Beyond the Banner

A look at online advertising in the country

By Heinz G. Bulos

icture this: In the U.S., there`s an
estimated 110 million Internet
users in 1999, representing about
40 o its total population o 23 million.
1hat`s about 43 o the total 259 million
Internet users worldwide, according to the
Computer Industry Almanac. U.S. online
adertising spending in 1999 reached >2.8
billion, or 85 o worldwide ad spending.

Now, let`s get closer to home. 1he Asia-
Paciic region has an estimated 35 million
Internet users in 1999, around 14 o all
Internet users and representing a measly
1 o the region`s total population. Ad
spending in 1999 was >166 million, or
only 5 o total spending worldwide.

In the Philippines, the numbers are more
pathetic. Internet usage is about 35
thousand, or 1 o all Asia-Paciic
Internet users, i.e. i the oicial
goernment data is to be belieed. O
course, estimates range rom 250
thousand to a million users. Still, these
estimates represent rom hal a percent to
a little aboe 1 o the entire population.
1here are no igures on local online
adertising spending. But a ery rough
estimate o about 1 o Asia-Paciic ad
spending amounts to >1. million, or
around P68 million. 1hat`s a pittance,
comparatiely.

Do we then write-o adertising as a
iable business model or lilipino online
entures Beore we attempt to answer
that question, it might be a good idea to
clearly deine what online adertising is.

Iirst things first
ebster deines adertising as
the action o calling something
to the attention o the public
especially by paid announcements." Grab
the classic Kotler marketing textbook and
it says that adertising is any paid orm
o nonpersonal presentation and
promotion o ideas, products, and serices
by an identiied sponsor.` It does not
include personal selling, sales promotions,
and public relations, though all orm part
o a company`s promotional eorts. Its
purpose is to inorm, persuade or remind.
Online or Internet adertising seres the
same goals. It includes banner ads,
sponsorships, adertorials, interstitials, e-
mail ads, and text links. It`s worth
clariiying these deinitions as people, or
example, mistake adertising as marketing,
which is a broader ield, or merely banner
ads, which is just a raction o what online
adertising is.

Adertising on the Internet is airly new.
Prodigy in 1990 adopted adertising to
complement its reenues rom
subscriptions. lotwired in 1994 was the
irst site to adopt a pure adertising
model. lere in the country, there`s no
record on who were the irst online
publisher and adertiser. Most likely, it
was only in early 1998 or late 199 that
online adertising was adopted here.
Businessworld Online, one o the
pioneers in online publishing, has been
around since 1995, but was able to sell ads
only ater three years. Michael Marasigan,
online editor o Businessworld Online,
notes, we hae been in the business or
ie years now and it was only in 1998 that
we got online adertisers. It will really take
time. At least, we are getting adertisers
now. I we look back, radio and teleision
were also not immediately accepted, it
took a long time beore they gained
popular support.`

P
\
Marasigan`s comments are eriiable. It
took radio 38 years beore it became a
mass medium, i.e. reaching 50 million
users. 1eleision took 13 years.
Surprisingly, the Internet only took
around 5 years beore it became
mainstream. O course, here, with only
1 o the population online, it will take
more time or the Internet to take o.

Mass or direct?
hinking o the Internet as a mass
medium brings up a neer-ending
debate on whether it is indeed a
mass medium like newspapers and
teleision, or a direct marketing medium
like direct mail and telemarketing. \hich
brings another bone o contention: i it is
a mass medium, then it`s an adertising
medium, best suited or branding. On the
other hand, i it`s a direct marketing
medium, then it works best or generating
leads or outright sales. More people are
beginning to accept that the Internet is
both.

