Rich media spending

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Rich media spending

  1. 1. May 2005 White Paper Rich Media: At The Tipping Point Sponsored byImpetus: The US Internet quietly passed an important milestone late last year, as the number of broadband userssurpassed dial-up users for the first time. More than one-third of all US households will be broadband-enabled by theend of 2005. Spurred by the wide availability of broadband, the use of rich media in advertising will grow sharply overthe next five years. The wider prominence of rich media and the strong response rate to rich media ads will stimulatenew creative activity—and that creativity could well lead to even more interest in rich media ads among advertisersand ad agencies. 063872US Rich Media Ad Spending, 2000-2008 (in millions) Overview The mass broadband audience has arrived. The shift to fast 2000 $161 connection in the home and the office has created a substantial 2001 $177 audience for marketers employing rich media advertising. Rich2002 $301 media advertising totaled roughly $800 million in 2004,2003 $581 accounting for less than 10% of all online advertising. eMarketer2004* $808 expects the category to register gains of more than 25% through 2007, and spending as a whole will reach $2.2 billion by 2008.2005 $1,093 Growth will come not only in absolute numbers but also as a2006 $1,407 share of the overall market, as traditional advertisers look to rich2007 $1,794 media for branding opportunities. But there are obstacles to2008 $2,200 overcome. Click-through rates are strong, but Internet usersNote: eMarketer benchmarks its US online ad spending projections against could become disaffected if they are bombarded with boring,the Interactive Advertising Bureau (IAB) - PricewaterhouseCoopers (PwC) irrelevant or repetitive ads. Targeting and frequency capping willdata, for which the last quarter measured was Q4 2004; *as of 2004,interstitial ads included in rich media be critical for both direct and brand marketing efforts, and,Source: eMarketer, March 2005 perhaps more so with rich media than with other types of online063872 ©2005 eMarketer, Inc. www.eMarketer.com advertising, strong creative work will be crucial. Issues & Questions s What rich media standards are emerging? s What are the best ways to measure rich media results? s Which formats work best—and when? s Which strategies are capturing consumer attention? The First Place to Look
  2. 2. Advertising.com Welcome Letter The eMarketer OutlookDear Marketer, The use of audio, video, animation, andIt moves, it speaks, it engages and captures the attention of an interactivity has been a siren song for advertisersaudience like virtually no other online advertising format. It’scalled rich media advertising - and with the approaching demise since the emergence of the Internet. The firstof dialup, it’s here to stay. generation of animated ads showed both theSponsored by Advertising.com, this report explores the promise and peril of the new medium – “Look! Itincreasingly influential role rich media advertising is playing in the moves!” followed by “Oh, no! It crashed mynew broadband-dominant world of Internet advertising. Usingmotion (animated or video), sound and interactivity, rich media browser!” Then came abuse and overuse—theadvertising offers important advantages for advertisers with ubiquitous “blink,” the endless loop, the audio filediverse goals. For brand marketers, it allows advertisements to that played without permission. Web publishersengage audiences at an emotional level once reserved fortelevision. For direct response marketers, it offers click-through moved to clamp down on these early forms ofrates as much as five times higher than static display ads. These rich media, and for years many publishers viewedfactors, the new predominance of high-speed Internet access,and the simple fact that sixty percent of American households are rich media ads with suspicion.now online are all contributing to double-digit growth in rich media The landscape has changed, and widespread broadband Internetad spending. access has been a key. Web sites, once dubious about the format,This report is critical reading for virtually anyone with a stake in the now welcome rich media advertising. Indeed, DoubleClick saysfuture of online advertising. The data captured here are fascinating that some 43% of the ads it serves are rich media. But the growthand sometimes staggering, and although technological and phase is far from over: Mike Henry, director of advertising sales forfinancial hurdles will make the road ahead rocky for some in our The Wall Street Journal