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INTERNET ADVERTISING AND ITS EFFECTIVENESS

KARIN KRISTIN SEPP PAVN

HAAGA-HELIA University of Applied Sciences 2007

Seminar version Seminar date: 15.03.2007

Evaluation version

Handed in for assessment: 22.03.2007

Opponents: Sara Nunes E-mail: karin.seppa@gmail.com

ABSTRACT Malmi Degree Programme in International Business


Writer(s) Karin Kristin Sepp Pavn The title of the thesis Internet Advertising and its effectiveness Group IBD03 Number of pages and app. Pages 41 + 4 Supervisors Anne Korkeamki, Mia Leino Internet has been changing the advertising industry quite rapidly, as it delivers messages instantly to consumers offering diverse degrees of interactivity, giving the users the option to reply or to ignore the adverts that appear to them. Many companies have started to invest more on this type of media, but many are still sceptic of inventing in this kind of media, and it is the task of advertising agencies to help these companies as their clients to understand the Internet as an advertising media.

15.03.2007

The objective of this thesis is to provide more detailed proof of the efficiency of Internet advertising as a new media within terms of how it works and why.

The thesis will provide the reader with more understanding of the benefits that Internet advertising provides through various tools and their interactivity. As a result, the thesis will provide advertising agencies with more empirical proof to provide to their clients and thus persuade more customers to go online. For other agencies, this thesis will clarify the concept of Internet advertising and the importance of having interactive experts in house, as many companies are going online all the time.

The study is based on qualitative research, which has provided the author with better understanding of and insight into the industry. The interviewees are experts on Internet advertising; their demographic is wide ranging as they come from different cultures and backgrounds.

The findings demonstrate the effectiveness of Internet advertising and its benefits. They also discuss how the industry is viewed and gives suggestions of future outcomes. Keywords Advertising, Internet Advertising, Traditional (Media) Advertising, Effectiveness, Interactivity, Globalization

TABLE OF CONTENTS
1 INTRODUCTION ......................................................................................................... 1 1.1 1.2 1.3 2 Research Problem ............................................................................................... 2 Demarcations....................................................................................................... 3 Key Concepts ...................................................................................................... 3

TRADITIONAL VERSUS INTERNET ADVERTISING................................................. 5 2.1 Advertising ........................................................................................................... 6 Changes in Traditional Advertising .............................................................. 8 Impacts of Globalization in Advertising ...................................................... 10

2.1.1 2.1.2 2.2

Internet Advertising............................................................................................ 11 How Internet Advertising Works................................................................. 13 Internet Tools ............................................................................................. 15 Effectiveness of Internet as an Advertising Media ..................................... 20 Benefits of Internet Advertising .................................................................. 24 Where is Internet Advertising Going? ........................................................ 26

2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 3

EMPIRICAL RESEARCH .......................................................................................... 29 3.1 3.2 3.3 Research Methods............................................................................................. 29 Interviewees....................................................................................................... 30 Data collection and analysis .............................................................................. 31

THE WAY AGENCIES SEE INTERNET ADVERTISING .......................................... 32 4.1 4.2 4.3 4.4 4.5 Internet Advertising............................................................................................ 33 Benefits of Internet Advertising.......................................................................... 34 Effectiveness and Measurements...................................................................... 34 Marketing and Internet Advertising .................................................................... 35 Response towards Internet Advertising ............................................................. 36

DISCUSSION ............................................................................................................ 38 5.1 5.2 5.3 5.4 Summary ........................................................................................................... 38 Conclusions ....................................................................................................... 38 Evaluation .......................................................................................................... 40 Suggestions for further research ....................................................................... 41

BIBLIOGRAPHY................................................................................................................ 42 APPENDICES AND TABLES ............................................................................................ 45 Appendix A: Interview questions in English................................................................... 45 Appendix B: Interview questions in Spanish.................................................................. 47

LIST OF FIGURES AND TABLES


Figures

Figure 1 Decrease in TV commercial viewers ..................................................................... 6 Figure 2 Example of Banners ............................................................................................ 16 Figure 3 Example of Text Ad ............................................................................................. 16 Figure 4 Example of Interstitials ........................................................................................ 17 Figure 5 Example of Pop-ups ............................................................................................ 17 Figure 6 Example of Opt-in Mailing ................................................................................... 18 Figure 7 Example of HTLM Ads ........................................................................................ 18 Figure 8 Example of Rich Media Ads ................................................................................ 19 Figure 9 Example of Sponsorship ..................................................................................... 19 Figure 10 Responses to Interviewing ................................................................................ 29

Tables

Table 1 Overlay Matrix ........................................................................................................ 2 Table 2 Impact of Online Content on Vendor Preference and Selection........................... 21 Table 3 Key Benefits of Internet Research........................................................................ 21 Table 4 Online Ad Spending ............................................................................................. 22 Table 5 Marketers Using Interactive.................................................................................. 22 Table 6 Top 25 Web Site Categories by Ad Revenue....................................................... 23 Table 7 Online Activities of U.S. Adult Internet Users ....................................................... 23 Table 8 Online Content Spending by Category ................................................................. 24

1 INTRODUCTION
Advertising is still the most important part of the promotion mix (Tellis 2004, 3 4), and has been developing in parallel with new technologies (Jones 2000, 4). The Internet has taken the leading position in digital advertising. During 2003, in the USA alone, online advertising revenues reached $7.3 billion (Moore; Stammerjohan; and Coulter 2005). It is claimed that the Internet provides several benefits for consumers and advertisers (Hanjun, Chang-Hoan and Roberts 2005). An example of this is global exposure, the possibility of larger business expansion, accessibility at all times when wanted, and added value and satisfaction (Simms 2005).

The authors interest on the advertising industry has led her to choose the topic of Internet advertising as she has noticed that this industry has been suffering of radical changes not only in practice, but also in the labour market. During her work placement, the author has noticed that many clients are starting to make their own marketing campaigns leaving the advertising agencies with only the creative work, without consulting which media could be employed to benefit their products, simultaneously, advertising agencies are starting to lack information on media, as it is changing rapidly.

The aim of the thesis is to see if Internet advertising, as a new media, can be truly effective and to analyze the impact of it, together with the challenges and the problems that it has when reaching customers. The purpose of the thesis is to see whether Internet advertising is, in fact, the best way to reach customers in the different segments and niches of different markets.

The benefit this thesis provides for advertising agencies is that it should help motivate clients to advertise more online and therefore enable them to have longer relationships with their clients. For clients, this thesis will help them understand why it is not so bad to advertise through the Internet.

Relevant data was of limited availability and sometimes difficult to access. The Internet is such a new tool that there is relatively little published information concerning this media. Much of the relevant literature and books were not available in libraries. Therefore, the number of publications reviewed was limited by the resources available.

During the preparation of this thesis the author worked at an advertising agency, Imageneering Worldwide Partners, which has very good connections throughout the world. Despite this, it was still difficult to find volunteers to be interviewed for the empirical

research. The number of volunteers available thus limited the extent of the empirical research.

1.1

Research Problem

The following questions were produced in order to have some proof on the effectiveness of Internet advertising. Hence advertising agencies need to know how Internet advertising works to show to their clients the why it is effective and is a good way to communicate with their customers. Please note that all questions are based on advertising agencies point of view.

According to Advertising Agencies: how does Internet Advertising work?

What makes an Internet advert effective? What are the benefits of Internet Advertising? What marketing factors influence Internet Advertising? How can the effectiveness of Internet Advertising be measured? What are the differences in Internet Advertising compared to traditional media advertising (TV, radio, print)? In general, how do Agencies see Internet Advertising?

Table 1.1 shows how the investigative questions are related to the theory and the empirical study.

Investigative questions What makes an Internet Ad effective? What are the benefits of Internet Advertising? What marketing factors influence in Internet Advertising? How to measure the effectiveness of Internet Advertising? What is different in Internet Advertising when comparing to traditional media advertising? In general, how do Agencies see Internet Advertising? Table 1 Overlay Matrix

Theoretical background 2.2.3 Effectiveness of Internet as an advertising media 2.2.4 Benefits of Internet Advertising 2.2.4 Benefits of Internet Advertising 2.2.3 Effectiveness of Internet as an advertising media 2.2.1 How Internet advertising work 2.2.2 Internet tools 2.2.1 How Internet advertising work

Results 4.3 Effectiveness and Measurements 4.2 Benefits on Internet Advertising 4.4 Marketing and Internet Advertising 4.3 Effectiveness and Measurements 4.1 Internet Advertising 4.5 Response towards Internet Advertising

1.2

Demarcations

This thesis will focus mostly on the practicality of Internet advertising, rather than the technical and economical sides of it.

