BANNER ADS TAKE THE LION'S SHARE Peggy Osborne, Morehead State University Michelle B. Kunz, Morehead State University Ron G. Cheek, University of Louisiana, Lafayette ABSTRACT The banner ad continues as the basic advertising unit for the Internet. This is a result of ongoing evolution and development of the banner. Banner ads offer greater flexibility and features than earlier versions. This paper will discuss the importance banner ads have in online advertising, and consider future directions. INTRODUCTION The share of ad spending garnered by online ads is projected to hit 7.6% by 2004, according to eMarketer (Advertising Age), which is a growth rate of 116%. Banner ads were the leading form of online advertising, 53% in the fourth quarter of 1999, with 56% for the entire year. Sponsorships accounted for 27%, interstitials 4% and email 2% (Freeman). According to a report published in Advertising Age (Internet Advertising Bureau), U.S. Internet ad spending reached S 1.95 billion in the first quarter of 2000, up 182% from a year ago, the Internet Advertising Bureau said in a report released Aug 8, 2000. The IAB said the consumer- related category accounted for 31% of online spending. In Asia, online advertising will hit $5.4 billion in 2005, or 6.5% of all ad spending, up from just 0.6% currently, predicts investment bank Lehman Bros. The total number of Internet users will reach 233 million in 2005, from 73 million in 2000. In France, banner advertising has skyrocketed in the past 18 months, with the number of advertisers up more than tenfold since January 1999, according to a new survey from media monitoring agency Secodip. According the UK Internet User Monitor/Fletcher Research, UK Internet attitudes about online advertising: 59% have clicked on an ad; 58% have clicked to find out about a product; 34% are annoyed by banners, 24% find online ads "a time wasting diversion;" 24% find ads useful, 21% have clicked to find out about a company (McLuhan). These numbers indicate online advertising is expanding in reach and application along with ecommerce and Internet applications. According to the quarterly report by PricewaterhouseCoopers (IAB), banner advertisements continue to be reported as the predominate type of advertising, accounting for 52% for Q1, sponsorships at 27%, interstitials at 3% and email at 3%. The types of advertising being delineated for the first time include classifieds (4%) referrals (3%), rich media (2%) and keyword searches (1%). All others accounted for 5% of the total. Reflecting the continuing strength of ecommerce, hybrid deals accounted for 48%, with CPM's or impression-based deals at 42% and performance -based deals at 10% for the quarter.

BANNER EFFECTIVENESS Laura Wonnacot (2000) contends that no other ad unit or program comes even close to the hold banner ads have on online spending (54%). However the preoccupation with click-through, CPM, impressions or cost per conversion miss the real problem with banner ad effectiveness. Banners, which are creative and innovative, are easily more effective than boring, and unexciting banners. Effective and creative use of colors, graphics and words demonstrate higher click- through rates. The thing, which differentiates advertising on the Internet from TV, radio, and other media, is its active participation factor. Despite negative press, banner ads have maintained their role in online advertising (Ott). This strength is embedded in the evolution of the banner, from static and boring, to a rich media, which allow the customer to interact. The increasing role of improved technology, which allows the use of audio, or video, will only enhance the engagement of the evolving banner ad. McLuhan also pens the term "beyond the banner" as advertisers institute affiliate programs. Marc Ryan of AdRelavance indicates there's really no difference between the online banner ad and the billboard or magazine ad for brand exposure (Fox). Unless banners happen to have a direct appeal, people ignore them, perceiving them as a detour (Carpenter). Banners (McLuhan -36) and buttons account for over half of online advertising budgets, yet most surveys tend to put the 'click-through' rate from these devices at a microscopic 0.5%. Emerging tools such as pop-up boxes and 'interstitials' - sound and video ads that appear when a site is loading - carry more information than banners. As technology develops (McLuhan - 37), advertising options are likely to expand beyond the limits of microsites, banners, interstitials, and boxes. "Everything will be changed, from the content to the navigation, and people are still trying to get their heads round what the advertising models should be, " says I-Level's McCulloch. According to a report published by Media Research for Ad Relevance, a division of Internet Advertising measurement service Media Metrix Inc., banner ads ended the year 1999 around 55% - 60% of all online advertising. (Ott, p. 28) Bill Furlong, CEO of Web ad network 13213 Works, many Web publishers have or are adopting pricing standards based upon cost per thousand (CPM) ad impressions and other performance-based metrics, as well as using a variety of fee-based models. Most vertical b-to-b sites' ad rates today range anywhere from $60 CPM to $400 CPM. Bill Furlong (Ott) predicts that CTR will become as "Irrelevant" metric as banners become more interactive and are used more for branding. CTR will be replaced by a couple of methods: one is offline research, such as a focus group and the other is cost per acquisition (CPA), which tallies several types of ad user interactions, such as Web site registration or a purchase. According to Paul Entin (Galea), president of EPR, "advertisers threw the rules of traditional marketing out the window once the Web came." The important distinction to remember is that the banner ad may be terrible but banner advertising isn't. The key to banner advertising is to instill a subconsciously positive feeling about a company. "The ROI and clickthrough rate of banner advertising has been on the decline-the rate in the US is less than one percent", says Eugene Lee, managing director of SurfGold.corn (Galea). Emarketer found seven barriers to online advertising still exist, including limits on creativity, a fragmented online audience and weak branding via the Internet (Gilbert a). However, Rich LeFurgy, (IAB), suggests combined brand building, one-to-one marketing, more effective targeting and ecommerce developments will continue to support increased revenue for online advertising.

PREDICTIONS Technology will have a major impact on the design and implementation of banner ads, their format and design, as well as the pricing strategy. Additionally the model of advertising online in still in the development process, and will continue to evolve. For example, Coupons.corn Inc. recently introduced a technology called "adBricks" that allows secure coupons to be embedded in ad banners. According to Steven Boal, Chief Executive Officer of Coupons.com, the 'Bricks' suite of programs allows traditional advertisers to measure more than just click- through rates. (Parker) Banner ads are very likely to remain a staple in the online advertising strategy, but their format and appearance will change, in all likelihood into something we don't even know about today. Technology may shape the form banner ads take, and ecommerce and online advertising will change also, However, it seems banner ads are the media to watch and monitor for future investigation and analysis. REFERENCES Carpenter, Nancy (2000), "Dot-coms' Using Taraeted Advertising on the Internet," Boston Business Journal, 19 (January), 2. Fox, Loren (2000), "The banner: Unsung Hero," Upside, 2 (April), 170-180. Freeman, Laurie (2000), "Web ad revenue up sharply," B to B, 85 (May), 17. Galea, Christine (2000), "The Incredible, Indelible Banner," Sales and Marketing Management, 152 (June), 38-40. Gilbert, Jennifer (2000), "AdZone joins fray to count online ads," Advertising Age, 71 (27),62. Gilbert, Jennifer (2000), "'Really booming' Net grabs $3.6 billion," Advertising Age, 71 (24), 44, 52. Internet Advertising Bureau (2000), "First Quarter 2000 Internet Advertising Revenues Close in on $2 Billion," available online: http://www.iab.net/news/content/first qu ia b revs.html, August McLuhan, Rob (2000), "Ways to Make the Clicks Measure Up, " Marketing, (June), 36. Ott, Karalynn (2000), "Banners of Change," B to B, 85, (June), 28-29. Parker, Pamela, "Coupons.corn Introduces CouponEnabled Banners, InternetNews Advertising Report Archives available on line at http://wwwinternetnews.com/IAR /article/0. 12 451831,00.html, November 12, 1999. "Public Gross Rate Card" available online at http://yahoo.com/docs/advertising/pgratecard2000/pgratecard 2000.html. November 12, 1999. Wannacott, Laura (2000), "Despite the Doom and Gloom of Naysayers, Banner Ads are Thriving," Info World, 22, (August), 68.