Online, estimates that rich media ads onindustry, the statistics clearly support one conclusion. In the WSJ.com jumped by 60% in 2004, with more increases expectedcoming months and years, rich media advertising will increasingly this year.influence how advertisers and agencies approach online The increased use of rich media for advertising will likewise increasemarketing, how publishers compete for advertising revenue, and attention on measurement. Brand marketers can’t spend significanthow we all experience the Internet. dollars without getting clear usage reports. But eMarketer expects measurement to become more accurate as the category grows, in part because control-group benchmarks will be more reliable.Sincerely, Similarly, measurement should become easier because reporting will become built into the buy, rather than added as an afterthought.Scott FerberCEOAdvertising.com Rich Media: At The Tipping Point An eMarketer White Paper 2
  3. 3. Implications for Your Business A. Defining Rich MediaFor Brand Marketers Before looking at the rich media marketplace,The growth of broadband, the expanding universe of Internet it’s important to understand what “rich media”users, and the widening array of available rich media formats andtechnologies mean that brand marketers can no longer overlook means. Some define rich media by technology,online advertising. Brand marketers not advertising on the Internet some by content.today are like their counterparts 10 years ago who failed toembrace cable television: “No thanks—we find the big networks But eMarketer defines it more by its purpose: rich mediagive us all the market reach we’ll ever need!” Rich media ads allow advertising uses motion (animated or video), sound and/ormarketers to engage audiences at an emotional level that once interactivity to engage its audience. That engagement may simplywas the hallmark of television ads alone. The emotional impact of be a better way to capture an individual’s attention for directrich media combined with the power of targeting gives marketers response goals, or it may be a brand’s attempt to build mindsharetools not available in any other medium. or weave its way into the consumer’s heart. That’s a broad definition, but it’s one that reflects general marketFor Direct Response Marketers perceptions. Some purists insist that simple Flash animations areFor direct response marketers, the superior click-through rates of not rich media, but if that measure were used, the majority of adsrich media are impossible to ignore. But rich media is a bit like a now identified as rich media would no longer be identified thatrich dessert—at least as far as the consumer is concerned. way. Most publishers and advertising firms still count Flash ads asStudies suggest that overexposure to a single ad reduces rich media.effectiveness. The creative possibilities of rich media are many, butuse of the ads still requires attention to nuts and bolts issues like Like any new medium, the nature of rich media is frequentlytargeted placement and frequency capping. debated by industry executives and observers. And while the industry is far from general agreement about what is or isn’t richFor Web Publishers media, a common thread emerges: interactivity.Rich media poses new challenges for many publishers. s Rich media ads are “interactive in nature,” says onlineAdvertising.com’s survey of interactive publishers, released in advertising firm DoubleClick.February 2005, found that publishers expect rich media to havethe greatest impact on revenues this year, citing the ads ability to s “It’s the interactivity,” says Advertising.com’s Mr. Ferber.deliver the advertiser’s message. Nonetheless, publishers are s Ads that “allow users to view and interact with products andconcerned about the resources required to support the ads—and services,” says the Interactive Advertising Bureau,streaming content in particular. Still, publishers who can offer richmedia placement and detailed audience data will be in a very s Rich media ads are “all about interactivity,” according to astrong position. presentation by Zedo, a San Francisco Internet ad serving company, and LearningCraft, a Massachusetts online ad consultant.For Ad Agencies The term “rich media” dates back to the early days of WebInteractive ads with audio and video components offer an advertising, when motion and sound were rare. Perhaps some dayopportunity to flex creative muscles in ways that simply aren’t the industry will no longer refer to “rich media” but simply topossible when working with flat image files. Setting aside the “advertising.” For now, however, “rich media” is the commonlymeasurable benefits—both branding and direct response—of accepted term.rich media ads, interactive campaigns are a chance to shine.“Rich media brings back some of the pizzazz to the creative sideof Internet advertising,” says Scott Ferber, the co-founder and CEOof Advertising.com. Rich Media: At The Tipping Point An eMarketer White Paper 3