The thesis discuses some generalities about international advertising and the changes that it has undergone; this will help the reader to understand the trends in the market as such. Here, topics such as culture will barely be discussed.

The discussion regarding Internet advertising will focus on the marketing point of view. The thesis will not discuss the process of creating an advert, but will give some points that should be considered, to help attract customers.

1.3

Key Concepts

Advertising is a form to of paid nonpersonal communication as well as other forms of interactive communication that firms use to send a message through mass media were it possible to identify a sponsor, making an impact on consumers through thoughts, feeling and actions. Advertising should be able to reach a large audience of customers. Customers tend to see advertising as something they hate while others see it as a fashion or entertainment guide. (Wells, Moriarty & Burnett 2006, 5 & 557; Tellis 2004, 9.)

Internet Advertising is seen by advertisers as a low-cost alternative advertising media through the World Wide Web, enabling interactivity via its various tools such as banners, web sites, and pop-ups among others . Internet advertising differs from traditional advertising in the way that it enables interactivity between the advert and the viewer, by advertising more personal ads. (Wells et al 2006, 276 277; Mackay 2005, 115; Myers 1999, 133 134; Jefkins 2000, 345 346; Yeshin 2006, 370.)

Traditional advertising it has been deducted from all the literature, that traditional advertising is the one that has been published on mass media before the creation of the Internet and other new technologies.

Effective or effectiveness in advertising is when the advertisers manage to deliver the message to its consumers causing a desired impact. It is said that for the ad to be effective it should gain consumers attention and hold their interest long enough to change the purchasing behaviour. (Wells et al 2006, 19.)

Interactivity is a two way communication between two or more people; but it can also refer with media as the involvement of the users in selecting the information they want to view or ignore. It is said that the nearest resemblance of communication to a dialogue, or the more manipulation of content by the user can be described as interactive communication. (Wells et al 2006, 271; AskOxford.com.)

Globalization is described by Myers (1999, 222 223) as the process in which money, images, product and symbols disturb and replace local structures and cultures, changing them into more global needs. He states that Theodore Levitt argued that competitive advantage should be possible in some sectors when marketing the same product globally.

Other concepts that are relevant to the thesis are:

Media are the ways of transmitting a message. Media in traditional advertising include newspapers, magazines, radio, broadcast television, cable television, outdoor advertising, transit advertising, and specialty advertising, meaning that advertisers pay a commission on these media. Other media may include exhibitions, direct mail, and leafleting among others. (Myers 1999, 225; Jefkins 2000, 379; Marketing Terms Dictionary 2007.)

Promotion Mix is the use and combination of the activities that support marketing campaigns. These are advertising, personal (face-to-face) selling, public relations, direct marketing and sales promotion ( product displays, trade shows and other sales events, dealer allowances, coupons, contests, and a variety of other promotions that do not fit into the other three types (Yeshin 2006, xxiv; Friedman 2000, 544.)

Marketing Mix is the combination of the elements for marketing a product. The four basic

variables are Product, Price, Place and Promotion (also known as the 4ps). Marketing mix may also include other elements like research and development to the after-market that represent the marketing strategy. (Yeshin 2006, xxii; Jefkins 1999, 379;Friedman 2000, 413.)

2 TRADITIONAL VERSUS INTERNET ADVERTISING


As mentioned previously, advertising is the most important part of the promotion mix; and even though consumers are bombarded with ads anything from 100 to more than 1000 a day it is important because it is not only a way of competition among firms, but it gives also other advantages such as communication between the consumers and firms about new and improved products. Advertising also supports media in general, including recruitment(alone, in the US, in 2002, expenditure in media was $236 billion, involved more than 21,000 firms and employed 203,000 people, and still it is likely to grow 32% compared to other industries). Advertising is also TAX deductible in many countries, hence subsidising public expenditure. (Tellis 2004; 3 4.)

Still, advertising has been making a shift to digital advertising. Theodore Levitt expresses this in the following words: A powerful force now drives the world toward a single converging commonality, and that force is technology. It has proletarianized communication, transport, and travelhomogenizing markets everywhere (Jones 2000; 4.)

At the last conference of the Advertising National Association (ANA) in the USA, Nancy Smith, vice president of global media and sponsorship marketing for American Express, said: "There has been such a change in consumer dynamics. The challenge is actually to find new ways of communicating." (AdAge 2005.)

The ongoing impact of digital technologies and video-on-demand has "reframed" the entire media business. What marketers are looking for now are new methods of being creative for consumers who now live in a storm of daily media streams. Big marketers are now saying that we can cost cut a certain amount, we can acquire properties a certain amount, we can look for ways to drive our efficiencies in our media relationships,' but what we're ultimately all looking for is top-line growth. The only way to get to top-line growth is to be much more innovative with media assets. Marketers want more creative ways to reach consumers", said John Partilla in an interview at the ANA conference. (AdAge 2005.)

This means that advertising media has been changing not only on spendature, but also on the ways to advertise a product, as we live in a time were technology is growing fast and not only changing consumer behaviour, but companies as well. In casual conversations, it has been discussed that people do not pay much attention to TV or outdoor advertising, and much less radio advertising, prompting consumers to change channels, do other

activities or just turn around. An example is Figure 1 which demonstrates in figures the actual number of TV advertising viewers.

Figure 1 Decrease in TV commercial viewers Source: Webcast How Enterprise Software Can Help Brand Marketing 2006

This does not mean that there is a trend in dismissing advertising. But as mentioned earlier, consumers are being bombarded most of the day with ads. The author once made an experiment of counting how many ads they could count and remember during one day. There was no conclusive result, as the ads observed were to many to count and many passed by unnoticed.

2.1

Advertising

For many years, advertising has been playing and important roll on communication activities between consumers and companies and it has been present in almost all aspects of daily life; delivering persuasive messages that embrace actual and potential consumers of a product or service; the goal being to stimulate interest in a brand and create positive brand values, show benefits of a product and differentiate a product among competitors so that consumers react in particular ways. It is stated that without advertising, we would not have brands, or innovation, consumer choice, value for money, or our diverse media. (Yeshin 2006, 1 4.)

It is stated that before the World War II, advertising used to be decentralized, but not in the context that is known today. Rather, every establishment would make advertising campaigns for the products that they would sell. Right after World War II there was a movement towards centralized advertising, with more focus on the global extreme, [which has been] driven by cost and control considerations. (Jones 2000, 4.)

Advertising has been changing over time; it started as a way to identify goods, but it became more focused on providing commercial information when printing press appeared. After the industrialization era, more products were created and advertising acquired the role of creating demand for these products. Nowadays, advertising plays roles which are marketing, communication, economics and society. (Wells et al. 2006, 5 7.)

Jones (2000, 4) explains that advertising helps industries as it coordinates cost savings, facilitates experience, enables effective control, it creates important benefits and provides consistency in approach to markets building brand positioning over time and territories.

These opinions are still shared by some, but not by as many as in the past. Still, the main problem of globalization and its consequences is that it has made the market more focused on production, rather than on the client, making advertising more standardized. (Jones 2000, 4.)

It is believed that American advertising has been a model for marketing developments and marketing campaigns abroad have been similar to those in the USA. But changes in the USA have occurred as well, as the general population in the US continues to become more diverse, with ethnic Americans of African, Asian, and Hispanic descent making up 25% of the population, the days of one-size-fits-all marketing are gone forever. Observers have noticed the effect of these changes and predict that that United States will not be a leader anymore but its consumer power will still remain the same. (Stachura & Murphy 2005.)

Jones (2000; 8) also explains that important changes that affect the advertising industry have been made in American consumer goods. For example, product categories have flattened turning 90% of consumer purchasing to take place in areas that show no growth; the lack of aggregated market growth, such as demographic shifts and increase of elder people, has led manufacturers to create dramatic fragmentation, hence the launch of new brands has become more problematic. Advertisers and promotional budgets have been

shifting from advertising to sales promotions, while at the same time television has been loosing most of its audience.

