Online marketing evolves away from banner ads
Denver Business Journal – by Lyn Berry Tech
The year was 1996. The place, the Internet.
As with its predecessors, television and radio, the Internet showed incredible promise as an advertising medium.
Scads of companies jumped on this new electronic bandwagon, snapping up Internet “banner” advertising space, while marveling at the medium’s interactive capabilities. Not only could banners accomplish brand recognition, but with the click of a mouse, products could be bought and sold.
Now, a new trend shows the popular banners are losing steam, while direct e-mail marketing is emerging as the high-growth darling of electronic advertising.
“Demand for e-mail marketing is definitely soaring,” said Ben Addoms, executive director of MatchLogic Inc., a Westminster-based provider of online advertising and marketing products and services.
MatchLogic reported a 2,000 percent increase in its clients’ direct e-mail usage, when comparing first quarter 1999 and 2000 results.
“However, our brand advertising was only up in the neighborhood of 300 percent during that time,” Addoms said.
MatchLogic’s experience mirrors a national trend spotted by Forrester Research. The Massachusetts-based independent research firm predicts the direct marketing share of all interactive advertising will swell from 25 percent in 1999 to 65 percent in 2003, producing a $5.5 billion market.
“What we’re really watching is the evolution of online marketing,” said Addoms. “Pricing and demand for different kinds of advertising are reflective of their performance, and e-mail is more effective on a cost per basis.”
This doesn’t mean e-mail is less expensive on its face, however.
The cost for a banner ad can run between $3 and $30 for 1,000 “impressions,” or people who see the ad. Direct e-mail marketing is much more expensive per thousand, falling in the $275 to $450 range.
Despite the price differences, e-mail marketing can save a company money down the road because it is a more targeted form of advertising, according to Pete Estler, founder and managing partner for iBelay, a Boulder-based Internet holding company that invests in a number of online direct marketing companies.
“It comes down to how many responses you get for each contact,” he said. “E-mail is getting much more response.”
According to a study published by E-BuyersGuide.com, e-mail promotions inspired 63 percent of consumers to shop online in December 1999, while only 38 percent of consumers were motivated by banner ads.
“Brand advertising is not very targeted,” said Estler. “You’re playing banners to everybody. There aren’t any consumer characteristics tied to banners.”
E-mail, on the other hand, is not only more targeted, but it allows a company to “get smarter” in its marketing efforts every time it receives response from customers, which happens more quickly than with other marketing techniques. “It’s an opportunity to refine the next e-mail effort and send it to a tighter audience, which improves performance,” Estler said.
Most e-mail solicitations are driven off of “opt-in” or privacy-protected databases, such as NetCreations Inc. and YesMail. These databases store lists of subscribers who have opted in to receive information about certain products, through avenues such as e-mail newsletters on the Web.
“This is a more receptive audience that is involved in the company’s marketplace and interested in its topic,” said Dan Murray, e-mail marketing strategist for Boulder-based MessageMedia Inc. “This leads to a much higher percentage of response.”
The database approach works especially well for companies that strive to maintain their current customer bases.
“It’s a lot cheaper to grow your current customer base than to go out and beat the bushes for new customers each month,” Murray said. “E-mail allows a company to provide excellent customer service by keeping customers updated.”
www.onlinebusinessstrategist.com
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