September 07, 2007
The online advertising market has roared back to life after the dot-com boom and bust. To take advantage of this, publishers are adding more ad-supported content as well as looking at emerging media to engage their readers. But are any of these new formats working?
We gathered a roundtable panel of five big players in the industry and asked them about current metrics and what they're testing with mobile, video, widgets and user generated content. Their advice and tips will help you.
Internet advertising revenues in the US set a new record of $16.9 billion in 2006, according to the Interactive Advertising Bureau/PricewaterhouseCoopers Internet Advertising Revenue Report. That’s a 35% gain over 2005, and the growth has continued this year: It hit another record of $4.9 billion for the first quarter of 2007, according to the most recent IAB/PWC report, a 26% increase over Q1 2006.
In response, publishers increasingly are looking to ad-supported content as their primary revenue driver, adding more content outside their subscription barriers or doing away with premium content entirely. Even The Wall Street Journal, one of the most successful subscription-based businesses on the Web, is reportedly debating whether to drop its premium model and become a fully ad-supported site following Rupert Murdoch’s purchase of the newspaper.
For all the excitement, though, the evolving market presents challenges for newcomers and experienced players alike. Standards and best practices are in flux for emerging media like video and RSS. Blogs, social networking sites and other Web 2.0 features are competing with publishers for ad dollars and eyeballs. And traditional metrics and ad models are changing in response to Web users’ habits.
How can a publisher make the most of the opportunities? To find out, we asked five experts in the online advertising field to share their insights.
o Craig Ettinger, Director, Sales & Business Development, TIME.com
o Pam Horan, President, Online Publishers Association
o Kyoo Kim, VP Sales, MSNBC.com
o Lance Podell, CEO, Seevast, which operates the Pulse 360 sponsored-link advertising network
o Patrick Moorhouse, National Manager Research and Development, Avenue A/Razorfish
Question #1. Traditional Web metrics, such as page views and impressions, are becoming less relevant thanks to the rise of Flash, AJAX and other Web technologies. What metrics are you using that better indicate the full range of user interactions?
KIM: We are tracking all sorts of “engagement” metrics for internal Key Performance Indicators, such as page views per visit, length of visit, time per unique user per month, interaction rates of various links on a page, etc. One measurement that I’ve been talking about anecdotally has been time per page view using Nielsen//NetRatings' average metrics [total time spent per unique user/total site page views]. Although it is a general average figure, it does speak to relative “value” in terms of OTS [opportunity to see -- a metric typically used in traditional media]. For example, if an average MSNBC.com user spends 60 seconds on our page and a CNN.com user spends an average of 50 seconds on CNN.com, we could argue that an ad on a typical page on MSNBC.com provides 20% more value than an ad on CNN.com if the advertiser paid the same CPM on both sites. Or, we can justify a 20% premium over CNN.com’s CPM.
MOORHEAD: We are looking at two unique measures: the Brand Exposure Duration Metric, or BXDM, which is a formula we use to calculate the relative brand value of an extended impression. By looking at the overall duration of time spent with a branded element and weighting it against typical impression metrics and recall and affinity responses, we can gauge how much impact a brand has made on a consumer over a period of time.
The other is a little less scientific and applies to AJAX. Because AJAX allows users to customize interfaces on pages, ads can’t necessarily be counted on page redraw. Instead, we have attempted to “weight” the relative position of an AJAX element in relation to the top left corner of the page, assuming that more attention and more importance is attributed to interface elements users choose to position at or near the top of the page.
PODELL: I wouldn’t say that traditional Web metrics are becoming less relevant with the rise of new technologies; people are just realizing that those metrics are part of the larger picture of interaction that advertisers and publishers need to look at. Depending on an advertiser’s campaign goals -- direct response versus branding -- and level of engagement an advertiser or publisher is looking to achieve, CPM, CTR and CPA metrics might be the other pieces of the story.
Question #2. Publishers and advertisers are excited by video, games and other interactive content, but do the results justify that interest? Have you seen better clickthrough rates or other metrics for advertising around interactive content?
KIM: We are consistently seeing 1%-2% CTR on the companion ad to our video pre-roll. So, I suppose in comparison to banner ad CTR, video is much better. We’ve also done a lot of dynamic logic studies with our video campaigns from simple ad effectiveness to more detailed mall-intercept type studies to get user feedback on purchase intent, online video ad versus TV ads, etc. And we have consistently seen that online video ads for our client creative has been just as effective in brand recall, purchase intent, etc. as their TV ad.
Question #3. Pre-roll advertising is the default technique with online video, but does pre-roll really make the most of online advertising’s interactive potential? Have you tried other ad formats that get a good response for video content?