Even though, the author has not been able to provide any evidence on why a change in consumerism, especially in the American market and American products worldwide the author has had first hand observation in the changes in the mentioned shift. For example in Latin America, there have been many demonstrations against American products by not purchasing products original from the US.

The outcome of these trends is unknown as the reaction if businesses in practice is unknown, but it is certain that companies will gain more competitive advantage by monitoring market trends more closely through the local observations of manufacturers and advertising agencies, and by willing to listen to advice. Nonetheless it is up to consumers to modify trends and businesses outcomes. (Jones 2000; 8.)

2.1.1

Changes in Traditional Advertising

There has been a huge shift in advertising to activities outside of traditional advertising. John Dooner stated in the 4As conference in 2002, that in that year 50% of Advertising agencies income came from promotional activities in comparison to the 90% of traditional advertising income that they had 5 years before that (Cappo 2003, 46). In addition, there have been studies by the Pew Research Centre that prove that there has been a decrease in media spending and in audience since 1993, with the exception of Internet, cable TV news and public radio (Cappo 2003, 70).

This has affected advertising and media agencies, as most of the promotional activities are done internally by the company (client). Hence, for this kind of internal marketing, the amount of spending and return on investment is difficult to calculate and compare with advertising in the media, as people inside of the (client) company, believe that promotional campaigns are only and exclusively part of the budget. Nonetheless, many companies have started to outsource marketing services; driving advertising agencies to create expertise in the promotional area. Thus, many advertising agencies do not call themselves advertising agencies anymore, but will call themselves marketing communications agencies or full marketing/brand building agencies. (Cappo 2003, 46 47.)

But even though there is evidence that many companies have succeeded in being very successful with very little or no advertising for example Starbucks or Victorias Secret for many other companies advertising though media is still an essential part of their

marketing campaigns, as some promotional activities may only lower the credibility of a company. (Cappo 2003, 47.)

There is really no certainty of what is going to happen to traditional advertising, but there are certainly many opinions of what the impact of the Internet and other digital media on traditional advertising will be. Advertising age, in one of their articles, mentions that for some, the Internet is just one more media that will be disruptive only in the short term, but the Internet as a media for advertising, should and will become a supportive media, without replacing more traditional media. (Morgan 2006.)

The author would like to emphasize the fact that advertising in indeed changing, but there is no real evidence that shows up to which degree it will change, or if it will be totally replaced by sales promotions and the internet. Advertising suffers a continuous revolution as new technologies come into the market. Same happened when television came out. But at the moment, Internet will be considered only as a supportive media that combines media advertising with personal selling and sells promotions.

It is said that the Internet has been killing the print newspaper as it has developed as a source of information. Statistics show that in 2005 newspaper distribution dropped by 1.9% and television viewership by 37.8%. Nevertheless, analysts have come to the conclusion that currently consumers use new media as a source of information complementary to print, television and radio. (Ahlers & Hessen 2005, 65.)

However, it is true that most traditional media television, radio and print is somehow shifting to digital media. This doesnt mean that adverts will disappear, but it means that the way they operate will change, especially since most marketers have already been shifting from advertising to direct marketing and promotion. (Morgan 2006.)

Conversely, changes in advertising revenue from traditional media have not declined as fast as was projected, regardless of the decline in their share of audience, mostly because advertisers have not found any suitable substitute for the exposure generated by traditional media. (Ahlers & Hessen, 67.)

As consumers have changed, the methods of reaching them are no longer about the public in general, but targeted at the customer themselves, the individual (Morgan 2006). However, advertising as it is known, it is not completely dead. Most advertisers and consumers use a wide variety of ad publications and media. The keywords for knowing where and how to advertise are tracking and measuring. There is no point in drowning

customers with ads (interruption advertising), as this will, in fact, make them avoid the ads. (Crawford 2007.)

Advertisers still have to consider where their target market is. Ahlers and Hessen (2005, 66) say that changes in media for advertising are more of a generational gap rather than an actual shift. They claim that the younger the audience, the easier it becomes to find them through digital media. They also claim that young adult spend far more time on the Internet, adults are 50-50 and the elderly population can very seldom be found using digital media.

The Internet is the fastest growing sector within advertising, but there is no real evidence of traditional media abandonment, au contraire, traditional media will still grow, but at a slower economic rate. (Ahlers & Hessen 2005, 67 68.)

Regardless of all the changes that there have been in the advertising industry, traditional advertising will not change or disappear completely. Many consumers are still used to more traditional media, and unless the new generations stop buying televisions and start installing iPods or mp3 players in their cars instead of radios, traditional media will stay.

And still, digitalization has changed traditional media in certain ways, for example, outdoor advertising is not only a poster with static images, but is rather a colourful, luminous ad people see in the streets, and special effects and digitalization help TV ads to be more creative and artistic.

It has to be remembered that advertising is a constantly changing industry, as it has to be consistent with consumer and technological trends. It has to keep it self updated in order to be effective and reach the desired target market.

2.1.2

Impacts of Globalization in Advertising

There are a lot of discussions about globalization and businesses going global. The same goes for the advertising industry, as there are agencies that work globally and even call themselves global advertising agencies. Nonetheless, it is claimed that advertising cannot be called global, as many aspect of advertising have to be localized because of the many languages, cultures, values and traditions. Even the media where the ad is run may have to change from country to country. (Cappo 2003, 92 93.)

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Somehow, at the beginning of the 80s, observers realized that global perspectives where not working well: and the methods of advertising started to shift becoming so that substantially localized campaigns increased from 20% to 35%, partly standardized and partly localized campaigns rose from 10% to 55% and fully standardized campaigns fell from 70% to 10%. (Jones 2000, 2.)

Marieke de Mooij (2000, 103 104) in one of her articles discusses the effects of globalization on the consumers changing needs and wants, and how these changes ease the standardization of advertising. In her article she states that standardization of markets is more viable in those markets that are economically equal, but a complete global standardization is not even near to reality because of all the cultural differences. For example, many international marketers thought that Europe would become more homogenous, especially after the introduction of a common currency.

Globalization seems to be a powerful because it gives companies a different strategy, but is rather difficult to market products at a global level. But globalization is not only about advertising going worldwide, but it is also about the workability of the ad planning and creation. Companies based in a specific country can use agencies that are original from other cultures to go to totally different countries using a culturally diverse staff. Therefore, companies can have mayor solutions to their advertising campaigns. (Myers 1999, 55 56.)

As mentioned, globalization in advertising is not only about taking advertising abroad, but it is also the way companies and agencies work. Staffs from all over the world are working together to make standardize ads more effective in local markets, by giving more detail and knowledge of the market to be entered. But it is still true that a standardized ad will never be called global, as there are adjustments to be made, from language to iconography and media employed.

2.2

Internet Advertising

Internet Advertising is more than a new way of communication in Europe alone in 2006, 46% of inhabitants were active Internet users (msn.es 2006), but it is also considered to be a totally different way of marketing. The Internet has been changing the way people look at advertising, just as television did in the 50s. (Cappo 2003, 70; Morgan 2006.)

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Marketing tools and marketing communications are provided via a single media, and are able to reach worldwide levels and all kinds of target groups. And even though some traditional strategies may apply, new technologies offer the same services as TV, radio and print, but at a much lower price. (Smith, Speaker, Thompson 2000; 209 210.)

The benefits of using a medium that comply different media are plenty, as it not also presents the opportunity of being more creative and hence having a competitive advantage, but also reduces costs and widens the probability of the appearance of the ad.

Traditional media has been starting to go digital, and instead of trying to compete with it, they use it to favour its specific media type. TV, magazines and radio stations have started to establish themselves on the Internet since 1994, without abandoning their original media. And still, nowadays, some companies start directly on the Internet; such examples are the digital magazines salon.com and slate.com which became public in 2000 without ever being in print. (Cappo 2003, 174 175.)

In relation to this last point, the author remembers and explains the case of a musical band called The Artic Monkeys which became extremely popular worldwide just by promoting their music through popular web pages on the Internet. As they became famous, disc labels offered the band management contracts and their music reached the top 10 lists in several countries.

Internet offers alternative solutions to all businesses when promoting as product, as they can use all the media in one single channel at a relatively low price. This is a benefit for many as advertising budgets do not have to be as large as they are when advertising through traditional media.

