Vertical and skyscraper ad units are taking online advertisers to new heights, including the price they're willing to pay for them.
A recent Jupiter Media Metrix Inc. report shows the volume of vertical ads jumped from 30 million a week in late February, when they were first introduced by the Interactive Advertising Bureau, to 280 million a week by mid-June.
The vertical units are commanding an average $50 cost-per-thousand-impression rate, compared with $30 for standard banner ads, and are being used on about 21% of sites overall.
But is the bang worth the buck?
"We’re seeing a nice pop in terms of response," said Rudy Grahn, senior analyst at Jupiter Media Metrix, pointing to response rates of up to four times the response rates for standard banners.
Rate wheeling and dealing
The vertical ads come in three sizes—rectangle, skyscraper and wide skyscraper—and have been quickly implemented by online publishers and embraced by advertisers as a way to make their messages stand out.
However, cautioned Grahn, "Any time you have a new ad format, they do very well when you start out, but it’s very hard to maintain those high rates."
Grahn also said that with the poor economy, there’s a lot more negotiation off the rate card than a year ago, with some advertisers being able to cut the published rate in half.
However, b-to-b advertisers trying to reach IT purchasers and other business decision-makers are paying the full rate or close to it on quality sites, he added.
CNet Networks Inc., which has taken a leading position with the new formats, wouldn’t disclose its online pricing, but a CNet spokeswoman said the IAB units are often in the $100-plus CPM range.
The spokeswoman pointed to CNet’s large, highly targeted IT audience as a factor for the higher prices. In the first quarter of this year, CNet delivered approximately 31 million leads to its online advertisers.
The New York Times Co.’s NYTimes.com is another site that’s taken the interactive units to new levels. The site has implemented not only larger banners and skyscrapers but also dynamic HTML banners for clients such as Oracle Corp. and Volkswagen.
A New York Times spokeswoman said vertical banners were priced at approximately $50 CPM, but the interactive units and dynamic HTML banners were priced even higher. She would not confirm a price for the premium units.
The publisher also has been using more e-mail marketing, with packages from $35 CPM for daily headline e-mails to $100 CPM for weekly e-mail wrap-ups. For the highest-priced ad package, advertisers pay $200 CPM for exclusive e-mail ads featuring their products or services alone, without editorial content.
While these various ad units and pricing packages are attracting advertisers willing to pay the price for a higher response, at least for now, the long-term benefit of Internet advertising may be in branding campaigns, which are not based on immediate response, industry watchers say.
"If you’re doing ROI [return on investment] evaluation but not including branding metrics, you’re underestimating the value of the campaign," said Grahn of Jupiter, which last month released a report that found only 15% of online marketers are currently quantifying branding. Those that do quantify branding will realize a 25% to 35% higher ROI on their online advertising, the report said.
In a separate study on branding, published by Harris Interactive last month, the research company found Unicast’s Superstitial online ads generated 81% brand recall, compared with 93% brand recall for TV ads, and that Superstitial ads generated the same levels of purchase intent, usage and consideration as TV ads.