With online advertising revenues under siege as a byproduct of the dot-com shakeout, the next wave of online advertisers, expected to come more from the offline world, is demanding more bang for its bucks.
"The industry is learning about what technologies and what sites are most effective," said Roger Sant, chief strategy officer at Carat Interactive Inc., a Boston agency that helps develop online advertising campaigns for companies such as Pfizer Inc., RadioShack Corp. and Symantec Corp. "Banners and buttons are in decline, and advertisers are looking for more innovative ways to get their message across, like streaming media and pay-for-performance models."
Sant said Carat Interactive is studying the effectiveness of online advertising to build brand awareness, rather than just direct response. Such advertising could take the form of trivia quizzes or point-and-click games, something that engages visitors with the brand without necessarily seeking a response from them, Sant said.
While online advertising companies such as Engage Inc., Advertising.com Inc., 24/7 Media Inc. and Mediaplex Inc. have announced layoffs and DoubleClick Inc. and advertising-dependent Yahoo Inc. have issued less-than-rosy earnings outlooks, a migration from offline marketers to the online world could mean brighter days ahead for online advertising.
Kathleen Heaney, e-commerce and retail analyst at New York-based BlueStone Capital Securities, pointed out that the top 100 advertisers still spend just a fraction—only about 1 percent—of their advertising budgets on online advertising.
But not everyone is convinced that the Old Economy companies can save online advertising. "Bricks-and-clicks [advertising] is increasing, but it cant possibly make up for the collapse of the dot-coms," said Martin Nisenholtz, CEO of New York Times Digital, adding that the next wave of online advertising will require much more effective use of the medium. "Weve gone from ... pure, undifferentiated click-through to much more intelligent, more strategic uses of the Internet for marketing," Nisenholtz said.
Some online marketing companies are trying to ride that wave. iWant.com, a Burlington, Mass., startup, struck out as a destination site for bringing marketers and prospective customers together. But the company may have a hit with its Instant Opt-in technology, now used in one form or another at more than 20,000 affiliate sites.
A dialog box on the site enables customers to request an offer geared to their purchasing needs. This takes the customers to iWants Deal Center, where they can refine what theyre looking for, whether its deals on travel, books, movies, music, computers, electronics, cars and so on. iWant then shows the customers a list of offers from its advertisers that can meet those needs.
iWant officials said the company has delivered 1 million promotions since December with click-through rates averaging 30 percent. It guarantees its 1,200 advertisers at least a 10 percent click-through rate. Web banner click-throughs have typically run at less than 1 percent.
Online shopping e-tailer DealTime.com Ltd. was understandably skeptical when iWant approached it late last year with the opportunity to be a test advertiser for its service. DealTime has since become a believer. It began testing iWants service last month.
"It delivers a much more qualified user than many other advertising mediums we had been using," said Chris Victory, director of online marketing at DealTime, of New York. Victory said DealTimes initial online marketing efforts focused on network banner ads, which were not effective. Victory wouldnt comment on DealTimes conversion rates with iWant, beyond saying that he was pleased with them. "We renewed for another month. Well probably renew again and then look at a more long-term relationship," he said.