intro to online advertising greg stuart

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


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.


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


Digital Media in Context

What is the Net, where is Digital going, and what does Media mean?


Digital Evolution of Media

The future is a number of Digital and Networked media


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


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:


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


If you had to live on a deserted island and couldonly take one of the following with you, which

would you take?


Types of Online Advertising

It’s just not one media. It’s the Network and there are many options


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


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


More Types of Online Media


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.


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


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)


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


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


Does Online Advertising Work?

Really, does it? And how well?

(Answer sometimes 10x better than TV)


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


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


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%


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


What Do We Know about Creative

BB

AA

Better creative can make the difference between success and failure

Source: XMOS


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


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


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%


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!


Roadblock

Trying Something Brand New:Home Page Takeover Ad

Ran One Day on Each Portal - Roadblock


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.


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


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


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


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


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


Online Advertising Research &

Measurement

And the Issues that do not get discussed publicly


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


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”


Online Media Research Overview


Big Strategic Advantage was

Global Internet Ad Impression

Measurement Guidelines


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


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


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


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 Ad Engine

Publisher Ad

Engine Log


Log

Image Server

Log


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 Ad Engine

Publisher Ad

Engine Log


Log

Image Server

Log

D

5b

Publisher Beacon Server

Publisher Beacon

Log

5a5c


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


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


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


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.


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


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


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)


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


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


Positioning Online Advertising

What Does the Research Show In How to Position Online as a Medium


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


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”


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


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


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)


Print Ads


Trends & Data

Never Enough Data. Lots of Trends.

What Does it Mean?


Global Online Population

Currently about 1.2 billion

Projected to grow to 1.8 billion by 2010


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.


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)


Internet’s reach exceeds TV’s from 7 am to 8 pm

68

Source: National People Meter, comScore Media Metrix 2007


The Web Already Delivers More Advertising Than TV!

69

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.


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


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


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%

72


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


Clickers Follow the 80/20 RuleSource: comScore, Total US Online Population, July 2007

Clickers are predominantly younger (25 - 44) with lower income (under $40K)


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


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

76


Future and Other Suggestions


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.


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


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


Review of the Online Medium

Prepared in July 2008

By Greg Stuart

[email protected]

+1 631 702 0682

New York City


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.

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