November 19, 2001 4:00 AM PST
Online ads take a cue from TV
Called "surround sessions," the new format lets advertisers target readers exclusively for the duration of a Web site visit. For example, a reader would see a series of related advertisements on each page he or she visits, starting by introducing a company and ending with an invitation to visit a Web site or receive more information about a product.
One of the first session ads appeared last week on The New York Times' Web site. The online counterpart to the staid newspaper, once known as the "Gray Lady," has turned out to be one of the most aggressive experimenters in online advertising formats since the market capsized. Though some of the Web site's ads have drawn barbs from Web surfers, industry experts say the new package compares favorably with broadcast deals that charge advertisers by the minute.
"It creates a whole new genre in online advertising that is informed by what makes broadcast advertising work," said Jim Spaeth, president of the New York-based Advertising Research Foundation. "We know that the more time someone spends with an ad, the more impact it has. And the more an ad can tell a story--television's great claim to fame--it can be that much more effective."
Sessions are just one of many new online ad formats bubbling up to lure reluctant advertisers to spend money on the Internet. But online ad experts said the sessions may push advertising out of a rut by recasting the way publishers and advertisers price Web ads and measure their success.
More than changing shape or style, the new format touts the measurements traditional advertisers have come to feel comfortable with in print, television and radio. Known as "reach" and "frequency," they refer to the audience an advertisement reaches and the amount of time people see it.
Such measurements are also common in brand advertising--the Holy Grail for Internet publishers hoping to tap the budgets of major consumer packaged-goods advertisers.
*CNET Networks is the publisher of News.com
Thinking outside the banner
Since February, Net content companies have made several attempts to entice skeptical advertisers.
*CNET Networks is the publisher of News.com
The new session format is gaining momentum. On Thursday, the Online Publishers Association (OPA) endorsed the format, saying it is a valuable new way of packaging online media. In addition, the Web site for The Boston Globe, operated by New York Times Digital, plans to launch the ad format later this year.
"Moving the industry from impression-based sales to audience-based sales is a step in the right direction for both publishers and advertisers and will help integrate online with traditional media for planning and buying purposes," said Michael Zimbalist, acting executive director of OPA. "Turning the user session into a fundamental buying unit brings online measurement closer to the reach and frequency model used in traditional media."
Getting away from clicks
Although traditional ad prices are based on measurements such as demographics and number of subscribers, some Web sites base their fees on the number of times readers click on ads.
Clicks are supposed to offer advertisers a solid measure of response, but the standard has offered progressively smaller returns to publishers. Average click-through rates on the Net have fallen to an estimated 0.44 percent, according to Nielsen/NetRatings, down from a high of 2.12 percent in 1996.
Online ad spending has flattened, too. Recent figures from the Interactive Advertising Bureau (IAB) reflect slowing percentage growth in the online ad market after years of unprecedented development.
Year over year, revenue has typically jumped by triple digits; for example, from 1998 to 1999, annual sales ballooned by 141 percent. Revenue is now steadying around $2 billion a quarter, or $8 billion annually. For 2000, U.S. online ad sales grew by just 78 percent from the previous year to $8.2 billion.
Internet publishers have been frantically searching for ways to bail out the sinking ad market. Web site operators this year introduced a bevy of new ad formats in hopes of attracting traditional advertisers and filling a void left by countless failed dot-coms. Larger, more intrusive advertising became the norm rather than the exception, threatening to throw off the delicate balance between reader and advertiser.
Earlier this year, the IAB introduced new standards for larger ad units, including pop-ups, skyscrapers and interactive marketing units. It followed up in August with rich media guidelines for animation, audio and video components in ads.
The industry has also made strides to prove the Internet is valuable for brand advertising in the hopes of enticing more traditional marketers to spend money online. The IAB, DoubleClick and CNET Networks, publisher of News.com, published a report on the effectiveness of Internet advertising for brand purposes earlier this year.
New York Times Digital has been among the most aggressive Web publishers, leading numerous experiments in new ad formats. NYTimes.com has run ad campaigns featuring a virtual airplane flying across the home page, and it has endorsed a controversial format known as "pop-unders," ads that launch a full browser window under a requested page.
With the surround-session product, the advertiser is featured exclusively on pages in various formats, including banners, buttons, skyscrapers and Interactive messaging units. The ads can be sequential and tell a story.
Surround sessions debuted on the NYTimes.com site Friday with ads for the prescription drug Nexium. This week, session ads are expected from automaker Porsche and E*Trade, an online financial services company.
It has been "difficult to tap traditional ad budgets because it's not apples-to-apples comparison. You can't compare seeing a banner to seeing a TV commercial," said Craig Calder, vice president of marketing for New York Times Digital. "But now, with consecutive messaging from a single advertiser across the site, it creates a real experience with a consumer that can be comparable to a 30-second spot...It's a fundamental shift in the way people will be thinking about how to reach an online audience."
Aiming at the individual
Initially, NYTimes.com will target the sessions contextually. For example, it will advertise E*Trade to visitors who enter the site at its Finance or Technology sections. But in the coming months, it plans to point ads toward consumers based on demographics and interests pulled from site registration data contained in "cookies," or tiny electronic markers.
Advertising analysts say New York Times Digital is a good candidate to pioneer the format because it has a loyal, highly targeted audience, and it can tap readers' registration data to target the sessions based on demographics.
The session format "turns the Internet into something much more like offline media because it sells an advertiser an audience, not an impression," said Marissa Gluck, ad analyst for Jupiter Media Metrix, which was recently acquired by Nielsen/NetRatings.
"In TV you talk about cost-per-thousand household, not cost-per-thousand impressions. You're buying by audience. (The session format) makes the Internet much more palatable to traditional media buyers and advertisers," Gluck said.
A session campaign, sold in monthly blocks, can cost $25,000 for 75,000 sessions, or an estimated 375,000 ad impressions, based on the average number of page views expected for each. That amounts to about $50 per CPM, or cost per thousand impressions, a premium over industry ad banner rates of $5 to $15 per CPM.
New York Times Digital promises advertisers that a consumer will see the ads across a minimum of five pages. The CPM rate would drop, however, if the number of impressions were to exceed that amount.
Advertising analysts say the cost may be one deterrent in the short term as media buyers and brand marketers keep tight grips on their budgets. But long term, industry watchers say the format may stick.
"This may be borne of desperation, but that doesn't make it a bad idea," said the Advertising Research Foundation's Spaeth. "Sometimes a spark of genius doesn't hit until you start to sweat."