Rebs Rebillon, Account Director o
LURORSCG Philippines, Inc., which
represents Intel Phils. Inc., says, it can do
both depending on what stage your
business model online is in or your
objectie or the site.` Dennis Jaier,
Sales Manager o \S liesta Corp., added
that the ability to create online
communities that are ocused on the
company`s product or serice can mean
increased sales and mind share. Angela
Montesa o BPI Direct agrees, Actually
both. It is important to create a name in
the Internet business, especially i the
target market will eentually be the market
that goes beyond our geographical reach.
And since we are a inancial institution,
the business we generate is always the
bottomline. 1hat's why the olume or
sales we get out o the adertisements are
also important to us.`
Better than traditional
s an adertising medium, the
Internet has signiicant adantages
oer traditional media. lirst,
there`s the demographics a lot o
adertisers will kill or -- well-o, highly
educated, good jobs. 1hen, there`s the
global reach and unlimited exposure.
Anyone around the world can see the ads
at anytime. 1here are no limited time slots
-- ads can be deliered 24,. Online
adertising is interactie. Unlike
traditional ads that relegate you to a mere
passie recipient o their messages, online
ads allow you to interact with the
message. It could be by clicking a banner
ad, illing up a orm, or playing a game.
1he entire sales cycle can also be
completed online, right then and there.
Local adertisers mention our other
important adantages -- low production
costs, lexibility, targeting, and tracking.
Jaier mentions that the production cost is
minimal compared to traditional media.
An ad banner deelopment cost would
range rom P3,000 to P,000, compared
to tens and hundreds o thousands spent
on print or 1V ads. le adds that
compared to other media that charge per
issue or time slot regardless o how many
people iewed the ad, online adertising
lets you pay only or ads that were
sered.`
Montesa agrees, online adertising is
cheaper and has a wider coerage in terms
o reach, especially i the target market is
really global and ery speciic. 1raditional
media adertising is deinitely a lot more
expensie.`
Lower production costs and the ability to
delier an ad in real-time allow adertisers
to easily modiy its ads along the ad
campaign period. Aside rom the cheap
costs, what really makes online adertising
attractie are the ability to target ads to a
1
A
ery speciic market and to track the
perormance o the ads. Rebillon says that
it is much more ocused and measurable.
Its like comparing a shotgun to a sniper
rile. lurthermore, you can reise your
material and adjust much quicker
compared to traditional media.` Jaier
notes, online adertising has this
technology or tracking, being able to
know how many users were hit by your ad
is ery important.` 1racking how many
responded to a 1V, print or billboard ad is
more diicult to do.
1he problem with advertisers
ien the unique adantages o
online adertising, why aren`t
local \eb sites drowning in
adertising pesos One probable reason is
that, unlike in the U.S. and other
countries, the Internet in the Philippines is
still not mainstream. Local \eb sites
cannot command the kind o eyeballs
their U.S. counterparts can generate. Our
1 million users to their 110 million No
contest. But our 1 million remains a juicy
market, gien its demographics. Deinitely
not a good medium or mass market
products, but an excellent one or higher-
ticket items.
Online publishers attribute this problem
with a lack o amiliarity with the Internet
among potential adertisers and een ad
agencies. Catherine Valencia, adertising
director o Businessworld Online, relates,
I hae approached seeral adertisers,
both direct clients and through adertising
agencies. I could say that still, it's not that
easy to penetrate but they are beginning to
be enthusiastic about the new trend which
is \eb adertising. Some adertisers
wouldn't want to be let behind and some
would still want to be behind the march
o ciilization, to put it bluntly. \ith
regards to people in adertising agencies,
the painul reality is that online adertising
is not yet included in their annual
adertising budget. 1he speciic responses
were: they are not ready yet, they are not
amiliar with \eb adertising, some are
not amiliar with the Internet itsel, and
the ironic part here is that some o the
adertising agencies don't know how to
design a \eb ad.`
Agrees Marasigan, the reason most o
those who reuse to adertise online now
is basically due to their lack o knowledge
about this new economy. Oer time, they
will be able to comprehend what's really
going on.` Jaier adds some more typical
responses: we still don't hae a \eb site,
it`s not our target market, we don`t know
anything about the Internet. Some
companies, he says, think that they're
inesting their adertising budget in a
small box, i.e. the computer.
1he problem of advertisers
en those who are already
adertising online are not yet
going ull orce. Montesa explains,
BPI is not really using online adertising
that much. Considering the low Internet
penetration rate in the Philippines, we still
lean on to our legacy marketing eorts --
print ads and the like. \e did adertise in
one or two sites but just or the sake o
haing its presence in some \eb sites,
and we were not really expecting much.`
As or the adertising budget, she says
their allocation or online ads right now
is ery small, in act a negligible amount is
allocated or online adertising.
Lentually, when we go ull orce to
target the global market, then, we will
increase the allocation o our online
adertising.`
Jaier says, lor now, we noticed that
most o the large companies use only a
small percentage o their marketing
budget. Locally, the industry is still in its
inant stage. Although compared to last
G
L
year, we'e experienced a large increase o
percentage spending rom adertisers to
online ads.` Rebillon points out, AlI I
can say is that at this point most brick-
and-mortar companies don`t want to
inest yet on online adertising.`
Apparently, there`s no bandwagon yet to
jump into. But or adertisers who want
to explore new adertising opportunities,
it`s important to determine what are the
adertising objecties are, and rom there,
decide on the most suitable adertising
model. Online publishers should also be
amiliar with what works best or them
and their clients. Responses on which is
the most eectie ary. Jaier claims, All
ads work. It really depends on the
marketing campaign o the adertiser.
Positioning is also a actor. Being seen
irst by the user upon logging in the \eb
page is already a captured eyeball.` Aside
rom banner ads, Jaier adds sponsorships
and content partnerships. lrom our
experience, the most eectie adertising
is sponsorship. \ith the ull editorial
support o the site, this somehow
endorses the ad to its users. Basically, the
ad also contains content or alue or the
user. In content partnership, the adertiser
proides you with the content while you
brand it with your \eb site. 1his proides
you with more traic and reenues since
the adertiser also pays you or their
exposure.
Rebillon says, It depends on your
objectie or your site. Used
independently or in combination, each
has a role to play in establishing or
maintaining a site`s stickiness.` Rhinee
Garcia o eAyala Center notes, I`d say
search engines are number one, ollowed
by banner ads.` Montesa, on the other
hand, says, 1he most eectie or us
right now are our e-mail ads
complemented by postings in news
groups. And this in act is the online
adertising that we really use, which
makes it ery cheap because we are not
actually spending anything here aside rom
the man hours to ormulate e-mail ads and
to send them out. Being a big traditional
bank is really an adantage or us too
because it proides us with a huge
database o potential online clients.`
Valencia asserts, \e are now pushing the
banner ads and I think that's the most
common orm o \eb adertising now so
I guess it's the most eectie orm. But
I'm not saying sponsorships and other
orms are not eectie, they could be to
some.`
Another important actor adertisers
should consider, aside rom the ad model,
is which sites to adertise in. 1his is not as
obious as choosing the site with the
content you want to be associated with.
1here are seeral things to look at.
Jaier adises, 1he most important actor
is to know your target market. \ou can
ind out about this through the
demographics report by the site owner.`
1hese can be eriied rom IP logs and
membership surey results. 1hen, there`s
the aerage traic o the site. le warns,
\ou need to based this igure rom a
series o months. A site may tell you that
it gets an aerage o 4 million, but you
don't know i they'll get the same amount
next month.` le adds that adertisers
should look or sites that oer real-time
ad reports, charge low CPM rates, and
allow animated banner ads, which hae
been proen to be more eectie. \eb
sites that are lexible in changing your ads
midstream and are committed to make an
ad campaign work are important
considerations as well, he adds.
Rebillon says they ealuate a site based on:
content ,is it talking to my target
market,, statistics ,number o
impressions,, technical support ,who runs
their backend and what inrastructure do
they hae in place,, marketing ,how they
promote their site,, lexibility ,they should
accept creatie buys or generate ideas
beyond regular banner adertising and
should also be lexible in payment based
on results generated and not tied down to
a lat ee, i.e. cpm base or click through
base,.

