The Future of Online Advertising

Today, we live in an internet driven world; from researching to social networking, people use the internet on a daily basis. This has given advertisers a new platform to reach potential customers. So far in this blog we have explored the topic of online advertising. We have talked about its history and its current impact. But just as in business, we need to also look towards the future.

One area where we can expect future improvement is the relevance of online advertising. Advertising companies have the infrastructure in place to implement ads and reach a large audience. A new trend that will continue into the future is better targeting individual ads to consumers. One example where this has been implemented in on Hulu, a website that allows people to watch current shows online for free. While watching a show, Hulu will present commercials or advertisements. While these ads cannot be skipped over, the view has the ability to provide feedback about the relevance of the ad or even switch to a different ad. This allows for Hulu to provide a better ad experience to its customers. As more companies start to take advantage of the technologies available to them, in the future online advertising will be able to become even more personalized and relevant.

Another growing trend in this field is mobile advertising. Traditionally, online advertising was associated with internet use on personal computers. As companies such as Apple and Android improve the design of smartphones and cellular providers increase coverage, people are spending an increasing amount of time on their mobile devices. While more time is spent on mobile devices, more advertising dollars should be designated for this emerging platform. According to the eMarket forecast, mobile advertising will make up an average of 5% of the total advertising budget in 2016. This is a sharp increase from its 1% share today, and will be expected to continually increase into the future.   

It is important in business, and especially online advertising, that while we may learn from the past and celebrate our accomplishments in the present, we must always keep looking towards the future. By analyzing emerging trends, we can best capitalize on emerging technologies and markets to increase our returns. What do you think we could see from online advertising in the future?    

Sources

http://adage.com/article/news/marketing-s-years/237616/      

Online Advertising and Privacy Concerns

So far in this blog, we have thoroughly discussed how online advertising can benefit a business. This is very important, because you, the readers, are the future business leaders of this country. As business students, learning how to use online advertising is essential to our future careers. However, this blog post will serve to view online advertising from an alternate viewpoint: consumers. Taking our customer's thoughts and concerns into account is a necessary function of a successful advertising campaign.

As a society, I believe people are accepting the increasing role technology plays in our daily lives. But as with any societal or cultural change, people will have hesitation.  Part of this hesitation dwells in the worry that personal information might not stay personal. As technological advances allow businesses to collect "big data", consumers worry about the prospect of a "big brother" monitoring their every move.  But are these concerns valid? Some would argue that they are. Recent data breaches at Target and Home Depot have proven to the consumer that technology has its faults. In addition, American culture generally values personal privacy. These are examples of obstacles in the way of online advertising; but it is up to business leaders to take into account the cultural environment they are operating in and find ways to combat the concerns of their customers.

One way to approach this problem is by utilizing the Risk/Return trade-off. Simply put, this principal states that people are willing to take on greater risks for greater returns. To apply it to online advertising, consumers would be willing to accept a greater perceived security risk if they saw more personal benefit from advertising online.  But how can business managers increase consumer benefit? I would argue that the best answer to this question is RELEVANCE. If consumers consistently see ads that are relevant to their wants and needs, that benefit would outweigh their privacy concerns. One study found that “two-thirds of Internet users believe better targeted ads would be less annoying, and 45% would share personal information in exchange for that advertising relevance.”  As technology leaders improve the techniques we use in online advertising, we will be able to provide more relevant ads to our customers and ease their concerns about personal privacy.

Do you think privacy should be a concern in online advertising? Is relevance the best way to provide benefit to customers? How else could the business community ease consumer concerns?

Advertising On Social Media

Social Media is currently sweeping the nation's attention by a vast majority. Almost every company or individual uses some type of social media  on a regularly daily bases. Whether it's for advertising or just simply for entertainment, it is still being used.  Social networks such as Facebook, Twitter,  Tumblr, and YouTube are dominating in the social media world. Youtube has over 1 billion unique users every month.  Facebook is used by 1 in every 13th person on the earth. Twitter has 232 million monthly users. While Tumblr has 300 million viewers per month. Needless to say social media is has a very large audience. Meaning that through social media companies can reach a wide range of different target markets.  But what does this mean for advertisers?

Social media allows advertisers to successfully market their product, service, or concern to the world. If everyone is using social media then everyone, at some point, is going to be viewing an advertisment. Let's look at twitter for example. Twitter has a rate of 11 new activated accounts per second. That means that every second 11 more people are joining twitter. By doing the math you can see how large those numbers add up making twitter a very large audience for advertising. Budweiser took note of this opportunity as they recently advertised their #FriendsAreWaiting promotional video against drinking and driving. By using twitter they were able to grasp the attention of their target audience hoping to bring awareness to the dangers of driving drunk. Clorox brand also recently used twitter as their platform to bring awareness to their Safe water project, which is a project that is sought to provide safe and clean water in Peru. By using twitter they were able to reach people who were concerned about the issues of unsafe water in Peru and also gain support from people who support the cause of the Safe water project movement. These are just a couple of ways that some companies are using twitter as their stepping ground for advertising.

