Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
Future of Internet Advertising
The whole history of Internet advertising started in the middle of 1990s when the Internet was first functioning and commercially launched as the part of technological contribution to worldwide communication.
In a very short time, this issue had changed everything in the world, and made a big revolution to the traditional media-based marketing approaches. Big capital companies soon turned their heads to examine this newly born marketing trend, along with giant fund allocation for market researches and the future growth.
In fact, the Internet has proved its tremendous appeal for the market that offers a lot of options for speed and reliability of online shopping and e-commerce reaching for international market. The movement of web advertising heightened since then.
How Advertisers Turned to Web Advertisement
This Internet booming is really tempting. McInerney (2000) told about a survey that said, about "seven new people go online every second." It was a great number, inviting more companies to see this potential for their future market. Companies believed, according to McInerney, that the Internet gives people "high level of exposure" to a broad range of people all over the world.
Verklin (2000) believed that digital technology would change what people do and think. People demand on seeing variety of shows, and with the technological change they have more options in PDA, wireless, and more sophisticated devices in the future. He said, "The future is not about the Internet, it's about interactive."
This means the Internet has a huge potential to provide users with information but in decent media. This is why other media like television, radio station, magazines and newspapers open their web sites to supply their customers with newly-updated materials every time.
It changes the options for advertising media as well. With "interactive factor" in the high rate, web sites open their spaces for advertisements to attract customers just like traditional media did with their spaces between news column, or commercial break on TV. New gears and programs enable designers to use interactive advertising for people to click on the internet, giving users not only information, but also entertainment, and at the end, a temptation to buy or order the service.
Many advertisers went online since then tried to find the most effective method to put their advertisement. Many rely on research data; based on what customers they were dealing with. Web sites also offered spaces, which to advertisers with different options to pay for it. Some made fortune; some went unsuccessful.
2. Types of Advertisement and Their Features
From all types of products advertised on the Internet, mostly many computer-related industries' products (hardware, software, peripherals, services, etc.) dominated the market. Menefee (1998) reported that Microsoft and AT&T were two of the main contestants in the share. The other big players were from automotive and beverage industries. From all the shares, Internet advertisings were expected to hike up to $210 million by the end of 1998.
Other products although giving a prospective look at this media, until now could not beat the amount of those high tech companies had paid. At first probably there was a prediction that computers did not reach as huge market as they do now. At that time the users were limited to large corporations, the government and academic communities. This perception soon changed after the rapid expansion of computer usage in houses, individuals, and small corporations, where those communities require communicating to each other.
Therefore, soon individual, home, and business-to-business-based products and services enter the advertising market on the Internet. The services they offer also develop rapidly to suit the common new trend in each environment.
Advertisers have looked up for variety of advertising methods to find the least costly, interesting, and most effective in delivering their messages in the virtual world. The most common methods that advertisers put on the Internet are banner ads, pop-up windows, and pay-per-click methods.
Banner ads are displayed in accordance with web site criteria. Web sites sell advertisement space to advertisers in specific criteria that links to the advertisers' home site. They mostly put the range in search term that matches the keyword and phrases. Therefore it narrows down the addressed community that customers would click on advertisements that appear in their range of interest performed in the search terms.
In the BBC News article entitled "End in Sight for Banner Ads?" The review said that advertisers favor this method as it enables the visitors to see what is offered, clicking to the interesting information they see flying or blinking across the screen. Although there is no such evidence that visitors really use the service or continue the visit to purchase something, advertisers argue that this is a very simple way to attract customers to come across. When things go slow they said it was a matter to invite visitors to see what they had got either it made sales or not.
While speaking about attracting attention, advertisers also have a very controversial version of their display using pop-up windows. Pop-ups give fun and interactive view to readers but in fact, their presence annoys many people. It is certainly not a comfortable situation when the windows suddenly appear from nowhere and distract the current surfing activities.
Yet advertisers still use this option to advertise their products. In the article "Pop-ups Chase Eyeballs" analyst guessed that advertisers use this option to attract children visitors as they are easily magnetized by animation and colorful figures. However, what present now in fact are not only sites containing children materials but also exposing adult and other commercial content.
As many distractions occur - which also claimed by people who feel that banner-ads distract them - advertisers start to see this as not a very promising method anymore. Right now users also install banner eater and pop-up killer software to give them more comfortable surfing time.
Wheeler (2001) said that now only 3% of marketing chiefs in the UK look at banners to advertise their businesses, following the unexpected slump down of leading portal like Yahoo, MSN, and Excite who said they had lost big percentages in their banner ads.
Wheeler also showed the study conducted by Marketing Week magazine and New World Commerce that 63% of companies planned to turn to e-marketing strategy (for all options), but 17% of the respondents agreed that email marketing is more effective compared to banners and pop-ups.
3. Current Trend and Estimated Growth of The Market
The BBC News Online's article entitled "Can dot.coms Make Money from Advertising?" reviewed the consequence that Yahoo had to bear after its series of success from its profitable advertisement systems. After some time, Yahoo surprisingly claimed that it had lost some of its advertisers, highlighting the difficulties to sell the places.
Despite the economy downturn, dot.com companies also closed up. They were forced beneath the online corporation booming in the middle of 1990s and finally the imprudent management and lack of financial support wrecked them down, leaving room only for quality and financially reliable ones.
Looking at the above facts, it seems that there is market saturation for all the advertisers to compete on such media. Not only that the growing number of users is hiking up, but they also race with advertisers adaptation to technology trying to find the perfect format for their advertisement. At first banner and pop up ads were so interesting and people continued to click on them, but this figure did not last long. People got bored and demanded for more freedom in their Internet activities. Meanwhile, advertisers have to struggle with their research and surveys to keep customers visiting their stores.
Featherly (2001) referred to a merchant bank media report Veronis Suhler. The report had given optimistic forecast figures to 2002 market even though sales slumped down last year. Slow economic condition would not a reason that Internet advertising would follow the line. It is expected that the online purchase will increase about 5% to 225 billion dollars by 2005, based on annual prediction. From all media advertising expense figures, the spending over the Internet was projected to reach 8.1% growth. The "compound growth" itself was expected to reach 3.8% during the years of 2002-2005.
He further added that some possible causes for the dropping frequency in the business somehow started in the mid-2000 after the down time at the stock market. Many Internet companies especially "free providers" and "e-commerce sites" went bankrupt or simply could not afford to continue their businesses. That was a difficult situation leading to the loss of ad spaces.
Meanwhile, when big companies struggle with their huge financial concerns to pay for their expenses, small businesses do not have that much to join the competition. Kriz (2002) gave a clue how businesses really benefit from the technology advancement. Approximately "70% of small businesses are online, almost 40% now have a web presence and about 3 million are doing business over the Internet." Such presence gives a lot of opportunities for web online purchases.
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