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I clipped this E-Mail out of an on-line digest I subscribe to and thought some of our readers would find it interesting.   I sure wish I could make the kind of money Yahoo gets for running banners.  Clicks certainly help (one click on one banner, that is)  Larry

1. Clickthrough -- The Biggest Obstacle

As you know, clickthrough is typically the largest deterrent to advertising objectives. You can see this when you look at average clickthrough rates and compare them to average conversion rates. CTR has come down to an industry average of less than 0.30% lately, but even with this disappointing turn of events, we are still experiencing acceptable conversion rates averaging 25% to 40% and more for targeted advertising, and non-targeted advertising ranging between 7% and 12%. The conversion rate and acquisition cost are, ultimately, what count.

Granted, the additional filter of clickthrough can ensure a more targeted demographic hitting your conversion page, but there are still many ad viewers who have some interest but are unwilling to click an ad. This accounts in part for some of the branding effect of online advertising, and the portion of increased traffic not directly attributable to banner clicks that is often seen when an online campaign is run. These are interested viewers coming back later, though they were unwilling to leave what they were doing when they saw the ad. Take away clickthrough and you increase eyeballs to your conversion creative (point of purchase, sign-up form, etc.)

Increased eyeballs on conversion creative translates to more conversions. This is what Rich Media advertising delivers.

2. Internet Ads: A Functional Hierarchy

a.. GIF -- Viewers like to be able to interact and exercise some control. Standard GIF ads don't allow the user any control whatsoever.

b.. HTML -- Statistically, HTML ads achieve higher CTRs than GIF ads. HTML ads allow the user to fill in fields, check boxes, select items from drop-down menus, etc., essentially to tailor their experience. This increases clickthrough and conversion.

c.. Rich Media -- These ads tend to perform better than HTML ads because they offer some form of compelling content, really slick animation, sound, interactive games, etc., that interest viewers and pull them in. Most Rich Media ads carry the disadvantages of rather large file sizes, slow load times, and some technologies that can cause browser crashes. We have read reports of 1700% increases in viewer response compared to GIF banner advertising. "Even Yahoo now accepts rich-media banners because advertiser demand is so great. That's at a $40-$200 premium CPM, with click-through rates on Java, Flash, Enliven and Unicast campaigns ranging from 3 to as high as 10%." (MediaPost, 4/3/00) As of the end of 1999, Rich Media ads constituted 4% of the year's $4.6 billion online advertising spending. "Jupiter Communications announced that Rich Media, or variations of banners that are "enriched" with Java, audio, video, or more elaborate animations (i.e. Macromedia Flash), will make up as much as 60% of online ad spending by 2002, equivalent to a $5.3 billion share of the $8.8 billion Jupiter forecasts will be spent online in 2002." (ICONOCAST, 3/23/00)

d.. E-Commerce -- Fully functional commerce ads allow the user even more control than an HTML ad, further increasing the likelihood of user interaction and of conversion - note that clickthrough is no longer a factor. Again, most of these on the market today (at least all of the ones we've seen) are big files and take a long time to load. As previously mentioned, certain technologies used in some of the proprietary Rich Media ad types are known for their instability. "A Milward Brown Interactive study in March 1999 tracked brand perceptions of three online advertisers: Intel Corp, Novell and Barnes and Noble. . . . Rich Media E-Commerce ads raised brand perception for Intel by 15% and for Novell by 32%. Clickthrough's for all three companies increased by 340%." (e-Marketer Quoting Wired, 3/99)

e.. X:Stream Action (TM), which we plan to launch next month, has total e-commerce capability as well as the ability to offer any amount of multimedia or other Web content. It loads as little as a well-optimized GIF ad. Once loaded, other content is called from the server only as the user requests it through interaction with the ad. This interactive content is deployed in similar time and fashion as any Web site content. This allows the advertiser to give the user more control, a wider diversity of content, more stability, short load times, and full commerce capability right in the space of an ad.

In this context, e-commerce ads seem to be the next logical progression, greatly shortening the distance between first customer contact and closing the deal. I hope this has been helpful.

Patrick Goodrich
Director of Client Services
XAPHON Interactive Advertising

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