The Wide World of Advertising

E-mail

The ability to pinpoint customers cheaply is expected to double the spending
on e-mail marketing, from $600 million last year to $1.3 billion in 2001.

Pros: Response rates average between 5 and 15 times better than banner
ads. Some 34% of the 200,000 ’N Sync fans who got an e-mail before the release
of the band’s new album in March downloaded an accompanying video.

Cons: As scores of e-mail messages pile up in in-boxes, response rates
and prices are falling. Merrill Lynch estimates that in the fourth quarter, the
cost of e-mail marketing fell 25%.

Banners

They make up 50% of online ad revenues, but their effectiveness may be
waning. When IBM kicked off banner ads in 1994 on tech site Hotwire, 30% of the
people who saw the ads clicked on them. Now the overall click-through rate for
banner ads has dropped to a measly 0.3%.

Pros: Easy to do broadly across the web.

Cons: It is still unknown whether banners boost a brand. In the
absence of any strong proof, traditional advertisers such as Visa and Sony
remain skeptical.

Skyscrapers

These are the extra-long skinny ads running down the right or left side of a
web site. Financial site CBS Market-watch.com, for instance, regularly runs this
kind of ad.

Pros: Response rates for skyscrapers, which started being used
aggressively in 2000, can be seven times as high as for banners, according to
Mass Transit Interactive.

Cons: Just as banner ads were launched with monster response rates,
analysts expect the effectiveness of these ads to decline as consumers tune them
out.

Streaming Video and Audio

Companies and content networks, including RealNetworks, NetRadio, and
MusicVision, insert ads for marketers into music and video clips as consumers
listen to them.

Pros: It’s much more like the TV that marketing advertisers know and
trust. Can get click-through rates of about 3.5%, according to RealNetworks.

Cons: Widespread use will depend on high-speed Net connections, which
aren’t expected to be adopted by a critical mass of 30 million households
until 2005, estimates Jupiter.

Effectiveness Tracking

Upstart DynamicLogic designed a pioneering service to help traditional
advertisers guage the impact of their marketing by placing tiny files, called
cookies, on viewers’ computers. This helps them track where people go in the
days or weeks after seeing ads.

Pros: Offers the ultimate way to guage the results of brand marketing
campaigns.

Cons: Time-consuming–and the cost can cut into the mass use of
advertisements.

Minisites, Pop-Ups & Interstitials

These ads burst upon the screens, allowing companies such as Volvo and
SmithKline Beecham’s Oxy acne medicine to dish up games and product
information.

Pros: Minisites allow advertisers to market without sending people
away from the site they’re visiting. This type of advertising also gets higher
click rates – on average around 5% of people estimates portal About.com.

Cons: Can be intrusive and annoying Think AOL’s welcome screen.

BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc