A recent report by the Interactive Advertising Bureau and PricewaterhouseCoopers pegs U.S. Internet ad spending in 2006 at $16.8 billion, up 34 percent from $12.5 billion in 2005. And eMarketer trend charts show 2005 spending was up 30 percent from 2004, and more than double the amount spent in 2002.
Of course, as Anne Holland, president of Warren-based MarketingSherpa and a nationally recognized expert in this field, is quick to note, it’s easier to grow by such leaps and bounds when you’re starting from a small base.
And indeed, a separate report by TNS Media Intelligence this month – which seems to paint a much smaller snapshot of online advertising, $9.8 billion worth – shows Internet ads made up only 6.5 percent of total ad spending in 2006, up from 5.8 percent in 2005.
Looking at both pieces of information together, Holland sees good news for companies that might have been timid about online marketing, or that thought it was too late to jump in.
“It’s exciting, it’s effective, it’s still pretty small, and the main thing is, Rhode Island-based companies can still get in and do a better job than their competitors,” she said. “Because though it seems like everyone is doing it, they really aren’t.”
But how do you do it best?
Well, here’s what companies did last year. A whopping 42.5 percent of U.S. online ad spending in 2006 involved paid searches on sites such as Google.com, eMarketer reported last week. That’s up from 41 percent in 2005, and eMarketer expects it to rise to 44.3 percent in 2011.
Display ads accounted for 21 percent of ad spending, the same as in 2005, but eMarketer predicts they will decline to 16 percent by 2011. Next came online classifieds (17 percent, same as in 2005) and rich media and video (9 percent, up from 8 and expected to rise to 17 by 2011).
Holland said paid searches’ dominance is due, to a great extent, to their accessibility, even for small local businesses.
With paid search ads, businesses buy a search term – say, “Providence,” or “solar power” – and when someone looks up that term, the ad comes up as a “sponsored” link. If the person clicks on your link, you’re charged a fee – from as little as 10 cents, to $100, depending on the term, said Vida Jakabhazy, vice president of operations at Working Planet Marketing Group Inc., a Providence firm that specializes in pay-per-click advertising.
“The truth is the fastest way for someone to find an online presence is through the instant gratification of pay-per-click advertising,” Jakabhazy said.
Unlike most ad campaigns, which require art and copywriting, Holland noted, search engine campaigns require minimal effort. “You can just go online with your credit card, and that’s often how companies get started. You can start for $50, put up a couple of ads, and see how you do.”
The latter is not the best approach, Holland said, but it’s the reality. Many business owners sign up for a couple of search terms to get started, and “if it works for you, it can be something completely addictive that can completely transform your bottom line. I’ve known people who have gone from zero to $100,000 in one month” in paid-search spending, she said.
And if it works, you’re rich. The problem with paid searches, however, is that you can also waste a lot of money on them, Holland said. Even if they drive thousands of visitors to your Web site, she noted, if people don’t go on to buy your products or services, or sign up for your marketing e-mails, or otherwise start a relationship with you, it’s not going to pay off.
Both Holland and Jakabhazy stressed that for any online ad campaign, it’s crucial to set up good tracking systems, and not just to measure click-through rates, but also what e-marketers call “conversions” – how many customers go on to buy or do whatever you wanted them to do.
Recent research has shown only a fraction of online advertisers do such tracking, Jakabhazy said, yet without that, “you can really throw away vast amounts of money without actually knowing the impact on your profitability.”
Of course to measure conversions, you have to start by deciding what you’ll count as success, Holland and Jakabhazy said. In some cases, it will be a sale, but it may also be downloading a white paper, registering, or even spending a certain amount of time on the desired pages.
To be most effective, both women said, online ads should link to a page that directly addresses what you want the visitor to do. You don’t want someone to have to dig through multiple layers to find the product or offer you enticed them with. The “call to action,” whatever it is, should come up immediately, before you lose the visitor’s attention.
Another insight that eMarketer offered in recent days is that the best campaigns don’t use just one medium – online or off. It cited a Yahoo! study released by comScore Networks last December that showed campaigns that used both search and display advertising increased their share of page views relative to competing sites by 68 percent, and their sales by 244 percent online and 89 percent off-line.
Holland took that advice one step further: The best campaigns, she said, combine Web advertising with e-mail, radio, TV, print – whatever channels best reach the target audiences.
For example, she said, “we’re seeing local radio going to Web doing extremely well,” both for business-to-business and business-to-consumer, as long as there’s a special landing page for the campaign and the URL is easy to remember and easy to type.
“The key is that the average consumer or business person doesn’t respond to an offer until they’ve seen that about seven or eight times,” Holland said. “But you can’t run the same search ads seven or eight times. You can’t send the same e-mail to someone seven times. … But if you mix the mediums, they’ll get that magic number and you’ll get that impact.”
One high-profile campaign that’s taking that approach is Blue Cross & Blue Shield of Rhode Island’s “Healthy Moves,” an effort to encourage consumers to eat healthy, exercise, be more engaged health care consumers, and watch their spending, among other things.
The campaign includes 15-second TV spots and boldly designed print ads with only a snippet of the message and an invitation to visit a specially created Web site with in-depth content.
The TV and print ads are “teasers,” said Christopher Medici, chief communications officer for the insurer, while the Web site is “user-centric,” allowing visitors to access information “on their own terms, at a time that’s convenient for them.”
Blue Cross is tracking hits and page views closely, Medici said, not only to gauge the campaign’s effectiveness but to see which points resonate the most. Asked how well it’s worked so far, he replied: “We have seen a good stream of traffic, but I’d like to see at least a couple of months’ worth of data.”