  4. 4. B. Broadband & the RichMedia Audience What makes the broadband audience attractive is not the highThe single most important factor supporting the speed alone. First off, those individuals who connect via broadband make up a sweet spot for marketers. Compared togrowth of rich media is the audience—more dial-up users, “people in broadband households earn 27% more,people are going online; they spend considerable are online 52% more time, and spend more money when shopping online ($80 more than dial-up users during the past threetime online and do more things there. More than months),” as a Forrester Research analyst told MediaPost in60% of US households are now online. August 2004. And while broadband’s greater bandwidth opens up an avenue forOnline Households in the US, 2003-2008 (in millionsand as a % of total households*) larger (and therefore more complex) rich media ads, the pervasive quality of broadband connections might be even more important.2003 64.1 (56.9%) Always-on encourages individuals to dip in and out at will, much2004 68.8 (60.0%) as they do with television or radio, making the Internet a much2005 71.5 (61.2%) more integral part of their overall media experience.2006 74.1 (62.3%) Besides broadband itself, the ready availability among consumers2007 78.0 (64.4%) of desktop technology required for much of rich media advances2008 82.2 (66.7%) the playing field. More than 98% of Internet-enabled computers have a Flash player, according to NPD Research data for 2004, andNote: *The Department of Commerce reported 112.6 million households inthe US in September 2003. eMarketer has based its total household more than 87% can handle Java.projections on this figureSource: eMarketer, February 2005 The main players for streaming video and audio are not as widely062970 ©2005 eMarketer, Inc. www.eMarketer.com available, but still represent significant chunks of the market.062970And just as important, more households are accessing the Rich Media Player Penetration in the US, 2004 (as a %Internet using high-speed connections that make rich media ads of Internet-enabled computers)palatable (even if not always welcome). Not even taking into Macromedia Flash Playeraccount the near-universal penetration of broadband at work 98.2%(94% among those with Internet access at their desks according to JavacomScore), there will be 60.4 million households with high-speed 87.1%connections by 2007—nearly half of all households in the US, Adobe Acrobat Readerwhether online or not. 78.2%Broadband Households in the US, 2003-2008 (in Apple QuickTime Playermillions and as a % of total households*) 59.6% RealOne Player2003 26.0 (23.1%) 58.5%2004 34.3 (29.9%) Macromedia Shockwave Player2005 42.3 (36.2%) 52.7%2006 51.1 (42.9%) ViewPoint Media Player2007 60.4 (49.8%) 49.6%2008 69.4 (56.3%) Microsoft Windows Media Player 42.0%Note: eMarketer uses the Federal Communications Commission (FCC) asits benchmark source for broadband households for 2003; *the SVGDepartment of Commerce reported 112.6 million households in the US inSeptember 2003. eMarketer has based its total household projections on 11.9%this figureSource: eMarketer, February 2005 Source: NPD Group, December 2004; Macromedia, Inc., 2005062972 ©2005 eMarketer, Inc. www.eMarketer.com 063936 ©2005 eMarketer, Inc. www.eMarketer.com062972 063936 Rich Media: At The Tipping Point An eMarketer White Paper 4
  5. 5. C. Rich Media Ad SpendingTo put rich media spending into greater In absolute dollars, the overall US online ad growth translates to a record $9.5 billion in spending this year, according to eMarketer,perspective, a quick look at the total US online ad rising rapidly to $17.6 billion by the end of 2008.spending trends shows an overall increase of US Online Ad Spending, 2000-2008 (in billions)30.7% in 2004. eMarketer projects growth of more 2000 $8.1than 20% this year, with healthy double-digit 2001 $7.1increases through 2008. 