By the year 2001, not only media, but businesses as well went digital to provide immediate information. Joe Cappo (2003, 174) quotes in his book the words of Michael Zimbalist, executive director of the Online Publishers Association, from a personal interview held in 2002:
Most media, with the exception of broadcast television, relies on a combination of advertising and circulation revenues for their business models. The ratio of advertising revenue to subscription revenue is about three to one, or 75 percent advertising to 25 percent subscription. Online publishing has not reached that point yet as far as payment for online content is concerned. Only about 9 percent of online publishing revenues come from paid content, but that amount is increasing and we expect that it will eventually be pretty close to the traditional media ratio. (Cappo 2003, 174.)

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But one also has to consider that the public on the Internet is considered to be young, and economically wealthy. While traditional media have suffered from a fragmentation of their audience, the Internet has managed to deliver through more defined channels (msn.es 2006.)

Advertisers have to keep up with generational changes. There is no generation that has the same tastes, needs, and wants. As a young adult, the author claims that newer generations prefer more interactive and personal ways of communication, more innovation and creativity creates attention including all what fall into the bizarre category; they like to have control of the flow of information, as current days peoples routines are rather hectic.

The main difference between Traditional Advertising and Internet advertising is that marketers have to understand how the Internet works, meaning that instead of producing a video or print ad, the produce banners that may contain small images, sound, short texts, links, rich media and push technologies among other things. (Smith et al 2000; 225.)

There are many other differences between traditional advertising and internet advertising. The reach to consumers, as they have started to spend more hours on the internet, and marketers do not have to think about reaching international targets in different ways, as the ad will appear in the same media globally; it reaches better targets not only because of the likeliness of clicks from consumers, but nowadays there are tracking systems that can recognize the specific tastes of consumers via their IP addresses; Internet is easier to measure as advertisers can know how many times people have seen a specific ad using tracking systems; and lastly the costs are much lower as the only costs are (for most cases) the web host and the creator of the ads. (Implied By Design 2007.)

2.2.1

How Internet Advertising Works

Internet has created a great impact on society and businesses as a personal communication medium. Cappo (2003, 192 194) says that Internet is not only a medium, but is more a union of two. He explains this by saying that the Internet is a media in which it is possible to advertise, although many use it for spam purposes. Nonetheless, net surfers can use the Internet to communicate with their loved ones when far away, and can listen to radio, view television and read the news all in the same place.

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Regarding spam messages, it is the authors opinion that they are messages that work just like undesired direct mailing that most people receive in their mailbox from small companies such as restaurants, kiosks, mini stores, rental places that operate in the neighbourhood nearby.

The Internet has not only facilitated the communication industry, but it has also changed the way commerce works (E-commerce). Retailers can control and coordinate their sales by data basing in a much more organized way. For example, selling peak times can be easily recorded and calculated, making marketers able to coordinate advertising in other media for more appropriate times; retailers can also give immediate examples of accessories after a purchase online, a thing that is not possible through catalogue sales. (Cappo 2003, 196 200.)

One thing that has great importance within the Internet is its interactivity (Sicilia, Ruiz & Munuera 2005, 31; Cappo 2003, 196). Internet users can choose to attend to certain messages or ignore them. Unfortunately, this is not 100 percent true, as other ad tools, such as banners, buttons, pop-ups, and skyscrapers, for example, are not wanted by the user. Interactivity starts when the user begins to control the information flow, meaning the communication process. (Sicilia et al. 2005, 31.)

Consumers appreciate the interactivity and creativity of the ads through the Internet, but at the same time, they try to avoid those messages that are obstructive or distractive. In order to create a good interaction between the ad and the consumer, it has to be non distractive and entertaining. The creation of appropriate ads will help the advertiser to have a better relation with its costumers as it will increase the data saved and its reliability through the diverse measuring methods of the internet.

Navigating the Internet is the interaction that the user has when navigating and searching websites and/or advertising to get information about several products and services. The Internet is about the flow of information and communication through technologies that allow interaction between the consumer and the advertiser. Interactivity means the facility of direct interaction regardless of place and time. The Internet offers different levels of interactivity in comparison with traditional media. (Sicilia et al 2005, 32.)

The main purpose of websites is to inform, persuade and remind people about certain products or services. There are many people that hope that the Internet will be the future of marketing communications. For many, the Internet websites, banners, and more are considered to be a form of advertising because they do communicate a message by

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content and design to the consumer. As Sicilia et al (2005, 31) explain in their article: Marketers are searching for ways to direct consumers to their websites and to send consumers a strong message.

Web sites, among the other tools of Internet advertising, are considered to be the most interactive form of advertising on the Internet, as the information can be controlled regarding what is or isnt shown, as well as when and where it is shown. (Sicilia et al 2005, 31 32.)

The main advantages of Internet as an advertising media are terrific resulting in instant feedback and results, in comparison with traditional media were researchers had to wait for several days, weeks or even months before being able to analyze performance and make the necessary changes at very elevated expenses. Instead, with the Internet, this same process can be done in just a matter of days and at minimal costs. (Wells et al 2006, 279.)

This last point is rather important when going online; as corrections and changes can be done when receiving input data on the viewers, and in case of any misleading messages, faults can be corrected before people notice that there is something odd in the ads, hence avoid bad word of mouth among internet users, on and off-line.

2.2.2

Internet Tools

Even though this section might seem rather irrelevant, it is important to understand the difference among the Internet tools as they all serve different purposes depending on the audience and the product wanted to be advertised. The Internet tools are discussed bellow.

Banner Ads are one of the most popular forms of advertising on the Internet. These are graphical bars that usually contain *.gif images (images that move but have no sound). Banners link users to the advertisers web site. The spaces are sold as CPM (cost per thousand) or CPC (cost per click). Advertisers have to realize that besides the fact that banners message has to be very concise; there are many sentences that users are becoming immune to. (Hayward 2006; Smith et al 2000, 227 228.)

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Figure 2 Example of Banners Source: www.irc-galleria.net 2007

Text Ads are just simple texts linked to web pages or e-mail addresses. They have been growing in popularity because of their simplicity. (Hayward 2006.)

Figure 3 Example of Text Ad Source: https://ads.planetdiscover.com/abilene/ssi/images/textAdSample.jpg 2007

Interstitials are pages that load for about 20 seconds between the main pages consequently are considered to as the Internets commercial. They are usually sponsors of the main web site. This type of ads now runs on more than 350 different web sites. The main problem with them is that they slow down loading time for the main page that is being visited. (Hayward 2006; Wells et al 2006, 278.)

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Figure 4 Example of Interstitials Source: www.tv.com 2007

Pop-ups are considered to be the most irritating type of advertising when the information is not of interest, but it can be a very useful tool when making announcements for example. They are small windows that appear when browsing in a web page to drive up traffic stats. They can either appear in the front of the web page, hidden in the back of the web page or open as you change pages or close the browser. (Hayward 2006; Smith et al 2000, 231.)

Figure 5 Example of Pop-ups Source: http://magazines.ivillage.com/cosmopolitan 2007

In contrast to spam mail, opt-in/opt-out mailings are newsletters or ads that people have signed up for and these will be delivered as a newsletter mailing in their inbox. Usually these kinds of companies try to promote events like seminars or podcasts. Emails of the listed people are never available to the reader. The difference between opt-in and opt-out mailing is that opt- in get the permission before hand and opt-out gives the option that makes it possible to decline those kinds of emails. (Hayward 2006; Wells et al 2006, 281.)

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Figure 6 Example of Opt-in Mailing Source: http://mail.google.com/mail/ 2007

HTML Ads are those which have HTML features, meaning that people can interact with them. These features can be pull-down lists, check boxes, or links to more than one site, and so on. They can range from banners, to the same web pages (Hayward 2006.)

Figure 7 Example of HTLM Ads Source: www.aftonbladet.se 2007

Rich-media Ads are those based on shockwave or flash. They contain a heavier type of images (video) and can be combined with video as well. In many cases, this kind of ad offers certain level of interactivity. Unfortunately, not every browser is compatible for this kind of ad. (Hayward 2006; Smith et al 2000, 229.)

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Figure 8 Example of Rich Media Ads Source: www.aftonbladet.se 2007

Edwin Hayward (2006) explains that Hybrids ads combine aspects of other advertising types, such as texts and banners, to make a more effective pitch to visitors.

