Online Advertising


By

Shyamlal Sharma
MBA (Marketing) 2004-06
Sardar Patel University
Vallabh Vidayanagar, Gujarat-388 001
 


A company needs to make marketing decisions not only in the areas of segmentation, product offerings, pricing and distribution but also in the areas of promotion. The successful promotion of a produce requires that, at a minimum, a positive message be received by potential customers. And advertising is the main and most commonly used source of communication to convey the message to the ultimate customers. Advertising is not a new concept. The principles of advertising have their root going back very deep into the history of man. About 3,000 years ago in Thebes, an advertisement was written on papyrus calling for information regarding a runaway slave. This was not the first advertising, merely one of the first examples, which has survived. Pompeli is rich in advertisement scratched and painted upon its wall. But time changes; so do we. And the way people advertise their product or a service is no exception either. Online advertising is the latest addition in this genre. Online advertising is also known as Web advertising, Internet advertising and e-advertising. But whatever be the name, in essence, it is all advertising. In a very simple sense online advertising can be defined as the use of electronic communication resources (especially Internet and its enable technologies) to engage in the activities of advertising.

The realm of which is a relatively new, un-researched area with a huge untapped potential. What fascinates me about this topic is the fact that in the information age, the growing accessibility of the Internet among diverse sections of consumers, can become a powerful tool for endorsement and hence sale of products. What is unique and defining about this medium is that, the advertiser reaches only those who are interested (a focused audience), and more cost-effectively than with conventional advertising. With the new focused channels, the Advertiser can concentrate on timely and customized announcements, rather than the relatively static and mass appeal approach in conventional media. On an individual level, for example, the marketer may use the technology to make himself more accessible to the consumer thus adding to his service levels through interactive marketing. The introduction of interactive marketing and specifically interactive advertising heralds the beginning of an era where customers will choose the advertising they wish to see, when they want to see it. The Web can be transformed into a research tool, a brand builder and an advertising medium in one swoop, something not offered by other media. Furthermore, unlike other media where the advertising agency is the only link between the client and the media-owner, the Web allows the client to become the media owner. The assortment of features of web advertisement notwithstanding, it provides a special challenge to marketers and planners due to its relative infancy, which brings previously un-encountered circumstances to the fore.

Why online advertising?

The Internet has produced a revolutionary new way for business to communicate and interact with customers. Everyone from small businesses to fortune 500 company's are racing to make their mark in cyberspace with their own "Home Pages" on the world wide web (www). The reason it presents great advertising opportunities for marketers because of its continuing growth. The number of Internet users around the world is constantly growing. The computer industry almanac has reported that by the year 2005, 118 people per 1000 around the world will have Internet access.

As Internet users are growing day by day; so are Internet advertisers because they can easily, effectively and efficiently communicate their products or services to targeted mass audience. Add to this the fact that Internet users are well educated with high incomes, it is only logical to conclude that Internet surfers are a desired target for advertisers.

Other reasons why online advertising is growing rapidly are:

* Advertisement can reach very large number of potential buyers globally.
* Web superiority over other advertising medium.
* Web page (advertisement) can be updated any time and changes or corrections are painless.
* Online advertisement works 24 hours a day, 7 days a week, 365 days a year.
* In online advertisement specific interest groups or individuals can be targeted.
* Online advertisement can effectively use the convergence of text, audio, graphics, and Animation.
* Online advertisements are cheaper in comparison to traditional advertisement. There is no printing costs, no postage costs etc.


Forms of online advertising

The Internet is a great place to advertise. There are many forms of online advertising. Some of the main ones involved:

* E-mail sponsorship advertising
* Newsletter and E-zine advertising
* Rich media advertising (flash ads, Interstitials & Superstitials, streaming audio/video, etc)
* Pop-up/pop -under advertising
* Online banner advertising
* Sponsorship (web sites, e-mails, sweep stakes)
* Advertorial (Paid-for editorial) placements.

Sector wise online advertising trends in world:

* Around 1/3 of net advertising is from FMCG Companies.
* Around 15% comes from finance companies.
* Around 11% from technology companies.
* Around 7% comes from communication a publication etc.
* And the rest from other sectors.

Online advertising: Indian Scene

Online advertising is still in the embryonic stages in India, while in other parts of the world it has already taken deep roots. The share of India's online advertising in world pie is almost negligible. But developing countries like India; where Internet users are growing very rapidly, it has huge potential. India's leading advertisers are starting to advertise online, but at a very slow pace. Indian companies are also showing keen interest in promoting their products or services online.