2002 $6.0 2003 $7.3Online Ad Spending Growth in the US, 2001-2008 (as a% increase/decrease vs. prior year) 2004 $9.5 2005 $11.5 -11.8% 2001 2006 $13.4 -15.8% 2002 2007 $15.6 2003 20.9% 2008 $17.6 2004 30.7% 2005 21.1% Note: eMarketer benchmarks its US online ad spending projections against the Interactive Advertising Bureau (IAB)/PricewaterhouseCoopers (PwC) 2006 16.5% data, for which the last full year measured was 2003 Source: eMarketer, January 2005 2007 16.4% 062495 ©2005 eMarketer, Inc. www.eMarketer.com 062495 2008 12.8% Meanwhile, advertisers spent $808 million for rich media in 2004.Note: eMarketer benchmarks its US online ad spending projections againstthe Interactive Advertising Bureau (IAB) - PricewaterhouseCoopers (PwC) Rich media spending in the US will surpass $1 billion this year, anddata, for which the last full year measured was 2003 then reach more than $2.2 billion by 2008. (See chart on the firstSource: eMarketer, January 2005062496 ©2005 eMarketer, Inc. www.eMarketer.com page of this report.)062496 In fact, these estimates may be seen as conservative, since richBuilding from a small base in 2002, rich media advertising media usage has not yet hit any tipping point among traditionalexpanded by a record 93.5% in 2003, according to the IAB/PwC brand marketers. Should that occur sooner than later, eMarketerresearch that eMarketer uses to benchmark its projections. would need to increase these projections by at least 50%.Growth was nearly 40% in 2004, and eMarketer projects thatspending on rich media will continue to grow by well more than Rich Media Ads as a Percent of Total Online Ad20% annually through 2008. Impressions Served Worldwide, Q1 2002-Q3 2004 Q1 2002 17.3%US Rich Media Ad Spending Growth, 2001-2008 (as a %increase vs. prior year) Q2 2002 19.3%2001 10.1% Q3 2002 23.2%2002 69.9% Q4 2002 24.9%2003 93.5% Q1 2003 27.8%2004* 38.9% Q2 2003 31.7%2005 35.3% Q3 2003 36.6%2006 28.8% Q4 2003 39.7%2007 27.5% Q1 2004 42.8%2008 22.6% Q2 2004 42.7%Note: eMarketer benchmarks its US online ad spending projections against Q3 2004 42.7%the Interactive Advertising Bureau (IAB) - PricewaterhouseCoopers (PwC)data, for which the last quarter measured was Q4 2004; *as of 2004, Source: DoubleClick, November 2004interstitial ads included in rich media 053300 ©2003 eMarketer, Inc. www.eMarketer.comSource: eMarketer, March 2005 053300063874 ©2005 eMarketer, Inc. www.eMarketer.com063874 Rich Media: At The Tipping Point An eMarketer White Paper 5
  6. 6. C. Rich Media Ad SpendingUsing the IAB/PwC’s overall data as a benchmark, eMarketer Branding and Direct Responseestimates 8.5% of 2004’s online ad spending went to rich media, Take away paid search, classifieds and e-mail from the US totals (andand expects that figure to increase to a 12.5% share by 2008. negligible non-format spending of slotting fees and referrals) and you’re left with the three core brand-oriented online ad formats:Rich Medias Share of Total Online Ad Spending in theUS, 2000-2008 display advertising (which includes banners), rich media (which includes interstitials) and sponsorships (which includes both).2000 2.0% These three formats make up the majority of ads on content sites2001 2.5% and portals and represent the advertising that brand marketers do2002 5.0% online. And by breaking out rich media, display ads and2003 8.0% sponsorships from the US totals—which are increasingly skewed2004* 8.5% by the large sums spent on paid search—you get a clearer view of2005 9.5% rich media’s place in online brand advertising.2006 10.5% Looking at 2004 alone, rich media is not a mere 8.5% of total online2007 11.5% ad spending, but 24.3% of online brand advertising spending. And2008 12.5% when you consider that an uncalculated portion of sponsorships is devoted to rich media ads, it’s likely that 2004’s true rich mediaNote: eMarketer benchmarks its US online ad spending projections againstthe Interactive Advertising Bureau (IAB) - PricewaterhouseCoopers (PwC) share edges up to the 30% range.data, for which the last quarter measured was Q4 2004; *as of 2004,interstitial ads included in rich media The current rich media spending share of about 25% appearsSource: eMarketer, March 2005063875 ©2005 eMarketer, Inc. www.eMarketer.com closer to the estimates from companies like Unicast, Starcom IP063875 and Eyeblaster. And by 2008, eMarketer projects that rich media alone will make up over 34% of online brand advertising; again factoring in sponsorships would make that figure higher. US Online Ad Spending for Branding, by Format, 2000-2008 (as a % of total) Display ads Rich media* Sponsorships Total** (in millions) 2000 57.9% 7.1% 35.1% $6,539 2001 52.6% 8.1% 39.3% $4,807 2002 51.9% 15.9% 32.2% $3,398 2003 51.2% 24.4% 24.4% $2,979 2004 51.4% 24.3% 24.3% $3,276 2005 50.0% 25.7% 24.3% $3,955 2006 46.5% 28.2% 25.4% $4,722 2007 42.7% 30.7% 26.7% $5,813 2008 39.5% 34.2% 26.3% $6,650 Note: *rich media includes interstitials; **total refers to spending on just the three formats shown Source: eMarketer, October 2004 060944 ©2004 eMarketer, Inc. www.eMarketer.com 060944 Rich Media: At The Tipping Point An eMarketer White Paper 6