Sponsorships are based on the traditional form of sponsorship, but on the Internet is more about the support the sponsor is giving to the owner of the page. Hosts can either be ordinary people or other sites yahoo, geocites and Google for example. Generally the sponsors are mentioned on the sites as follows: Site brought to you by. Or This site is sponsored by (Hayward 2006.)

Figure 9 Example of Sponsorship Source: http://www.uwsp.edu/psych/dog/dog.htm 2007

The list of Internet tools in large, but the most important and common ones have been brought into discussion.

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2.2.3

Effectiveness of Internet as an Advertising Media

In comparison with television advertising, the Internet has not shown proof of its effectiveness, but its adaptability replaces that of any other medium (Cappo 2003, 189). Also, Internet provides increased opportunities for measuring traffic, visit duration, conversion rate, sales value, number of transaction and number of users (Yeshin 2006, 378).

Yeshin (2006, 379) resumes that many agencies use tracked links to measure the effectiveness of an ad placed on the Internet, whether more traditional methods are less popular. Therefore, agencies are starting to charge on the basis of Cost per Thousands (CPM) to be able to put a price on a banner.

Sicilia et al (2005, 32 33) claim that Internet advertising, in order to be effective, has to be interactive. This is because the consumer can select the information and order in which they want it to be presented. They state that persuasion in advertising reflects the net favourableness of the cognitive responses that people evoke as they elaborate on a message. They argue that in order for interactivity to start, the control of the information flow should cause pleasure to the user.

In order to prove the response and effectiveness of Internet advertising the author has sourced diverse reports/publications from the CMO Council and Interactive Age. All these tables are important to this thesis because they represent the increasing value of the communication flow that the Internet offers to consumers and businesses, providing some proof for the discussion by Sicilia et al. The tables are discussed in the following paragraphs.

Table 2 of this study indicates that clients rely on the Internet to be able to choose which products to purchase based on the information given through the vendors web pages, as they feel more comfortable comparing the information this way than with other media.

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Table 2 Impact of Online Content on Vendor Preference and Selection Source: CMO Council 2006

Table 3 shows the benefits that the purchasers gain when searching for products online rather than in traditional media, where they would spend more time and money when they search for information about the products they want to purchase. Ease of access and availability is the benefit that most users get when searching for information about products and services.

Table 3 Key Benefits of Internet Research Source: CMO Council 2006

It can be seen in table 4 that organizations started to spend more on online media and this type of online resource during the year 2005 in comparison to previous years to previous years by growth, therefore the projections for year 2000 indicate a lager spending during year 2006. Paid search is the area where most Online advertising was invested.

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Table 4 Online Ad Spending Source: Advertising Age 2006.

Based on a study made to 230 marketers, table 5 indicates which interactive media is used/going to be used the most when advertising on the Internet resulting that consumer product marketers are and will be using more interactive channels.

Table 5 Marketers Using Interactive Source: Advertising Age 2006

Spending on the type of sites for advertising can be appreciated in table 6, as it shows the spending in advertising by the amount of ad revenues that they create. The total amount of spendature is $8.32 billion. This table also shows that advertisers have been spending more money on search engines and news websites than in other types of web pages

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Table 6 Top 25 Web Site Categories by Ad Revenue Source: Advertising Age 2006

Table 7 shows the main activities of US adults when going online. The data of this table shows that the population (at least in the US) uses the Internet mostly to obtain information on products and its purchase.

Table 7 Online Activities of U.S. Adult Internet Users Source: Advertising Age 2006

Lastly, table 8 indicates the amount of money spent on online services by consumers, resulting so that entertainment and personals are the most paid for.

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Table 8 Online Content Spending by Category Source: Advertising Age 2006

So how do these tables relate to the theory? By observing the data provided in the previous tables, one can observe that there has been a clear increase on the uses of the internet. Consumers and companies are relying more on the Internet when having to make a purchase decision, and companies have clearly been spending much of their budgets in Internet advertising.

Spending of the advertising through the Internet is clearly affecting positively to many industries, as table 8 shows, changes in consumer spending throughout the internet have incremented largely in comparison to the previous year. This proves that indeed, interactivity has called the attention of many consumers and reached their selling goals.

2.2.4

Benefits of Internet Advertising

As mentioned previously, the Internet has been able to provide the same services as traditional technologies through a single channel, for example, banners are a kind of posters, blogs are like bulleting boards, sponsoring a page instead of a program, magazines and newspapers are also publishing their articles online, TV programs can be shown through the Internet, and feedback can be taken from the way consumers adjust certain web pages, and stores are offering their products and their catalogues through the Internet so that consumers are able to make immediate purchases. (Smith et al 2000; 209 210; Myers 1999, 138 140.)

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In this way, the Internet has been able to make communication more interactive among advertisers and consumers, not only because all the information about the desired product can be found instantly, but also because there are opinions and justifications from other customers, which can greatly sway the buying decision. (msn.es 2006.)

Besides of being able to serve as a multi-media channel, the Internet is also a good tool for other promotion campaigns, such as sales promotions, word of mouth and direct selling. The author dares to say at this point that word of mouth is becoming increasingly popular among the Internet users, as people is able to read about all sorts of things, from opinions, to peoples personal history and living proof of the usability and reliability of certain products and/or brands.

On the advertisers side the Internet has been offering several benefits such as interactivity, low costs and businesses can offer immediate special deals when prompted. They also have much more comprehension of the customers wants and needs through a bidirectional communication, hence improving the efficiency and effectiveness of campaigns almost immediately by adding behavioural variables to the ads. They can also get to know the perception of brands by their customers, almost instantly. (msn.es 2006; Wells et al 2006, 279.)

On the creativity side, there are more opportunities to advertise creatively, not only with banners or web pages, but also through games, blogs, messaging and animations, among other things. (msn.es 2006.)

Companies also benefit from Internet advertising as the measuring systems are easier to follow-up and the customer response is faster to analyse. Because of this, it has become more feasible to compare contributions and effectiveness among competitors from Small and Medium Enterprises to Multinational Enterprises and other media as well, while at the same time, companies are able to offer exceptional sales deals or make an actual immediate sale. (msn.es 2006; Wells et al 2006, 280.)

All the benefits mentioned above, give companies mayor differentiation within competitors whilst increasing competitive advantage, as they will serve to the consumer as a proof of the capabilities, positivism of the company in question. In addition of creating at the same time customer loyalty, increased brand awareness and brand value. Lastly it will show the consumer how far companies are willing to go to keep its public as a consumer.

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MSN (msn.es 2006) has made a study identifying the most important improvements areas of advertising perception obtaining the following responses:

Recognition of a brand: up by 5.4% Memorizing of an ad: up by 45.3% Message association: up by 21.6% Positive reaction toward certain brands: up by 5.6% Intension of purchase: up by 5%

Evidently Internet advertising has a positive impact on consumers within awareness and perception of ads, in comparison with traditional advertising. And even though the source did not indicate the why this increases, one can assume that this increase in the awareness of ads is precisely because of the levels of interactivity and attraction of the ads.

Still advertisers have to take into consideration the disadvantages of Internet advertising, for example, the speed of many home Internet connections are slow and do not download images and rich media properly. Other considerations that have to be in mind are the limitations that web site holders have meaning that they will limit the space and the content size/type into simpler images while others offer larger types of advertising, thus resulting as a benefit for the web site owner (publisher) as their advertising revenue will increase by not limiting the advertising services. (Wells et al 2006, 280 281.)

2.2.5

Where is Internet Advertising Going?

The Internet has drastically transformed the Traditional advertising industry. There has been a great shift from TV and print advertising to online advertising. Marketers and consumers are posting all kinds of ads, videos and blogs about different brands. (El Economista 2006b.)

During 2005, Internet advertising spending rose by 200% in Mexico, which in turn was a 200% increase compared to 2004. In Mexico alone, Internet advertising covers 2% of total publicity expenditures. (El Economista 2006a.)

It is said that by the end of 2005 the number of Internet users in Mexico was 17.1 million, of whom a large percentage used sites from other countries, which publicists cannot reach easily. Because of this, new platforms are being created to assure greater results in marketing campaigns and maximise ROI. (El Economista 2006a.)

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The author having lived in Mexico for several years would like to comment and explain that in Mexico, as a developing country, the access to computers and Internet is not as common as in European countries. But to compare the values of Internet advertising revenues to the number of computer users in Mexico, the author has expected that the revenues were expected to be much lower, based on the general experience and the knowledge of the low-income population.