PODELL: Pulse 360 has the capability for pre/post-roll sponsored link advertising. Generally speaking, we find publishers prefer to run post-roll.
MOORHEAD: We are most excited by the emergence of new “overlay” interactive advertising in video. The advantage of these ads is they do not present an interruption or barrier to the consumer’s experience of the video content, yet allow an interested consumer to engage with an ad message if they choose.
HORAN: Pre-roll video ads receive a great deal of attention -- both because they are so commonly used and a natural extension from the TV world and because they seem to be the technique everyone loves to hate. The question of whether pre-rolls are “making the most” of the interactive medium is an interesting one, but an even more important question is which video advertising techniques can lead to the most desirable outcomes for the advertiser.
In June, the OPA released a study to address video content and ad effectiveness. The “Frames of Reference” study measured four video ad attributes -- duration, 15 versus 30 seconds; placement, pre-roll and post-roll; companion ad, with or without; and advertising type, original online versus repurposed TV -- and a variety of ads to test 96 combinations for how they impact key advertising and brand metrics, including brand awareness, brand consideration, ad likeability and ad relevance. As it turns out, pre-roll ads were very effective at raising brand awareness -- providing an 11% lift in awareness compared with post-roll ads.
KIM: I’m one of those people who does not believe that the pre-roll is dead. I think it is about the only real scalable standard that we have today against good content. However, in terms of different ad length, I think you have to consider the content environment. A 30-second ad in front of a 15-second user-submitted video is probably not appropriate. But that same 30-second creative could be very appropriate for a three-minute video that is an interview with a compelling newsmaker.
Question #4. User generated content is popular with consumers and a feature many publishers are using to increase interaction on their sites. Some advertisers are still wary about the quality of that content as a place to display ads. What strategies have you found to deal with concerns about the quality user-generated content?
ETTINGER: TIME.com's approach to user generated content has been to incorporate it selectively into the site where it makes the most sense -- as a way to enhance the overall user experience. A perfect example of this can be found in our weekly 10 Questions feature that runs both in TIME Magazine and on TIME.com.
Each week, readers are prompted to post questions on TIME.com to be asked of a prominent newsmaker. TIME editors choose 10 of the submissions to be asked of the newsmaker in an interview that is then published on TIME.com and in TIME magazine. This feature, including with the ability to submit questions, will soon be appearing on TIME Mobile. We’ve signed on a major sponsor for 10 Questions during the fourth quarter of this year.
PODELL: We serve CPC advertising on many of the user generated content and social network sites, including Facebook and MSN Live Spaces. When you work in a CPC environment as we do, every type of inventory is valuable at a price. The quality translates right back to the willingness to bid for placement and a bid price that ensures a positive ROI for the advertiser.
KIM: We have created an internal tool called “First Person” that we launched early this year as our UGC tool that users can use to upload any content. However, the tool lets our editors preview and quality check everything. In fact, we have had a lot of success at “programmatic UGC,” where we try and create a short-term franchise out of UGC, thus providing programming and seasonal relevancy that editorial feels is appropriate for that content section or feature. We’ve found this to be a great and flexible way to meet advertiser demands. For example, if an advertiser comes to us and wants to sponsor our summer travel content but also wants something unique, we would work with editorial to create a “First Person” UGC photo or video gallery around “Best Beaches” or “Favorite Vacation Photos.” This drives user engagement, drives page views and creates a more multimedia showcase where we could also work with the advertiser to do some unique ad experiences.
Question #5. Widgets, XML, RSS and other technologies have made content more portable than ever. What strategies are you adopting to help generate revenue on content that publishers may not control on their own Web sites anymore?
ETTINGER: TIME.com launched RSS feeds very early on, and we’re currently looking into adding ads in some of our larger feeds. as well as the ability to target users who come in to TIME.com via our feeds. We developed a widget with Clearspring based on our highly popular Quotes of the Day feature and are in the process of developing two widgets for Facebook.
The ultimate goal of these moves is to expand our audience reach and generate more traffic for the site that can then be monetized. We’ve had strong success with audio podcasts (audio RSS feed). We’ve had numerous advertisers sponsor our weekly Biz podcasts that launched in early 2006. We’ve also had success selling sponsorships of special feature podcasts, such as our 100 Best Albums podcast that had hundreds of thousands of downloads and spent two weeks on the iTunes Top Podcasts list last year.
PODELL: Pulse 360 just launched the first two Publisher’s Vertical Networks (PVN). We went live with two verticals on msnbc.com -- Politics and The Today Show -- a few weeks ago. The Today Show focuses on healthy living and family. The PVN product provides larger publishers that are in increasingly competitive markets with ad networks to control greater market share of inventory and revenue. To date, they have ceded this inventory to large, generally untargeted ad networks.