  7. 7. C. Rich Media Ad Spending D. Measuring Rich Media EffectivenessBranding Challenges The cost of creating and running rich media adsRich media projections by eMarketer raise some key make results measurement all the morequestions about the nature and use of rich mediaadvertising—is it fundamentally a tool for brand building, important. The basics begin with clicks. This is aor one for direct response? primitive user response, and limited in itsAdvertising.com CEO Scott Ferber says the answer may meaning for the marketer, but the click doesbe in the eye of the beholder. “Right now, it’s seen as a illustrate the greater engagement rich mediabranding medium,” he says. And that makes a certain creates over static ads.amount of sense, given the visceral impact of animationand other special effects. “Movement conveys ‘essence,’so it helps branding.” Click-Through Rates Rich media click-through rates have outperformed non-rich mediaBut the reality, says Mr. Ferber, is that rich media is a valuable CTRs in every quarter. Click rates fell in 2003 but the declinestool both for branding and direct response campaigns. “The halted in 2004. The decline in click rates in 2003 suggests that asability to capture information in an interactive environment new ad formats grew more familiar to users, the ads were easieris an incredible tool for direct response.” to ignore. Stabilizing rates in more recent quarters suggest thatWith that broad utility, Mr. Ferber is looking for a new wave new formats have proven compelling and that marketers have aof advertisers to adopt rich media. Currently, use of rich better understanding of the need to cap ad frequency and to usemedia tends to be focused on a handful of industries, he appropriate targeting.says. “Broadly speaking—on the branding side, most rich The key in all of this is that rich media ads have stabilized and aremedia ads are in the entertainment and automotive sectors, delivering a CTR five times higher than static display ads.while on the direct response side the focus is on retail,financial services, telecom and travel.” Click-Through Rates for Rich Media, Non-Rich Media and Total Ads, Q1 2002-Q3 2004Widespread broadband should change that. “I would hope Rich media Non-rich media Totalto see the CPG companies coming more to the Internet to Q1 2002 2.50% 0.41% 0.72%raise brand awareness,” he says. But that’s just a start. He Q2 2002 2.48% 0.33% 0.69%points to major marketers like restaurant chains and Q3 2002 2.47% 0.27% 0.69%technology companies, to name just two, that could benefit Q4 2002 2.44% 0.27% 0.72%from increased use of rich media to build brand online. Q1 2003 2.15% 0.28% 0.70% Q2 2003 1.87% 0.34% 0.61%Use of rich media is still new enough that not all of the Q3 2003 1.57% 0.29% 0.76%wrinkles have been ironed out, he says. Advertising.com’s Q4 2003 1.24% 0.27% 0.44%network has a reach of roughly 125 million unique users, Q1 2004 0.98% 0.25% –but the entire network is not yet rich media enabled. Q2 2004 1.17% 0.23% –“Right now the figure stands at about 70%,” he says. Q3 2004 1.17% 0.20% – Source: DoubleClick, November 2004Meanwhile, the process can still be sticky. “There’s not 058416 ©2004 eMarketer, Inc. www.eMarketer.comone standard, no common language, for rich media. The 058416reach is there but some of the process is still beingworked out.”The challenges, though, are easily outweighed by thepotential benefits—in particular the chance to interactwith customers. “The big issue is responsible marketing,”he says. “You can overdo it with obnoxiously loud volumeor offensive graphics. But if we’re responsible asmarketers, there’s not much downside risk.” Rich Media: At The Tipping Point An eMarketer White Paper 7
  8. 8. D. Measuring Rich Media EffectivenessFrequency Capping Again, the specific rich media format influences response rates.Ad frequency makes a difference in the click rate. Data from While 28.8% of users interacted with floating ads during the firstEyeblaster for the 14 months from January 2002 through February quarter of 2004, only about half that number interacted with rich2003 indicate that while the average CTR was 5.99%, it peaked at media banners or expandable ads. Note, too, that DoubleClick6.36% among users who had seen an ad two times, dropping off counts even the act of closing the ad window as a viable metric,to 5.33% when users were exposed to an ad six or more times. since user perception of the ad takes place during that brief time. Not every marketer might feel that way, however.Logical