The potential for annual growth in Internet advertising investments is 18%, which means a large growth for this industry. At the same time, the projected growth of Internet advertising alone is around 32%: as stated by PricewaterhouseCoopers. (El Economista 2006a.)

Worldwide, during the first quarter of 2006, Internet advertising reached a revenue record of $3.9 billion. This means that marketers all over the world believe that advertising online brings new opportunities and is effective at reaching consumers. (Interactive Advertising Bureau 2006.)

Concerning media, major changes are taking place. Interactive television the combination of television with the Internet is to be said the future of broadcast advertising. Some examples of how television can interact much more with the Internet are the services of WebTV and MSN TV, where people are able to navigate the Internet using broadband cable through the TV with a remote control device and a wireless keyboard. The benefits of this type of service are many and in the future there will be more interaction between companies and viewers. Examples are: direct opinions of products, determination of the effectiveness of a commercial, technology to instantly sell products. (Cappo 2003, 180 183.)

One company that is worth keeping an eye on is the Dish Network, as they are currently making this possible in selected areas of the USA (Tamez, J.L., 20 February 2006).

Also changes in the way of measuring might be possible in the near future, as marketers believe that Internet could be measured in the same way television and radio do for example using daypart data as well as reach and frequency tools. Wells et al (2006, 281) explains that Planners believe Web site click will eventually be audited the same way viewership and readership are for traditional media

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Whether Internet increases its potential as a media, there is no doubt that the Internet offers several benefits and opportunities to new markets and media, though the outcome cannot be predicted as this point, mostly because of the speed of daily changes in technology and trends of the usage of the new technologies by the general public; were users, software programmers and advertisers have to keep updated and adapt quickly.

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3 EMPIRICAL RESEARCH
The research is supported by free response interviews with people that have been working for a long time with the Internet and are considered experts in their own area. Interviews were the selected method because this enabled a more in-depth insight of the market situation and an understanding of how the new advertising environment works. Interviews also provided an enhanced and more concrete opinion of the Internet and the advertising industry in general.

3.1

Research Methods

A qualitative type of research free response interviews has been chosen for the study of the thesis, as qualitative research seeks to understand factors that are difficult to measure. Chisnall (1997, 180) cites Coopers and Branthwaites summary of the uses and rationales of qualitative research, which is given in figure 9. This table expresses that structured interviewing can give deeper insight and understanding to the subject in matter, as it helps to give a diagnostic for certain kinds of behaviours in this case the use of Internet as an advertising media .

ACCESSIBILITY Public Private Communicable Noncommunicable

LAYERS OF RESPONSE Spontaneous Reasoned, conventional Aware Unaware

Responses by structured interviewing Relative ease

Concealed, personal

Intuitive, imaginative Relative difficulty Unconscious, repressed

Figure 10 Responses to Interviewing Source: Chisnall 1997, 180

Qualitative research has to be rather impressionistic and its goal is to prove a point, rather than counting. It is said that qualitative research should be able to provide unique insights to inspire and guide. (Chisnall 1997, 180 181)

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As mentioned previously, free response interviews are the chosen form of qualitative research. Chisnall (1997, 161 -163) explains that interviews relate to a purposeful exchange of meanings and interaction. In more detail, free response interviews allow the respondent freedom in answering (open) questions in form of discussion.

Therefore, as the study needed a great insight and understanding of why Internet is a good tool for advertisers through its workability and effectiveness, interviews have been chosen as the best method to obtain data, as it allows the collection of data to be open with the interviewee, providing more opportunities to discuss and hence understand the data correctly.

3.2

Interviewees

The interviews were held with people of different nationalities of which 5 are currently located in Finland (American, Finnish and Scottish), 3 are located in Mexico and 1 is located in Spain. The interviewees were selected based on their knowledge and experience of Internet advertising, as well as the authors work relationship with the interviewees.

The professions of the interviewees ranged from copywriters (Internet based content), project managers, ICT developers, general managers and vice directors of companies that have expertise in the Internet. A small description of the interviewees can be found bellow.

Peter Cura (Scottish is a copywriter at Imageneering. He is responsible for writing and checking data for all the content that is to be published, mostly in web pages. Some of his work can be revised in www.eget.fi.

Tommi Jokinen (Finnish) is Imageneerings IT developer. He has great knowledge of the Internet and its workability. He has created the companys extranet and formatted Imageneerings new web page. His responsibilities within the company lay mostly internally.

Matias Vakkilainen (Finnish) is a former employee of Imageneering as interactive manager and currently employed by Dagmar as design manager. He will be a judge for Net Advertising in the Finnish digimedia contest Grand One 2007 which will be held on march 22nd, 2007.

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Lic. Ernesto Valdez (Mexican); he is the Vice President for the Mexican Internet Association, in the Mexican Internet industry he is considered to be one of the few experts in Internet advertising.

Lic. Jos Luis Tamez (Mexican); he is the CEO of Ciberlex, which is a marketing design studio with expertise in multimedia and Internet. He is the main responsible for all the Harley Davidson campaigns in Mexico.

Four of the interviewees have requested to remain anonymous.

The company supporting this research is based in Finland, and is called Imageneering Worldwide Partners. Imageneering provided the tools for the interviews and also volunteered to answer some questions.

3.3

Data collection and analysis

The questions were formulated after the collection of the theoretical data, and are mostly related to the workability of the Internet as an advertising media. Interviewees were also asked to give their opinions on how they view Internet advertising. The question can be found as an appendix.

The interviews were held by phone, face-to-face and e-mail. The answers given first were recorded and reviewed several times in order to get a more precise comprehension of the data given. The results were then compared with the theory on specific chapters; this relation can be found in table 1 in at the introduction of the thesis.

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4 THE WAY AGENCIES SEE INTERNET ADVERTISING


The interviewees agree with the theory that Internet advertising is actually a new media that offers more interactivity among consumers and organizations concerning the information flow, as consumers can indeed control the amount of information received. And, that companies can track the usage of the information that they provide through the Internet in a faster and more effective way.

Overall, the Internet seems to give very positive results when supporting other media. It not only works as a reminder but also enables advertisers to track who clients are and what their interests are better, in order to provide a more personal message when they market to certain audience.

And even though globalization seems to be an area of concern within the advertising industry, the Internet gives the option to the viewer for continuing communication with a certain ad or not, regardless of demographics. As stated by interviewees and theory, the impact of globalization not only concerns the advertising of a product worldwide, but it also concerns the movement of people from one country to another.

As observed, the main topic of discussion in the theory and answers provided in the interviews is the interactivity that the Internet provides. Interactivity is what makes Internet advertising effective and more reliable; it gives a competitive advantage to businesses as they can position themselves better in the market.

Interactivity facilitates the information flow for the consumers as well for the advertisers. The consumer can choose the information that is wanted and the advertisers get the information that they need from simple tracking systems. Unfortunately, fraud and counterfeit is still possible on the Internet, which gives a bad reputation to the media. Many businesses and associations have been working on ethical codes to reduce the negative sides of advertising and to make it more user-friendly.

All in all, Internet advertising seems to be benefiting the advertising industry more than harming it, since consumers and more and more businesses are starting to react to the different tools and communication systems that the Internet provides.

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4.1

Internet Advertising

Internet advertising, according to the interviewees, is much easier to modify, and it reaches its target market much faster and more easily than Traditional advertising. This is because it allows multiple strategies and the possibility to modify them if they are not suitable. But still, problems may arise when the speed of the Internet connection or the browser are not suitable for the many different ads that are on the net, making the loading of pages slower. There are also new programs that can block advertising and prevent adverts from reaching the reader.

Ads can be supported by many types of tools, such as banners, podcasts, video advertising, newsletters, radio and TV through Internet, pop ups, viral (chain) ads and messages, blogs, downloads, free demos, freeware, shareware, online shopping, Googles advertising programs, and much more. These tools can be divided into two categories: intrusive, these are adverts that appear in front of a browser as soon as the reader loads a page, this type is the most annoying; and non-intrusive, which are adverts that appear, pop out or include media, but do not bother the user in any way, as they appear in the right place at the right moment.

The interviewees also mentioned that with Internet advertising clients know in more detail who their customers are in comparison with traditional media, which is more massive.

Regarding the internationalization of the Internet, there were many different opinions. The interviewees where asked the question: can Internet advertising be truly global if the ad is localized? Some responded yes, some responded no, some others answered that it depends.