With this tool, a leading publisher is able to create their own highly targeted ad network and syndicate their content (widgets) and this higher value advertising to sites that join the network. The member sites benefit from increased revenue from targeted advertisers and an enhanced site with top content from a leading publisher in their vertical.
Question #6. The rise of blogs, social networking sites and other online content has led to an explosion of online ad inventory and a potential commoditization of the product. If you can’t compete on volume anymore, what tactics are you using to keep protect the value of your ad inventory or keep advertisers interested in your properties?
KIM: This is a big issue for us, especially as our sales force, MSN, is the sales rep for sites like Facebook. Our success has been to focus on creating a very contextual and compelling content sponsorship opportunities. In fact, over 50% of our revenue is generated by sponsorships, and we sold over 1,800 sponsorships last fiscal year.
Question #7. What strategies have you adopted to incorporate mobile in the online advertising mix, and what advertising tactics are delivering the best results?
ETTINGER: We’ve seen significant interest in mobile advertising, but the true commitment level has been spotty. TIME launched its open mobile WAP site, mobile.TIME.com, in September 2006 and we’ve sold several site-wide sponsorships over the past year. In addition, we’ve recently seen success building TIME Mobile in as a "cool" extension of our bigger specials packages, such as Person of the Year and All-TIME 100 TV Shows.
HORAN: To help media companies and marketers continue to take advantage of mobile, the OPA conducted an international study earlier this year that looked at mobile Web usage and advertising. Among the most important findings of “Going Mobile” was that consumers are very receptive to mobile marketing. In fact, more than one-third of mobile Web users internationally say they will watch advertisements in exchange for free mobile content. And consumers aren’t just saying they’re willing to watch mobile ads, they’re actually acting upon the ads they see. Almost one in 10 consumers actually made a purchase based on a mobile Web ad. About one-quarter were driven to check out a website, while 13% requested more information about a product or service.
MOORHEAD: Everyone is interested in mobile and everyone is trying to figure out how to make it work. The truth is, the best way to learn about it is by testing and experimenting. We have seen terrific results by carefully considering what the end consumer wants to get out of a mobile experience, and not simply treating it as “the third screen” in a “push” distribution mentality.
Designing marketing experiences for the phone requires channel sensitivity. Mobile is very unique and requires custom strategy and execution to function properly in a media mix. The mobile device is highly personal to the consumer, and marketers will falter if they attempt to turn the phone into a “TV in the pocket” from a marketing perspective. We have also had terrific success with hybrid media strategies that use cost efficient online ad inventory to drive awareness and adoption of mobile messaging and WAP site visits.
Question #8. Looking back over the past six-12 months, is there a particular tactic or model that’s worked especially well for you or a tip you have for publishers and advertisers interested in the online ad market?
KIM: My goal has always been “easy to sell, easy to buy,” with some level of flexibility and compelling ad experiences. So, the things that have worked best for us in driving revenue and solutions for our clients have been sponsorships, roadblocks [allowing one advertiser to buy all the ad units on a given page or section for one day], search integration -- we are using intelliTXT for search keyword integration within our stories -- video offerings and good old-fashioned storytelling that empowers our sales people to create a value differentiation for our services.
ETTINGER: TIME.com has a free online archive dating back to 1923. This collection of original-source content has not only helped tremendously with SEO and other audience development initiatives, but we’ve also been able to mine this asset to create highly custom packages for advertisers. These “sponsored archives” are produced around themes that are relevant to the advertiser’s target audience and can range from health issues such as heart disease to historical topics such as WWII.
MOORHEAD: Using dynamic content assembly technologies for video, in conjunction with current techniques of behavioral targeting and content targeting data has gotten significantly higher clickthrough rates in the places we have used it. This is technology that allows for a customized version of a video ad to be created and served on the fly based on the available behavioral, cookie and content targeting data supplied by the publisher. Publishers need to gear up their ability to furnish granular behavioral targeting and clickthrough data to ad networks to further enable the dynamic asset generation technologies that will ultimately deliver highly personalized, highly relevant ad messages to consumers at the right moment and with the right custom message.
PODELL: Content targeting is not just about contextual advertising. On weather.com, we offer unique ways to target including by very granular location -- local banks to consumers who live in the same ZIP Code -- or weather condition targeting -- umbrellas to consumers with rainy weather -- and consumer defined interest areas -- allergy medication to consumers who frequent the pollution and pollen count pages.
Useful links related to this article
Interactive Advertising Bureau/PricewaterhouseCoopers Internet Advertising Revenue Report:
Online Publishers Association: