.2 x
3,000

150.00

2,000
100.00

1,000
50.00

- -
Internet TV Internet TV

The CPM’s are just much, much lower for Internet.

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Source: Display Impressions: comScore Ad Metrix, Jan -08, Television GRP’s: comScore Estimates
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 Internet Ad Revenues Continue to
Surge
Quarterly Internet Advertising Revenues
$21.1B in 2007,
($ Billions) Up 26%
Over 2006

1998 1999 2000 2001 www.gregstuart.com

2002 2003 2004 2005 2006 47
2007

Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC) estimates.

 Ad Dollars are Flowing Online
Advertising Dollars
Media Spent in 2007* Percent Change from 2006

Internet $21 Billion

Outdoor $7
Cable TV $26
Magazines $14
Direct Mail $61
Miscellaneous $39
Overall $295
60% of all ad
Trade Journals $4
spending in
Yellow Pages $14
traditional media
Broadcast TV $46 goes to branding
Radio $19 campaigns
Newspapers $44

Source: Global Insights as published in BusinessWeek

* Other sources may define categories differently, leading to different results
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Yet, online is only 7% of total ad
spending in the U.S.
2007 Estimate
($ in Millions) % 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%

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
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 Decline in Online Ad Click-Through
Rates
2.50%

2.50%

2.00%

1.50%
1.12% 2002
2006
1.00%

0.41%
0.50% 0.20%

0.00%
Rich Media Non-Rich Media

Sources: Doubleclick, eMarketer, Eyeblaster, ABI Research estimates

www.gregstuart.com 50
Clickers Follow the 80/20 Rule
Source: 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

Include View-Through Effects When Measuring the

Campaign – Clicks Are NOT Enough 52
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

www.gregstuart.com 53

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Future and Other
Suggestions

54
 Future Trends to Watch
What are the key issues to look for:
1. Video Online: More, better, targeted and
innovative ad units
2. 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 Trends
The hottest growth is in Video Ads on the Net

$2,500.0 $2,400
Net Video Ad Spend

$2,000.0
$(Millions)

$1,500.0 $1,400

$1,000.0
$820

$500.0 $425
$225
$65 $135
$55
$0.0
'02 '03 '04 '05 '06e '07e '08e '09e
Source: eMarketer 56
 Other Suggestions
Subscribe to IAB Smartbrief
Review ClickZ
Potential events to attend
 Ad Tech – 27-28 April 2011 New Delhi
 iMedia - Various

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