The ones that answered no argued that if it is local, it cannot be global. The ones that answered yes argued that because of the current movement of people ads can reach certain demographics regardless of the location of the Internet user. And, since the Internet is for global usage and the connections are global then if the ad is appropriate for certain users, they will click on the ad. The ones that answered that it depends argued that depending on the ad and the demographics and the purpose of the campaign, the ad can be considered either global or local.

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4.2

Benefits of Internet Advertising

The Internet can provide many additional benefits compared with those of Traditional advertising. These benefits are interactivity, the availability of more information, and errors can be corrected faster. Besides, a number of media (audio, video, animation) can be provided from one single place, customers can get instant help online, and sellers can instantly close deals. An additional benefit for the customer is that they have the liberty to decide when and how much time to spend on a website, in comparison to TV, for example, where you can only view ads selected by the networks at the time of their choosing.

Market reachability and direct sales are one of the other major benefits of Internet advertising.

4.3

Effectiveness and Measurements

The interviewees agreed that even though the Internet is just another media in the market for b-2-b marketing, Internet advertising can give specific benefits with very good results, for example the numbers of sales versus the number of exposures. The key point is to create a database that is perfectly targeted and to send high impact messages, while still taking into consideration if it is absolutely necessary to go digital or not.

Still as with all media, the level of reach and effectiveness has to be measured. The tools or systems that the Internet uses are quite different from those in Traditional advertising: here are some examples of methods that the interviewees provided:

Cost per click (CPC)/Cost per Thousand (CPM): Google is the major player with this type of ad program. By tagging banners, links, games, forms, and more, the number of clicks and the directionality of the message can be tracked. The clicks that are valid are those that actually achieve the ads purpose i.e.: to give information or to sell a product.

By databasing. By sales or polls.

There are many examples to prove the effectiveness of Internet advertising. From the extensive list of examples, the most popular was Googles you tube. They mentioned that You Tube provides free services to its users, making it easy for the public, bands and

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video developers to publish their videos for free or for very little cost. Therefore, many bands now launch their videos first through You Tube before buying time from MTV.

Another interesting example is Harley Davidson, who have been advertising and promoting in Mexico exclusively online through the web page www.hdrallies.com. On this page customers can find product offers and invitations to events and rallies. This webpage is the main communication tool for Harley Davidson Mexico.

One more example from around the world is Sony Style. They hosted a competition through the Internet and sent emails with the expectation that 1000 participants would register, but instead over 20 000 people registered.

Concerning word of mouth, it can be also applied on the Internet through blogs. One example given by one of the interviewees was of a solar rechargeable backpack that allows its users to charge their electrical devices such as mobile phone or GPS systems when running out of battery. This company employed blogs in such a way that they sent one backpack to one hiker, whose blog is popular among people that practice hiking and mountain climbing. The hiker made comments of the mentioned product and the demand for it started to rise among hikers and climbers.

However, what does effectiveness mean to the interviewees? The answers were the following: efficiency is to give satisfaction to the client, make a sale and reduce costs all at the same time. And elements such as Client Relationship Management help the advertiser to reach their customers in a more personal and complete way. Enterprises have increasing access to the Internet, to the point that some have restricted certain pages/programs because people have been starting to spend more time on the net than working.

Communication is what makes Internet advertising effective, as it is more direct, more instant and less time consuming.

4.4

Marketing and Internet Advertising

For all the interviewees, the Internet is a very well integrated part of the marketing mix; it supports and complements traditional media providing more information, and more immediate information about brands. Nonetheless, currently the market is not ready to abandon traditional media and be based 100% on the web; on the other hand, many

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suggested that traditional media could be used as teasers, while digital media could be the media for closing deals.

Invitations are the most common tools for Internet advertising, as they attract people to subscribe to certain web pages. They also help to get to know the customer better. Moreover, the Internet complements traditional media (e.g. Television) by offering further information and by being more precise.

Furthermore, around the world there is a topic that many discuss, while few let their opinions be known openly. This topic is ethics. In traditional advertising there are a number of ethical principles like the times and places an ad that promotes alcohol or cigarettes can be shown, the type of people that should be used in ads, and so on and so forth. Unfortunately, with Internet advertising, these kinds of regulations are far from reality. For an Internet user, it should be easy to distinguish the ads that are from serious companies from those that are not. However, there is a thin line between advertising on the Internet and spam, because if the user feels aggravated or invaded, the results of campaigns may not be the ones desired.

In addition, all the personal data should be saved in databases and information should be given directly and with the authorization of the user; at the same time, the user should have the option to unsubscribe from a site if desired. The information provided should be used only for marketing purposes. Ethics are usually given in conditions and terms of use, but most people do not read them. Unfortunately, there are no obligations for companies to provide this kind of information and a lot of data can be stored without users knowing.

Internet associations have been creating internal ethical codes that every member should follow in order to avoid fraud and undermining of the Internet.

4.5

Response towards Internet Advertising

From the advertising agencies interviewed the general attitude is positive, as they consider that Internet advertising, if well projected, does indeed have good results, and it does not result in being as annoying as many people claim. At the moment, Internet advertising is not considered as a must, but as a good complement to marketing campaigns when clients consider the interactivity of the ad with the client.

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The Internet is considered to be a medium that is not 100% explored, and in, for example, Mexico, the Internet is considered to be for users that have a medium-to-high social status, but this is changing. It was suggested that in Mexico, there should be more promotion, through seminars, of Internet advertising, as there is little information about the advantages that the Internet offers. Unfortunately, seminars cannot be organized often because there are few experts (in Mexico) on the topic.

From their own personal point of view, interviewees seem to be quite positive about the use of the Internet as an adverting media, but they wish that the intrusive types of ads would be reduced, as they may actually drive them away from certain pages. But advertisers have to yet realize that the Internet is a media that is still in its growing phase, and that is has an unlimited potential.

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5 DISCUSSION
This thesis attempts to establish how Internet advertising works and how effective it is. It has been written with the intention of providing advertising agencies with actual proof of the benefits of Internet advertising. It is hoped that they can use it as a basis for convincing clients that Internet advertising is indeed a good media to advertise their products in, and to prove to them that they should not be afraid to go online despite the 2001 bubble.

The thesis emphasizes the importance of interactivity and personalization when advertising through the Internet regardless of the level of internationalism of the ad or the campaign.

5.1

Summary

New times are coming for the advertising industry. Many claim that the Internet is a threat to traditional media, while others claim that the Internet may actually be more beneficial to the advertising industry, as it complements the information given through traditional media.

This research has proven that the Internet, even though it is changing the way the industry works, is not going to replace traditional media for a long time, i.e.: until consumers and businesses are ready to go 100% digital.

The Internet has provided major benefits to traditional media as it has brought the attention and interest of consumers to adverts viewed inside and outside the Internet, giving them the opportunity to get direct information on a product or service of interest.

5.2

Conclusions

Internet advertising is indeed a fast growing tool that is changing the way people communicate. But that does not mean that the Internet is going to replace other media 100%. Consumers, businesses and media have to balance their usage and exposure of advertising, as currently there is no exact knowledge of what is going to happen with traditional media in the next decades.

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It is widely recommended to avoid the use of intrusive advertising, as this type of advertising will just push away current and potential consumers. But this does not mean that advertisers have limited options. On the contrary, advertisers are most likely allowed to play, try, create, design and much more on the Internet, especially when new technologies and new software are coming out to markets continiously.

Internet advertising is a very efficient and effective way to advertise to the younger population and businesses abroad, but there is still a lot of research to do concerning intrusive ads. And the Internet as a media greatly complements traditional media as a way to provide more information on a certain product or service.

Businesses should be more aware of the implications of the Internet and the advantages that it provides. It is not necessary to advertise on the Internet, but they can create below the line meaning other promotional activities rather than advertising marketing campaigns at a worldwide level and with a faster rate of response.

With all media there are always dangers, and Internet is no exception. When going online, advertisers have to make a deeper and detailed study of their target market, as the Internet provides interactivity through personal messages to the consumers, compared with TV, radio and print that are focused on a more generalized market.

It is important to notice that geographical location of people is changing quite rapidly, so the realization of standardized ads would not be as effective as the personalized and interactive ads.

In regard to content, there is no specific ad that is good or bad advertising. There are many techniques, systems, media and strategies that advertisers can employ. But what is has been mostly discussed is that advertising has to be appealing to the consumer. An in Internet advertising this is interactivity.

Interactivity is what has made the Internet a good advertising media. Consumers seem to prefer those ads where control of the communication flow is in their hands. But still advertisers should avoid the use of intrusive advertising such as pop ups, as they will only incite the consumer to ignore the message and alienate the user from the web site where the pup up appeared.

Still, levels of interactivity have to be tracked and measure in order to evaluate properly the effectiveness of the ad. Consulting media or advertising agencies on which techniques

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and tracking systems are the most appropriate for certain products is the best way to get better and more precise information to creating a successful ad.

5.3

Evaluation

Despite the limitations on the information and number of interviewees available, this thesis covers the research topics as planned. The interviewees answered in accordance to theory, giving a positive outlook on the analysis of the data given in comparison to the theory findings.

The availability and accessibility of theoretical data was the hardest of them all. As the Internet is such a new tool, there is little information in books concerning this media. Most of the books had to be purchased or acquired from overseas, as many of the books could not be found from the local library. Therefore a large number of books had to be reviewed before selecting the appropriate ones for realizing this study.

The author considers that the analysis of data has proven the point of the thesis, which is that Internet advertising works under special circumstances. The thesis offers beneficial information with tangible proof of the effectiveness of the Internet as a new media.

The data provided in this thesis is considered to be valid, as all the material collected and the interviewees were carefully selected and used with prior approval.

The interpretation of the data given has been scrutinized by several people within the agency that have supported this thesis, in order to avoid language or content misinterpretations. The data has been also revised by other marketers and advertising experts in order to check that all explanations and discussions can be understood by a general public of marketers.

The information that this thesis provides is based on books that are published and relatively new, so that the industry analyses could be analyzed with more exactitude at the time of writing. The interviewees had been previously questioned about their current knowledge of the industry and how often they, themselves, were involved in it.

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5.4

Suggestions for further research

The author suggests that further research should be carried out on more specific areas of advertising. For example: the benefits of TV advertising regarding its economic point of view in comparison to other media, or a more in-depth study of how the public and business perceive Internet advertising.

Other types of research can be furthermore carried out, for example a quantitative research for this study to support the theories and conclusion from this study. As well, it is recommended that this thesis is updated through out the years, as it is possible that the industry changes completely in the future.

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BIBLIOGRAPHY
Published Sources

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Ahlers, D. & Hessen, J. 2005. Traditional Media in the Digital Age. Nieman Reports 59:3. Pg 65

Cappo, J. 2003. The future of Advertising: New Media, New Clients, New Consumers in the Post-Television Age. Mc Graw Hill/Advertising Age. New York Chisnall, P. 1997. Marketing Research. 5th edition. McGraw Hill. Cambridge

CMO Council, Knowledgestorm. 2005. Define whats valued online. September 2005

De Mooij, M. 2000. The future is predictable for international marketers. International Marketing Review. 17:2. Pg 103 Friedman, J. P. 2000. Dictionary if Business Terms. 3rd Edition. Barrons, New York

Hanjun, K., Chang-Hoan, C. & Roberts, M. 2005. Internet uses and gratifications: A Structural Equation Model of Interactive Advertising. Journal of Advertising 34:2. Pg 57 Jefkins, F. 2000. Advertising Frameworks. 4th edition. Prentice Hall. Great Britain.

Jones. J. P. 2000. International Advertising: Realities and Myths. Sage Publications. California. Mackay, A. 2005. The Practice of Advertising. 5th edition. Elsevier. Great Britain.

Moore, R., Stammerjohan, C., & Coulter, R. 2005 Banner advertiser-web site context congruity and colour effect on attention and attitudes. Journal of Advertising 34:2. Pg. 71

Myers, G. 1999. Ad Worlds: Brand, Media, Audiences. Arnold Publishers. Great Britain.

Sicilia, M., Ruiz, S. & Munuera, J. L. 2005. Effects of interactivity in a web site. Journal of Advertising. 34:3. Pg 34

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Smith, R., Speaker, M. and Thompson, M. 2000. The Complete Idiots Guide to eCommerce. Alpha Books. USA

Tellis, G. J. 2004. Understanding When, How, and Why Advertising Works. Sage Publications. California. Wells, W., Moriarty, S. & Burnett, J. 2006. Advertising Principles and Practice. 7th Edition. Pearson Prentice Hall. New Jersey.

Yeshin, T., 2006. Advertising. Thomson Learning. United Kindom.

Unpublished sources

AdAge. 2005 Engulfed In Change, Top Marketing Execs Seek Guidance. http://www.adage.com/news.cms?newsId=46323 Accessed 14.10.2005

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Crawford, D. 2007 Bella Online: Is Traditional Advertising Dead? http://www.bellaonline.com/articles/art35990.asp. Accessed 22.02.2007

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Implied By Design. 2007. The Advantages of Internet Advertising vs. Traditional Advertising. http://www.impliedbydesign.com/articles/the-advantages-of-internetadvertising-vs-traditional-advertising.html. Accessed 22.02.2007

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Interactive Advertising Bureau. 2006. Internet Advertising Revenues Close t o $4 Billion for Q1 2006. http://www.iab.net/news/pr_2006_05_30.asp Access 26.06.2006

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APPENDICES AND TABLES

Appendix A: Interview questions in English

Name: Company and title:

Date of Response:

Please respond the questions that you are able to answer regarding your experiences with Internet Advertising. There is no limit to your responses. Deadline for return of the answers is the 15th of February the latest. If you would like to remain anonymous, please mark it down .

Thanks for your help!

1. How does Internet advertising differs from advertising on traditional media (radio, TV, print, )?

2. In your (agency) opinion, how would you describe Internet Advertising? (How do you feel?)

3. What has been the response of the clients towards Internet Advertising? And from the consumers?

4. How does Internet support/complement marketing communications?

5. How can Internet Advertising be measured?

6. Is there any evidence that Internet Advertising has been working effectively?

7. In the Internet, what is effective? What elements (such as CMR) make it effective?

8. Does Internet Advertising provide extra benefits than those of Traditional (radio, TV, print, ) Advertising? Why? What are those benefits?

9. Can you say something about the Ethics in Internet Advertising?

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10. How is the information saved and how is used? Do consumers know that information is being stored for marketing purposes?

11. Can Internet Advertising be truly called global if the ad is being localized?

12. Other than websites, are there other tools that support Internet Advertising? Which?

13. Personally, how do you perceive Internet Advertising?

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Appendix B: Interview questions in Spanish

Nombre: Empresa y ttulo:

Fecha:

Por favor de responder todas las preguntas posibles dependiendo de su experiencia en Publicidad por Internet. Las respuestas son abiertas. Favor de regresar este documento con sus respuestas a ms tardar el da 23 de Febrero. Favor de indicar si desea mantenerse en anonimato.

Gracias por su cooperacin!

1. En qu se diferencia la Publicidad por Internet con la Publicidad Tradicional (Radio, Televisin, imprenta)?

2. En su opinin o en la de su agencia, Cmo describira la Publicidad por Internet? (Por ejemplo, como la percibe.)

3. Cul ha sido la reaccin de los clientes respecto a la Publicidad por Internet? Y la de los consumidores?

4. Cmo es que la publicidad apoya/complementa a las otras formas de esfuerzos de comunicacin de marketing?

5. Cmo se puede medir la efectividad de la Publicidad por Internet?

6. Existe alguna evidencia de que la Publicidad por Internet ha sido eficiente?

7. En respecto al Internet, que es Eficiencia?, Qu elementos, tal como el CRM, lo hacen eficiente?

8. Provee la Publicidad por Internet beneficios adicionales a los que otorga la Publicidad Tradicional (Televisin, Radio, prensa?, Porqu?, Cules son los beneficios?

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9. Cul es su opinin acerca de la tica en referencia a la Publicidad por Internet?

10. Cmo se almacena la informacin dada a travs del Internet y con que intencin? Saben los usuarios que mucha informacin se usa para fines de mercadotecnia?

11. La Publicidad por Internet, se puede llamar global si la informacin esta siendo localizada?

12. Adems de pginas Web, Existen otras herramientas que soporten la Publicidad por Internet?, Puede mencionar algunas?

13. Personalmente, Cmo percibe usted la Publicidad por Internet?

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