Internet ad companies say click-through rates for standard banners are hovering at a low of 0.3% to 0.6%. "It seems now [banner] advertising online is a behind-the-scenes distraction that people have figured out how to tune out," says Bill Power, director of marketing communications at Droplets, a New York-based online marketing company specializing in rich media.
Advertisers are saying the banner ad is "not turning out to be the direct response medium [they were] hoping it would be, nor the branding experience that TV delivers," says Jay Stevens, director of marketing for Radical Communications, a Marina del Rey, Calif.-based interactive marketing company.
Enter rich media, which, according to online ad server DoubleClick, generally allows for greater user interaction with animation, audio or video, and advanced tracking and measurement capabilities. Today's more popular versions include enhanced banners or badges, interstitials and enhanced e-mail ads. "Floating" ads that move around a computer screen and streaming media also are beginning to emerge.
Forrester Research projected last month that traditional advertisers will boost their U.S. digital marketing dollars from $11 billion in 2000 to $63 billion in 2005. Similarly, Universal McCann, the New York-based global media services operation of Interpublic Group of Cos.' McCann-Erickson Worldwide, reported in December national advertisers would increase their ad spending on the Internet by 60% in 2001 over 2000, and drive an estimated $5.12 billion through the medium.
Industry experts say those spending forecasts-plus the declining effectiveness of basic banner ads-mean rich media is positioned to deliver much of the growth in online spending. But a few obstacles remain before rich media becomes widespread.
"About 95% of all Web sites are able to receive rich media ads, but a relatively low percentage of online ads, only 10% to 15%, are based in rich media," says Charles Buchwalter, VP-media research for AdRelevance, a division of Jupiter Media Metrix.
"Right now, rich media ads are triple what they were last year, but there is still a lack of consistent standards for developing and measuring these new items, and the hassles of using rich media are still frustrating for many agencies," Mr. Buchwalter says.
PLENTY OF OPTIONS
For DoubleClick clients, enhanced banners are currently the top choice in rich media options. "Rich media banners are still the most popular because they allow you to do many things within existing real estate that all sites have," says Stacy Smollin, DoubleClick's director of global studio and media research.
Rather than static screen shots, enhanced banners can expand, collect data, change appearance or allow users to play a game. Depending on how enhanced banners were created, consumers can either see the full content automatically while visiting Web pages or they may be required to download a plug-in before being able to view the enhanced banner's creative.
Jim Meskauskas, chief Internet strategist at integrated media buying agency Mediasmith, New York, says banner ads enhanced with rich media get much higher response rates than standard banners. "I've seen HTML [enhanced ads] do as much as three to five times better than standard GIF images. With Flash technology, I've seen click-through rates as high as 25%," Mr. Meskauskas says.
DoubleClick also reports higher response rates for rich banners. The company cites a study by Wired/Millward Brown Interactive that found banner click-through rates jumped to 4.32% for rich media from 0.98% for GIF banners.
Though more effective, the rich media banners also are significantly more expensive to produce. Mr. Power of Droplets says the creation of a standard banner costs $1,000 to $2,000, while a rich banner requiring more programming hours costs between $4,000 and $8,000 to create. The cost of the media buy varies widely site to site.
ENTER THE SUPERSTITIAL
Interstitials are another type of rich media. A product called the Superstitial, created by Unicast, San Francisco, loads unnoticeably on a consumer's computer while he is reading other Web pages. This allows an ad to play in full without loading delays.
According to Allie Shaw, Unicast's VP-global marketing, the Superstitial product is reaping higher response rates than traditional banner ads, with the typical Superstitial campaign garnering 6% click-through rates. Unicast, using estimates from Nielsen/NetRat-ings, claims the Superstitial format has the potential to reach 62.9% of all active at-home Internet users.
The cost to produce an interstitial spot varies widely. In terms of the media buy, Ms. Shaw says cost-per-thousand rates for a Su-perstitial ad typically runs $45.
Advertisers also are warming up to rich media ads delivered by e-mail, say some Internet advertising executives. "People are looking for alternatives to banners, both as a branding vehicle and as a direct response vehicle, and e-mail is fulfilling that promise," says Radical Communications' Mr. Stevens. An e-mail ad's advantage is that the consumer already submitted a request to see the message, thereby allowing the marketer to develop a one-to-one direct relationship with them.
START A DIALOGUE
Bob Soljacich, president-CEO of Latham Synchronized Relationship Marketing, Oak Brook, Ill., says his clients often begin the relationship by grabbing Web users' attention with a targeted rich banner ad that opens up a dialogue-sometimes through surveys-with a user when clicked.
"It's a natural evolution. I got your attention, now I want to speak to you in an e-mail, then learn more about your wants and interests so I can custom-design a targeted response," Mr. Soljacich says.
He estimates text-based targeted e-mail response ranges are from 5% to 15%, while a rich HTML e-mail draws responses in the 15% to 35% range. Mr. Stevens finds that e-mail campaigns containing rich media elements such as streaming video achieve twice the response rate as more basic HTML e-mail campaigns.
While the price of creating rich e-mail varies, Mr. Soljacich says the cost to distribute a rich e-mail is the same as distributing targeted text e-mail: 4 cents to 6 cents. E-mail ads containing streaming video would fall in the 6 cents to 8 cents range, Mr. Stevens says.
SALES STEP ADDED
Radical Communications and Cybuy, an e-commerce marketing technology company, are both adding the sales transaction step to rich e-mail marketing campaigns. "It's all about impulse. The challenge for us is to shorten that distance between the offer and the purchase itself," says Dom DiMascia, CEO of New York-based Cybuy.
"I learned [at previous employer home shopping network QVC] through the last decade and a half that the combination of entertainment and commerce is a compelling proposition to the marketer."
Cybuy clients include eBags, a luggage e-tailer, and Blades, an off- and online retailer of extreme sports equipment.
Rich media banners that entertain may initiate the relationship with the consumer, but e-mail allows the consumers to complete the purchase without having to click to various pages.
Mr. DiMascia says the technology improves clients' response rates by decreasing lengthy checkout procedures. A Cybuy-enhanced e-mail campaign costs 10% to 15% more than a static e-mail campaign.
But from the media buyer's side, the cost of a rich media campaign may still be open to negotiation. "What we have found is that prices for new media and rich media have become highly negotiable," says Mike Drexler, exec VP at Mediasmith. "What we all believe is there's a relative effectiveness of certain types of media and it is priced accordingly."
NO WIDESPREAD USE
Beyond banners, interstitials and e-mail campaigns, some other rich media ads float across the screen, either for a quick branding purpose or to get viewers' attention to a short-term promotion. Streaming video and audio ads require users to download plug-ins or applets, but Ms. Smollin says the audiences available to view streaming advertising are not large enough to warrant widespread use.
That brings up another problem with rich media in general, says Rosemary Petta, chief integrated marketing officer at consultancy ProMedia, Natick, Mass. Often, a marketer's target audience may lack hardware to handle large-file downloads efficiently.
However, "When we look back a year from now, rich media penetration will be one of the big trends of this year," says Mr. Buchwalter. "Rich media allows major advertisers to get brand messages across in ways that more closely resemble print ads and TV spots, and these forms resonate more than banner ads with major advertisers."