Currently finance sector is most dominating sector in online advertising and accounted about 40% of total online advertising in India. Some of the leading companies from this sector are HDFC, Citibank, SBI, and UTI etc. FMCG goods have just started to come in led by companies like Hindustan Lever, Procter and Gamble etc. FMCG accounted about 20% of total online advertisement spending in India. Consumer durables companies are also coming and accounted 15% of total online advertisement. Share of media sector is about 10% and rest comes from other. In India, most popular form of online advertising is banner advertising. The reason, it is easy to create, place and use. E-mail advertising follows it.

India has to cover a lot of grounds to come up to the level of online advertising as, say, a country like U.S. There are many stumbling blocks in the growth of online advertising in India like, psychological fears of IT, high cost, low education and above all low awareness level. Still many Indian companies are hesitant, anxious and doubtful about the potential it offers. Unless these are dealt with online advertising can't really take off in India.

Benefits of online advertising

The Internet has great potential as media carrier compared to traditional media. It offers higher selectivity which is tailored to the user's profile. The customer can also customize the adverts as he/she is in charge of his own navigation. Through the online advertising the advertiser can get quick, easy and inexpensive feedback in real time, which no other media offers, providing a higher feedback rate. Some other benefits of online advertising are as under:

* Online advertising facilitates the advertiser to reach an absolutely pinpointed and targeted audience.
* "Traditional advertising is usually a one-way mechanism there is no way for customers to act on the information in the advertisements. On the Internet, however, interested customers can click on a banner, learn more, and actually make purchase on the spot," states Arti Dwarkadas, business director, Ogilvy Interaction.
* The Internet as a medium knows no demographic boundaries and gives the advertiser a huge audience to tap and build brand image if not sell products.
* Internet's interactive nature allows for greater flexibility than traditional media in the type of information transmitted and the method of transmission.
* Online advertisement can facilitate purchase decision.
* Enhance customer company relationship.
* Protection of environment.
* Online advertisement expands the company's market to global market.
* It is easy to create, and place, it saves time, labor and money.
* No loss of quality even after a very long period of time.

Limitations of online advertising

Research, reveals that not many companies take advantage of online advertising opportunity. There are many reasons behind it. Some of the most common are as under:

* Online advertising is not simply a "Customer oriented" medium; it is a customer-dominated medium
* Online advertising is not emotional medium like T.V.; it is a cognitive medium
* Mindset shift in using online advertising
* Psychological fear of IT
* Infrastructure inadequacy
* High cost
* Limited space
* Limited information
* Users work on the net for a specific purpose; they are not interested in other things like advertising
Company can't target all the potential customers like those who are not Internet
* Too many companies are trying to slice up a tiny online advertising pie, resulting in Commoditization of the business and leading to extreme competition pressure.
* Suggestions for online advertising
* Understanding the right way to advertise on the Internet is extremely important as the negative or downside potential is extremely great for a small startup or medium sized firm.

Suggestions for effecting online advertising:

* Make sure that the audience of the site matches with the audience you are advertising.
* Online advertising should be valued in terms of the value of the business it creates from the new users it attracts to your site.
* Placing advertisement in the right content vehicles.
* Determine optimal frequency can be the factor, which determines the effectiveness of any advertising campaign.
* Keep Innovating.
* Use of animation to attract the audience.
* An effective presentation simply shows your visitors the right answer to the questions they have.
* Keep it simple.
* Considering the human factor of selling on the web.
* Don't forget to follow advertising ethics online.
* In almost all cases you want your message to be very short. People don't have time to drill into your advertisement for meaning.
* Don't make outrageous claims and don't lie.
* Make sure that you offer some thing worthwhile.

Conclusion

No doubt, online advertising offers potential benefits like target ability, tracking, deliverability, flexibility, interactivity, etc.; that are not available through traditional media. But it doesn't mean that online advertising is the superb way of advertising. It has many limitations also. Success of online advertising requires sound strategy, management understanding, commitment and integration of Internet with companies overall marketing strategy. At this point, it is very hard to predict the future of online advertising because this industry is too young to allow analysts to reach any concrete conclusion. Several factors will influence the future of online advertising like privacy issue, legal issue, and security issue, infra structural and above all market itself.

Bibliography

Online Advertising "Sumanjeet"
www.agencyfaqs.com
www.ibef.org
 


Shyamlal Sharma
MBA (Marketing) 2004-06
Sardar Patel University
Vallabh Vidayanagar, Gujarat-388 001
 

Source : E-mail March 3, 2006

 

   

 

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