According to a recent report by US market research firm Jupiter Communications, online advertisers will increasingly turn from banner ads to more innovative advertising vehicles such as co-branded content and interstitials in future, placing the onus on Web publishers to provide these options.
By 2001, advertisers will dedicate, on average, a quarter of their budgets to each of these two emerging models. The remaining half will go to banners, which currently represent 80 per cent of online ad spending, said the report, which is entitled Banners and Beyond: Strategies for Branding, Driving Traffic and Sales.
Savvy advertisers will increasingly centre on deals to co-brand content with publishers, mainly in the form of sponsorships. Jupiter estimates that 26 per cent of the top 100 Web publishers host sponsored areas now, as opposed to 42 per cent of the top 50.
Two main factors that will drive advertisers further toward sponsorships are internal return on investment (ROI) pressure and the unprecedented accountability that online media buys, particularly banners, will have; and advertisers' desire to connect more deeply with consumers than unclicked banners allow.
Because of their intrusive nature and high branding potential, five to 10-second animated interstitials or "intermercials", limited mainly to push platforms so far, will be commonplace on the Web by 1999, the report said. Static interstitials - "splash screens" - will become increasingly popular as well. However, consumers may resist these models, especially at first, and advertisers pioneering their use may bear the brunt of their displeasure, according to Jupiter.
The smart thing
Shrewd advertisers will increasingly nest their ad content on publishers' sites in microsites and in banners. Nested ad content will ultimately result in greater and stronger user engagement than content on advertisers' Web sites, the report said. Content will be tailored to each Web site's audience - even taking on the site's look and feel - and it will be smoother to click to. Nested ad content will ultimately be more successful at generating leads and sales, including impulse buys, Jupiter concluded.
According to the report, the banners that advertisers continue to buy in the next few years will increasingly be animated and, gradually, interactive. Interactive banners will yield higher click-through rates and sales than static ones. Cost and technology issues are slowing the adoption of interactive banners, but these obstacles will be overcome as more off-the-shelf development tools emerge, the report said.
Advertising will also increase on alternative ad platforms - push technology, chat, ad-supported e-mail and Internet access, including consumer online services, Jupiter says. All offer very high targeting potential, as well as other advantages. Chat offers an environment which, while unpredictable and hard to control, hosts users who are partic- ularly passionate and loyal. Push enables publishers to work around bandwidth constraints to deliver a richer ad experience to consumers. Meanwhile, ad-supported e-mail has excellent point-of-purchase potential, and ad-supported ISPs can ensure longer opportunities-to-see, the report noted.
In some early sponsorships, ad message was poorly matched with editorial content, limiting its potential to impact consumers. Today there are several examples of very well executed sponsorships, said the report, predicting that, as advertisers and publishers continue to creatively and patiently test the medium, this form of advertising will become very effective.
When it goes too far in blurring the line between advertising and editorial, however, co-branded content does risk consumer alienation and subsequent brand damage to marketer and publisher, Jupiter warns. Advertorials carry the greatest risk of consumer backlash; they are much more difficult to distinguish from editorial online than they are in print, and can lead to consumers feeling duped. This model will see limited use for this and other reasons, the report said.
Product placement is a model whose time will come, according to Jupiter. Currently limited to textual references in episodic copy, product placement is only starting to take the form of images in two- and three-dimensional environments, such as chat and games. As technologies mature, the possibilities for placing products as props, and as logos on the clothing of avatars, for instance, will be numerous and intriguing, the report said.
The next change
Looking further ahead to the future, Jupiter forecasts that marketers who haven't yet done so, will bring their Web sites into the third evolutionary "utilitarian" phase. Having built "brochureware" sites that had no consumer appeal, and "showbiz" sites that tried to do the work of publishers, advertisers as a group are increasingly relaunching sites that are leaner, more targeted and more useful than earlier efforts, the report said.
Advertisers looking for the best targeting opportunities will turn to subscription and required-registration sites, and to alternative ad platforms. Because these sites and platforms require users to provide data about themselves for billing purposes, in the best cases they will give marketers precious targeting intelligence. Publishers with behavioural consumer data can also offer targeting value to potential advertisers, the report noted.
For branding, advertisers will increasingly migrate from banners to co-branded content and interstitials. While early research suggests banners can instil favourable feelings in a user about an advertiser, as long as they fill just one-tenth of the screen, their potential to make a lasting impression will be lower than that of co-branded content and interstitials. However, because banners are by far the most widely available model, they do offer the greatest reach online.
Advertisers wanting primarily to drive traffic will continue to stick mainly with banners. While static banners have so far tended to yield click-rates below 5 per cent (higher for animated and interactive), co-branded content and interstitials are designed for other purposes and so are likely to yield even lower rates. Banners actually compare favourably with direct mail, and will improve as advertisers and agencies get better at using them, the report said.
For generating leads and sales, advertisers will look to interactive banners and static interstitials. As interactive banners become cheaper to produce and technically more viable, and as transaction security concerns diminish and online commerce begins to flourish, advertisers will increasingly deploy these models to make sales, the report noted.