Now let's look at Facebook and Tumblr. Both social media websites with very large participation and audiences. Facebook is unique in the way that it's marketed towards all age groups from the Baby boomers to GenY's. Tumblr is unique in the way that every user is able to make their own unique page and create anything whether it's a poem or photo that describes their personality or anything they believe in. However when it comes to advertising apparently Tumblr is the place to go as it outpaced every other social media sites in revenue per visit (with Facebook being the runner up). Tumblr visitors/ users are more likely to feed into the advertisements displayed on the sites than any other social media site users. Tumblr believes that its users have a generally higher income than users of other social media sites. It is important that advertisers pay close attention to the demographics of these social networks users so they are able to target the right group in whom they are trying to advertise to.

Advertising on Youtube is similar to that of twitter. Companies use promotional videos to grasp their target audiences attention. Have you ever tried to watch a YouTube video and are forced to watch a 1 minute commercial or advertisement?  Sometimes you can skip the add but other times it is inevitable. This is YouTube's main way of advertising. It may seem like a burden and nuisance to their consumers, but in the end it grasps the viewers attention and that is the main goal. Many companies believe that YouTube is the best place to advertise when it comes to social media because EVERYONE uses it. Even if you don't have a YouTube account, whenever you want to watch a video or search a specific song, YouTube is the place to go!

Advertising on social media in my opinion is very vital to a company's success or at least, at the very least, getting out awareness of their product or service. How do you feel about advertising on the social media networks that you use? Do you find the ads annoying or maybe useful? Feel free to share any thoughts, questions, or opinions! 

Sources: 

https://www.youtube.com/yt/press/statistics.html

http://www.digitalbuzzblog.com/facebook-statistics-stats-facts-2011/

http://www.businessinsider.com/twitter-total-registered-users-v-monthly-active-users-2013-11

http://allthingsd.com/20130521/how-many-users-does-tumblr-really-have/#

https://blog.twitter.com/2014/how-clorox-is-using-twitter-to-bring-safe-drinking-water-to-peru

Can Advertising with Amazon Lead to Amazing Results?

Have you ever gone online and not seen a single ad or pop-up window? Hardly. Online advertising has become an essential attribute of the Internet. Most of the ads we see (yes, those text boxes on the majority of websites or the ones that appear on the bottom of most YouTube videos) are powered by Google AdWords. Facebook and Twitter launch the “Buy” button; I wonder how many peopled have tried it out already? And, of course, Amazon wants to get its share of advertisement dollars. A couple of weeks ago, Wall Street Journal reported that Amazon plans to launch its own ad placement platform, Sponsored Links, later this year.

It would be wrong not to mention that Amazon already has a couple of advertising options, such as Amazon Product Ads, Amazon Media Group, and Amazon Local, so why would it spend millions of dollars on new software development? Until now, Amazon was one of Google’s biggest ad buyers, meaning the online retailer’s expenses turned into its competitor’s revenue.

What exactly is the Sponsored Links platform?

Amazon defines Sponsored Links as “advertisements related to your recent product search query or content on the page [that] are always clearly labeled.” According to Forbes, Amazon Sponsored Links will work similar to Google’s AdWords, which is based on keywords data that makes advertisement targeting quite precise. In addition to that, advertisement agencies would be able to buy ads in bulk for numerous clients. Based on the information gathered from millions of its customers, Amazon Sponsored Links will have the ability to target the right ad to the right audience at the right time and in the right context.

Is the new direction too risky for Amazon?

Critics have mixed feelings. On one hand, Google has a more-than-a-decade head start in the online advertising business and development, and it would be hard to compete with the industry leader. On the other hand, Amazon has a great advantage – valuable data on millions of shoppers. Over the years it has collected a vast database of transactions, search, demographic and personal information about its customers. Neither Google, nor Facebook could possibly have such information. When you visit Amazon.com, the system knows what items you looked up before and, more importantly, what you ended up buying. Amazon has an opportunity to make sponsored ads better targeted than ones from Google; it can make ads more “click-worthy” for shoppers, and therefore give a better value for advertisers.

Currently, Amazon Sponsored Links is still in the development stage, so the most important questions remain unanswered. Can Amazon use its information advantage effectively to compete with Google? Will the ads be relevant enough to reach their targeted audience? If you were a business owner, would you entrust your advertising dollars to Amazon rather than Google?

Testing Advertising Metrics

KISSmetrics has a good blog post introducing 8 fundamental principles of profitable direct response advertising and how they apply to online advertising. If you’re in business or thinking about being in business the entire post is a must read! But…

If you only took away 1 principle of direct response advertising:

TEST EVERYTHING!

Knowing nothing else about advertising, if you followed the principle of testing every component of your advertising, you would eventually learn all the other principles anyway. The ability to test is what makes online advertising so effective.