Death to the banner ad
s emphasized by our respondents,
there is a real need to educate
clients and adertising agencies on
the nuances and adantages o online
adertising. In the meantime, local dot-
coms hae been sprouting like
mushrooms in recent months. Many o
these rely on adertising, at least in the
short-term, just to surie. Gien the
statistics and general consensus on online
adertising, is this business model iable
in the local setting
Marasigan admits, based on our
experience, online adertising is not yet
suicient to sustain our operations
because we are a separate company now.
loweer, i we are operating like how the
other newspapers' online diisions
operate, our online ad reenues will be
suicient ,and perhaps with a little proit,
to sustain our to ie people. Currently,
Businessworld Online has about ity
people in its payroll. 1o sustain our
operations, we hae other reenue
sources, like \eb site creation and
maintenance. \e are also an ISP.`
Valencia notes howeer that, compared
to other newspapers online, we`re pretty
much ahead in terms o adertisement
and content.`
Jaier concedes that locally, or now, the
answer is no. Only a ew companies hae
\eb sites. Unless you book all your ad
slots or one or two large adertisers.`
Jim Ayson, ounder o PhilMusic.com,
one o the earliest content proiders,
maintains that it depends on the oerhead.
In a dot-com startup, you may be
running on inestment unding so you can
lie on that een i the ads don't come in.
In which case you should be conseratie
in your spending habits so you don't
achiee a high burn rate. I you do bring
in ad reenues, make sure you properly
manage the income rom reenue with the
inestor unding. Now in the long term,
well it depends. It`s like a magazine. It
depends on your adertising manager and
your marketing eorts. In general, do not
expect to hae ads as your sole reenue
stream because it's gambling too much. I
you're in the mode where you're pitching
to VCs or angel inestors, no one will buy
your business plan i ads are your only
reenue stream.` le adds, I suggest that
sponsorship o speciic sections o the
sites complement raw banner adertising.
1his means you deal with sponsorship
packages, which can ary, rather than
uniorm ad rates. I also suggest extending
the sponsorship opportunities to lie
eents that allow you to work with
traditional media as opposed to pure new
media.`
side rom PhilMusic, other
Internet companies that take the
oline route include ABS-CBN`s
PinoyCentral, \ehey!, and JobsDB. \ou
can ind them not just co-sponsoring lie
eents but putting up print ads, billboard
ads, mobile ads, and the like. Still, it will
take some time beore we reach the
absurd magnitude o oline dot-com
spending o our U.S. counterparts. But
these initial steps to this online-oline
direction reinorces the idea that online
adertising -- and een just putting up a
corporate \eb site -- should always be
tied up with the oerall marketing eorts
o adertisers, a simple point oten missed
A
A
by companies.

Is there light at the end of the tunnel?
t's easy to declare that online
adertising is still at its inancy in the
Philippines, as noted or example in a
Philippine Daily Inquirer article dated
April 23, 2000. But almost exactly two
years beore, in a Computerworld
Philippines report dated April 15, 1998,
that was the same conclusion. \ill we
eer experience a spurt o growth
Ayson asserts, \es o course it will grow.
1here's no way to go but up. I don't see
much pure new media campaigns
howeer, but there will be an increase in
integrating new media into traditional ad
and promo campaigns, to complement the
campaign, especially i the target market is
young and GenX. 1his is already
happening now with some o the hip
agencies. I also think that local dot-coms
hae to look outside the Philippines or
adertising clients. It's actually easier to
sell ads to the U.S., Canada, and
Singapore.`
Marasigan concludes, \hen we started in
1995, nobody can understand what we
were doing. So we helped create
awareness by organizing Internet
conerences, workshops, seminars, etc.
Len up to now we eel that there is still a
lack o comprehension o the Internet in
most industries. Looking at it positiely,
once we are able to hae a critical mass in
the adertising industry, then I'm ery
sure online adertising will eentually take
o.`

I