enough—familiarity breeds, if not contempt, disinterest inclicking. Therefore, if part of a marketer’s goals with a rich media- Interaction* Rates with Rich Media Ads onbased ad campaign is the direct response of a click, make certain DoubleClick Network Worldwide, by Type of Ad, Q1 2004to limit the frequency of ads that run on any single site. Rich media banner 15.5%Click-Through Rate for Rich Media Ads Run on the Rich media expandable 14.0%Eyeblaster Platform, by Ad Frequency, January 2002 -February 2003 Rich media floating 28.8%1x 6.00% Average 18.4%2x 6.36% Note: *DoubleClick defines interaction as including "a mouse-over, a pull-down, game playing, clicking to another layer of information, or closing3x 6.03% the window in which the ad appears" Source: DoubleClick, May 20044x 5.93% 060965 ©2004 eMarketer, Inc. www.eMarketer.com5x 5.84% 0609656x+ 5.33%Note: Average click-through rate=5.99%; seven rich media ad formatsSource: Eyeblaster, April 2003048856 ©2003 eMarketer, Inc. www.eMarketer.com048856Ad FormatsAd format makes a difference for CTRs, according to DynamicLogic’s study of Eyeblaster-branded interstitials. The floating ad—where the creative is not bound by a rectangular banner shapeand moves on top of the page content—had a 4.39% CTRcompared to 1.56% for a commercial break ad (a full-page unitthat plays on site entry or before a site page).Click-Through Rate for Rich Media Interstitial Ads* forSnuggle Botanical Bliss, by Creative Format, 2003Floating ad 4.39%Commercial break 1.56% GIF banner 0.11%Note: *the two types of Eyeblaster-branded rich media interstitials usedwere a commercial break (a full-page ad that plays on site entry or beforeany other site page) and a floating ad (moves within transparent layer overWeb page and plays within area up to 500x500 pixels)Source: Eyeblaster/Dynamic Logic, April 2003050030 ©2003 eMarketer, Inc. www.eMarketer.com050030DoubleClick also measures “interaction” rates, referring to user-initiated events such as “a mouse-over, a pull-down, game playing,clicking to another layer of information, or closing the window inwhich the ad appears.” Rich Media: At The Tipping Point An eMarketer White Paper 8
  9. 9. D. Measuring Rich Media Effectiveness User Interaction Rates* and Average BrandPlaying With the Ads Interaction Times** for Rich Media Ads Using PointRoll Technology, by Industry, AugustPerhaps it goes without saying that the creative side of 2004-October 2004any rich media ad plays a huge role in generating clicks Interaction rate Average brand interaction timeand interaction. A recent campaign that generated strong (in seconds)response was Moxie Interactive’s work for Verizon Automotive 17.9% 9.9Wireless’s new VCAST service offering streaming media to Pharmaceutical 12.0% 12.8wireless phones. Moxie developed floating ads with Consumer goods 9.0% 12.4streaming video that allowed users to get a sense of the Finance 8.8% 8.7VCAST service. Retail 8.6% 11.7 Technology 8.6% 15.2“We wanted banners that people could play with,” says Travel 8.6% 9.4Moxie Vice President Joel Lunenfeld. “Our goal was to Entertainment 8.2% 11.2clearly shout that Verizon has this new service, and to Telecommunications 7.6% 11.7match the innovative service by putting it in people’s Total 9.5% 11.3hands online and letting them play with it.” Note: interaction defined as "any time a unique user rolls over the ad unit to expand a panel"; *interaction rate defined as total interactions dividedThe campaign was not easy to pull off, Mr. Lunenfeld says, by total impressions; **average brand interaction time defined as "weighted average of total seconds that panels were displayed within anbecause it needed clearance from the sites where the ads individual impression" Source: PointRoll, November 2004were to run. “We needed permission to run streaming 061715 ©2004 eMarketer, Inc. www.eMarketer.comvideo uninitiated,” he says. (He suggests reaching out to 061715media partners to reach agreements early in the process.) Indirect ResponseBut the campaign delivered significant results of interest Beyond click-through and interaction time, indirect response isto both brand and direct marketers. “Click-through rates another key measure. DoubleClick found that consumers were morewere phenomenal,” he says, at over 3% during the first likely to visit an advertiser’s Web site or purchase the company’sweek. Interaction times, meanwhile, were roughly 13 product after viewing a rich-media ad than a non-rich media one.seconds. (Moxie worked with Advertising.com usingPointRoll Technology on the campaign. See chart below Post-impression activity per impression was 1.11% for rich mediafor statistics from PointRoll on interaction times.) in Q4 2003 versus 0.54% for non-rich media. And when tracked, each rich media activity created greater conversion to sales thanBut beyond the interaction, Moxie saw gratifying message did static display ads.results as well. “We started off the campaign by doingroadblocks, geo-targeted, frequency capping at one per Consumer Post-Impression Reactions to Rich Mediauser per day,” he says. “We saw 39.5% message vs. Non-Rich Media Online Ads, Q4 2003association from the roadblocks alone.” Post-impression activity* per impression 1.11% 0.54% Post-impression sales** per activity 2.30% 1.47% Rich media Non-rich media Note: *any activity taken by a consumer subsequent to viewing an online ad but not clicking on it; includes visiting advertisers Web site, downloading document or filling in form for more information; **conversion data here represents only DART for Advertisers data in which advertisers tracked conversions through Spotlight tags Source: DoubleClick, February 2004 060941 ©2004 eMarketer, Inc. www.eMarketer.com 060941 Rich Media: At The Tipping Point An eMarketer White Paper 9
  10. 10. D. Measuring Rich Media EffectivenessData from Advertising.com supports the DoubleClick post- Brand Metrics for Rich Media Ads vs. GIF/JPG/HTMLimpression activity results, showing rich media’s strength over Ads, Q2 2003 (as a % lift over unexposed group)display advertising. Brand awareness 7%Take a recent week of activity on the Advertising.com network. 5%While only 11.67% of the total impressions were for rich media Message associationads, fully 22.71% of “actions” took place in response to such ads. In 31%this case, actions are defined as “any post-click event, such as 18%lead acquisition or a user filling out a site registration.” Brand favorability 6%Rich Media Ads Share of Impressions, Clicks andActions* on Advertising.com Network, Week of 4%January 1, 2005-Week of March 12, 2005 Purchase intent Impressions Clicks Actions 5%Week of January 1 14.25% 21.55% 30.15% 4%Week of January 8 13.64% 21.41% 23.67% Rich media GIF/JPG/HTMLWeek of January 15 15.45% 22.52% 24.11% Note: Dynamic Logics MarketNorms database defines rich media asWeek of January 22 16.34% 21.23% 24.38% "including DHTML, Flash, rollover/expand, Superstitial, Eyeblaster, andWeek of January 29 14.65% 19.56% 18.97% Pointroll, [but] does not include video and audio" Source: Dynamic Logic, 2004; DoubleClick, May 2004Week of February 5 13.36% 19.97% 15.80% 060964 ©2004 eMarketer, Inc. www.eMarketer.comWeek of February 12 12.32% 19.06% 15.68% 060964Week of February 19 12.96% 24.92% 17.70%Week of February 26 13.69% 30.91% 18.74% The Bottom LineWeek of March 5 13.12% 27.62% 18.66% For many advertisers, click rates, interaction measurements, andWeek of March 12 11.67% 21.94% 22.71% brand lift are secondary to the fundamental goal of customerNote: *actions defined as any post-click event, such as lead acquisition or acquisition. A poll of online retailers by the e-tailing group found thatuser filling out a site registrationSource: Advertising.com, March 2003 customer acquisition was the most important marketing objective.063910 ©2005 eMarketer, Inc. www.eMarketer.com063910 US Online Retailers Rankings of Their Marketing Objectives, 2004 (as a % of respondents)Branding Effectiveness Very Impor- Some- Not Not NotTo measure the branding effectiveness of online advertising, impor- tant what very at all applicable tant impor- impor- impor-marketers typically employ the services of third-party companies tant tant tantsuch as Dynamic Logic. Basing its research primarily on Customer acquisition 72% 21% 7% 0% 0% 1%exposed/control consumer panels, Dynamic Logic has developed Convert browsers to 67% 26% 6% 1% 0% 1% buyersits MarketNorms database, as a benchmark to compare any Customer retention 67% 25% 7% 1% 0% 1%current campaign. Drive traffic to site 49% 28% 20% 3% 0% 0%Dynamic Logic has found that rich media ads generate increased Minimize shopping 33% 34% 22% 7% 2% 3% cart abandonmentreadings for branding metrics when compared to control group Integrated multi- 26% 29% 22% 8% 5% 10%figures. Message association showed the strongest lift. It is important channel initiativeto note that these figures do not include audio or video ads. Reduce spam 10% 18% 30% 17% 8% 17% Source: the e-tailing group, Exmplar, Inc., October 2004 062630 ©2005 eMarketer, Inc. www.eMarketer.com 062630 Rich Media: At The Tipping Point An eMarketer White Paper 10