Over a century before the internet, testing is also what made direct response print advertising effective. Direct Response advertising, for the unaware is any advertising where the prospective customer is directed to respond to the advertising in a specific way. In cave-man days this might mean filling out a form and mailing it in, clipping a coupon and bringing it to a store, or calling a telephone number for more information.

What savvy direct response marketers realized was that they had much more control over their advertising results when they tested and tracked their results. The one way to test for ad effectiveness was to deliver a CTA (call to action) that directed the customer to act in a way where their response could be measured. Therefore, if they paid for ten thousand ad placements in which they told their customers to mail in a form for more information, and they received 200 forms in the mail they now knew their response rate for that specific advertisement at that time, to that market was 2% (200 / 10,000).

They could then test different ad headlines, body copy, graphics, and CTAs. If they changed a headline and their response rate improved .3% they had proof it was a better headline and would start testing that ad in larger circulation while testing newer ads in smaller circulation.

The reason the internet is such a disruptive technology in advertising is because online advertising is direct response advertising on steroids. It offers instant feedback, and the opportunity to test countless metrics in highly targeted market segments.

As you learn about various online advertising platforms, frankly, all the charts, graphs and data can be a little overwhelming. Which metrics matter more? KISSmetrics reminds us:

“Many marketers are unduly concerned with ‘building brand recognition’, ‘increasing customer awareness’, ‘leveraging social media’ and all these other fancy marketing techniques...If you haven’t got a clear idea of how a given marketing technique will help you make more sales, don’t use it. If you’re already using it, stop immediately. On the other hand, if you do have a clear idea but lack any way to measure your success, find a way before continuing.”

In short, whatever you measure, make sure it translates into sales!

For example, you’ll hear a lot of talk in online advertising about CTR (Click-thru-rate). CTR is the percentage of people who were showed an advertisement that also clicked on it. Obviously, if you’re advertising widgets and someone clicks on your ad and is taken to your online store, then that can translate to a sale. There is a necessary relationship between the customer clicking the ad and eventually buying from you, so if you improved your CTR then you should increase your sales, so you should measure your CTR.

Another metric you’ll hear a lot about in online and offline advertising is CR (Conversion Rate). CR is the percentage of prospects who take a specific action. At its simplest CR measures involvement through activity. But most often that activity is buying something, though it doesn't necessarily have to be. Again, whatever it is it should naturally translate into an eventual sale, otherwise it’s unnecessary.

Keeping these core principles in mind in all your advertising will help you take measurable advantage of the array of modern information technology online designed to help you get and keep more customers.

Advertising Vs. Marketing

Before you can execute a successful online advertising campaign you have to understand what advertising is and what it isn't. Many people confuse advertising and marketing, assuming they’re essentially two different words for the same thing. While advertising and marketing do overlap, it is critical to the success of any business in the long run to have a solid grasp on the important differences between the two functions.

What is Marketing?

The AMA’s widely accepted definition of marketing defines it as:

...the activity set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

If that sounds like a mouth full it is. Marketing is the broad systematic function within every business responsible for developing product and service ideas, researching the validity of those ideas, designing their final form, pricing those products and services, communicating them to the potential customers, and facilitating the exchange of those products and services with customers. Marketing also includes, developing efficient supply chains and effective customer & support programs.

One of the many functions of marketing includes promotions. Promotions are also commonly confused with advertising, but again aren't exactly the same. Promotions are broadly any effort to communicate an offering to a market. This includes, Public Relations, Telemarketing, Web Pages, Brochures, and drum roll….

Advertising!

What is Advertising?

According to the AMA, advertising is the placement of any persuasive message placed in the mass media in paid or donated time or space by an identified entity.

For example, an advertisement would be a spot on television or a spread in a magazine (Mass Media) that had been paid for by a person or organization (or on behalf of a person or organization) that is clearly identified in the ad.

Advertising is merely a single piece of the broader promotional process which itself is a single piece of the broader marketing process. So all advertising is marketing, but not all marketing is advertising. See… Big difference.

Online it can take a little practice to distinguish between the two. For example, a Facebook page may promote a brand, but it is not by definition an advertisement since the space is not paid for by the company that created it. Instead, it’s merely a promotional tool. However, the strip of pictures running down the right side of the Facebook page are advertisements because they are paid and identifiable placements.

It’s important to not confuse what is meant by “paid”. While a company may “pay” a great deal for the design and management of a Facebook page it is not paying for the space (the page itself) and that’s required if we’re to consider it advertising. Even if the page was owned by the company it wouldn't count because the price they pay is not tied directly to time and space. That is, a company webpage can be as long or short as it desires and can exist indefinitely. Advertisements have a specific predefined cost associated with where and when they are displayed.

Now that you know the difference between marketing and advertising you can truly begin your journey to developing powerful online advertising campaigns.