Banner-waving

Saturday 1st September 2001

New Zealanders just lurve the internet but online advertising hasn't taken off. Andrea Malcolm examines why.

If you logged onto Xtra in early May you would have had to be colour-blind to miss the change. Instead of its usually restrained blue-and-white home page it had turned shocking yellow.

Why? It was all about making internet users sit up and notice the online advertising. Xtra took the unprecedented step of changing its site colour for three days to resemble that of advertising client Freedom Air. The site also bore the teaser "Seeing yellow and wondering why? Click here to find out". The creative move delivered 6000 people to Freedom's website.

Air New Zealand's cut-price domestic airline is particularly adept at squeezing dollars from the internet. Up to 40% of Freedom Air's bookings are made online and its planes are emblazoned with its web address. Last year it dropped advertising agency Seven Group for DDB Needham because DDB better understands online advertising, says company vice-president Wayne Dodge.

But Freedom Air is the sharp end of the cyber-stick. Overall, online advertising hasn't had the same take-off.

After six years in the New Zealand market, online advertising accounts for just 0.5% of total ad spend. Compare that to 3.5% in the US, 2% in the UK and 1.5% in Australia. While the Australian market will flatten to around $A90 million this year, New Zealand languishes at around $A10 million. So what is the problem here? For a start American online advertising was fuelled by the dot-coms, of which we only ever had a handful. But there are plenty of other theories for the local lag.

All advertising has contracted, and general nervousness about the economy has restrained advertisers from the web. Some advertising agencies see the new medium as fragmenting advertising spend and as too expensive. Web publishers have been ineffective at educating advertisers about the new medium. Negative press from the US slamming banner ads, which sit across the top of a web page, is also blamed.

It has all been enough to make online advertising a hard sell. Those advertisers braving the medium tend to have an existing online business model - selling or using the net to generate leads or provide a service.

The tech-wreck hasn't helped those pushing the medium but has helped offshore advertisers. It has driven prices in the US as low as $US1 per thousand views (a measure known as CPM). Depending on the site, Australian CPM rates range from $A10 to $A50. New Zealand is a bit more expensive, at $50 to $120.

While general rate-card costs haven't dropped much here, a regular advertiser or client with a major campaign can get good discounts, says Simon Aimer of TVNZ's website, nzoom. "If it's the wrong media for you it looks quite expensive and if it's right for you it looks fantastically cheap. People are still unfamiliar with buying it and it's difficult for them to get their heads around."

Sending the message

What's the answer? Industry players all agree that more education is needed. People understand TV, radio and print but the internet is still relatively new for advertising. Even net-savvy people, whether they're advertisers or users, are still wary and distrustful.

Nicky Willis, online strategist for advertising agency Optimedia, has seen interactive TV presentations get viewers to click through to advertising sites in much higher numbers than the internet has been able to achieve. On BskyB in the UK, Pantene ran an interactive TV ad that was seen by 78,000 viewers. Sixty thousand went through to the advertising site and 30,000 worked through 10 screens to get a sample.

"The reason for the success is that people trust their TVs and don't trust their computers. People are used to computers crashing, and security concerns," Willis says.

The mix varies from client to client, says Willis. In a campaign for Nescaf� that included TV, cinema and magazines, about 7% of spend went online compared to the norm of just 0.5%. The reason for the high spend was the target market: 16- to 21-year-olds who are active online.

Willis doesn't include online advertising in a campaign if the client hasn't got a functioning website. The site needs to be able to cope with making a sale or have something worthwhile to send a user through to. Only half her clients fall into this category. On the bright side, this number is slowly increasing.

Industry sectors dominating advertising on Xtra's site are recruitment, computer equipment and services, travel, banking and financial services. You need to give people a reason to go to your website. If you're an advertiser and you don't have a compelling offer, don't blame the publisher, says Aimer.

Measuring up

One of online advertising's good points is its ability to measure how many people have seen an ad and responded by clicking on it. It's the most measurable form of advertising there is. Clients get excited about this feature - but being measurable is a double-edged sword.

"The internet has great branding opportunities but measurability is a stumbling block because branding doesn't necessarily get the measurable, click-through results people expect," says Polly Foote, online strategist for Colenso BBDO's Media Online division.

Websites are wising up to this and are now measuring past the click-through. Thanks to new ad server technology from companies such as Double Click, it's possible to measure not only how many people clicked on an ad but how many went on to buy something. Instead of saying "You should do this because you can measure it", web publishers are starting to say "You can do this online, it supports what you're doing offline and by the way, you can measure the results".

Nzoom's Aimer says creativity and strategy are all-important. "You know how we look at TV ads from the 60s and 70s and think how cheesy they are? Well, that's how today's online ads will look to us - but a lot sooner. Our advertisers don't usually talk about click-through. They're happy to raise advertising awareness."

Banner ads, the rice and potatoes of online advertising, don't take much room and are easy to put on a web page but from an impact point of view there's only so much you can do. Most agree that one banner ad for a month isn't going to work, or teach the advertiser much about developing an online strategy. Making increasingly regular appearances are the new, sexier formats such as the "skyscraper", which runs down the right-hand side of the page, or larger ads akin to quarter-page print ads. "They allow the advertiser to take greater ownership of a page and are a lot better for visual ads, used for products like cars, cameras and perfume," says John Stewart of media company The Internet Bureau. "I think certain sectors - like the automotive industry, which does a lot online overseas - will drive these new formats."

US agencies will do five or 10 creative ads and run them in a range of places, then take out those that don't work. The more clued-up advertisers are starting to do that in New Zealand.

Compaq, which does 20% of its advertising online, has gone from a broad to a targeted approach. The computer maker uses online advertising for focused selling (where it's had a 4% response rate) rather than general branding. It also uses it to support other projects, such as the ski race it sponsors, says marketing manager Peter Wogan.

He sees good reason for optimism: publishers are getting better at tracking and matching results back to campaigns; the online advertising industry is getting better at offering value; and advertisers are clearer about how to use the medium.

Perhaps we're simply being unrealistic. After all, online advertising is only six years old. It took radio advertising 50 years to reach the success levels of the internet today.

Why it hasn't happened yet

Too expensive
Online advertising further fragments advertising spend
Nervousness about the economy
Online campaigns not focused enough on creativity
Negative US press about banner ads
Online measurability means clients' expectations are too high

Reasons for optimism

New online ad formats allow bigger, creative graphics and more text
The medium is maturing and stabilising after the dot-com crash
As the number of businesses going online increase, so does online advertising

Andrea Malcolm
andrea_malcolm@idg.co.nz

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