  11. 11. D. Measuring Rich Media Effectiveness E. Obstacles—and SolutionsThat’s the goal for Internet phone service provider Vonage. “We Rich media is poised to become the dominantare focused on customer acquisition at a good CPA,” or cost peracquisition, says Caroline Finch, director of marketing. form of Web site advertising, but obstacles remain.Vonage judges rich media online ads, including streaming video, A key issue is cost, from both the marketer’s and the publisher’son that single goal. “We look at rich media as a way to increase perspective. According to a JupiterResearch survey, more than aawareness, educate consumers, and provide an enjoyable quarter of respondents cited cost as a reason for not buyingexperience—but with the focus still on customer acquisition,” online video advertising. (It should be noted that nearly as manysays Ms. Finch. cited unfamiliarity with the format.)The success of an ad is simple, she says: track acquisitions based Reasons that US Marketers Give for Not Buyingon individual campaigns. “Some companies do look at other Online Video Advertising, 2004 (as a % ofmetrics,” she says, “but we don’t. It’s primarily acquisitions at an respondents)acceptable CPA.” Audience is too small 38% Price is too high 27% Too unfamiliar with the format 21% Publisher offerings arent attractive enough 19% Poor picture quality 14% Source: JupiterResearch, 2004; MediaPost, July 2004 060959 ©2004 eMarketer, Inc. www.eMarketer.com 060959 On the publishing side, Web sites are nervous about the costs associated with rich media, in particular streaming media. While 70% of publishers support rich media ads, only 27% support streaming content. Types of Advertising Capabilities Supported by US Online Publishing Sites, December 2004 (as a % of respondents) Web banners 87.2% Rich media 69.2% Pop-ups and pop-unders 60.3% Contextual advertising 51.3% Streaming content 26.9% Behavioral targeting 24.4% Other 3.8% Source: Advertising.com, February 2005 062848 ©2005 eMarketer, Inc. www.eMarketer.com 062848 Rich Media: At The Tipping Point An eMarketer White Paper 11
  12. 12. E. Obstacles—and Solutions About this White PaperThe restrictions placed on certain formats by individual Web sites Much of this white paper is based on researchmay pose inventory challenges for advertisers looking for broadreach. The promulgation of standards will help alleviate this issue. that originally appeared in the eMarketerAnd the growth of rich media use will persuade more cautious spotlight report, “Rich Media: Techniques andpublishers to support it. In the meantime, advertising networks are Trends,” by Senior Analyst David Hallerman.one option for advertisers seeking wider audiences. Additional reporting and writing for this paperCost issues will not disappear, but as with any technology, they willdecline over time as the use of rich media becomes more was done by Ezra Palmer.common. And even now, on a cost per click basis rich mediaseems to be worth its price. eMarketer Contact Information eMarketer, Inc. Toll-Free: 800-405-0844Certainly cost is an issue when considering streaming audio and 75 Broad Street Outside the US: 212-763-6010video—tools that give marketers the ability to create the 32nd floor Fax: 212-763-6020emotional impact of brand advertising on television and radio. One New York, NY 10004 E-Mail: sales@emarketer.comroute around this problem is repurposing content from othermedia—but this must be done with an eye toward thecharacteristics of the Internet. Advertising.com Contact Information Advertising.com Phone: 212-497-0085“We can’t treat this like TV,” says Advertising.com’s Mr. Ferber. “If Lauren Weinberg HTTP://www.advertising.comwe just repurpose, we’re not making the most of the medium.” 625 Broadway, 5th Floor E-Mail:research@advertising.comA campaign by Adidas made use of repurposed content—with a New York, NY 10012twist. An Adidas TV spot featuring Muhammad Ali “boxing” with hisdaughter was downloaded more than 2.5 million times. The twist:The knockout wasn’t included in the TV part of the campaign, andcould only be accessed online.Meanwhile, interactive streaming media advertising is still, at thispoint, not very common. But the success stories, like the JerrySeinfeld-Superman Webisodes for American Express and BurgerKing’s Subservient Chicken site, point up the marketing possibilities.Inventiveness like this is at the heart of successful rich mediaspots. At WSJ.com, the highest impact unit is a “sliding brandlaunch unit,” which briefly expands over editorial real estatebefore sliding back into its designated ad position.As WSJ.com’s Mr. Henry puts it: “We think better advertising isbetter for everyone, from clients to readers.” Rich Media: At The Tipping Point An eMarketer White Paper 12

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