A Rational Alternative to Web Banner Ads

By: Steve Outing Web banner advertising doesn't work well. With current average banner
clickthroughs running at below 0.5% (source: NetRatings 2000), it's obvious that
something needs to be done to improve the performance of Web advertising.

As I noted in a recent column, a growing number of sites are trying over-sized Web banners,
in hopes of increasing response. While that is likely to improve clickthroughs,
that approach just puts a bandage on the symptom of poor banner performance. It
doesn't attack the underlying problem with Web banners.

Possibly a better way is shown by a Boston-based direct marketing company, iWant.com.
Its novel approach to Web advertising side-steps the limitations of conventional online
ads - and early indications are that it performs at response rates of many multiples over
banners.

How it works

The concept is simple and straightforward. On a publisher's Web site, a "Want
Box" is added. Akin to a search engine box, the Want Box is labeled something
like "Want Something? We'll get you great deals in ..." The Web user clicks the
box, then selects from among categories and sub-categories (currently numbering
about 270).

If the user wants marketing information on vacation deals, for example, that is
chosen from the list and the user is taken to another page where he can specify
details - such as where he wants to go, and specifics about his needs. The
request is submitted, then a page is shown with links to Web sites of
advertisers who have what the user is seeking.

The powerful part of this comes in the form of e-mail messages offering the
consumer requested marketing information. Advertisers who take part in the
program are able to see specific requests, then respond to the consumer (who
remains anonymous).

Here's a concrete example: Using an affiliate site that uses iWant.com's service
(Smarter Living), I requested information on a vacation package to the Virgin
Islands. Within a couple hours of submitting the request, I received an e-mail
via iWant.com telling me that a travel advertiser had responded to my request.
The e-mail contained a URL, which I clicked to take me to my personalized "deal
center." On that Web page was a personal response from a travel company
representative, quoting a price for a ground package at a specific Virgin
Islands resort for a family of four. (The Web page would have multiple responses
had I received more than one; other companies might respond to my request at a
later date, and I'd again be notified by e-mail.) I could then contact the
travel company myself for more information - but its salespeople could not
contact me directly.

Better than banners

The concept here is called "demand-triggered marketing," and its advantages over
banner ads should be obvious. iWant.com CEO Shabbir Dahod says that this
form of Internet advertising gets good response because it qualifies potential
customers for advertisers. If a Web site visitor uses a Want Box to request
information about Chevrolet trucks, say, then that user is highly likely to be a
potential buyer of a truck who is using the Internet to search for good deals or
purchasing-decision information. Banner ads, by contrast, are more like
newspaper or magazine ads - put before everyone's eyeballs, but only a
small portion of those who see them will be interested.

Dahod says that so far, average clickthrough rates for the ad responses runs at
about 25% - with some sectors, such as travel, getting up to 40%
clickthrough rates. The conversion rate - those users who actually purchase
something - for iWant.com's advertisers is running at about 5% of those who
click through. He says that over time, the clickthrough rates for the requested
ads actually are rising, while banner ad clickthroughs continue to slip.

Dahod says he believes industry-wide banner ad response has fallen over time
because in the early days of Web ads there was a novelty effect helping the
banners. Once that went away, clickthrough rates continued to fall. He doesn't
expect the iWant.com ads response to drop, because those who request marketing
information are motivated to receive and read it. It's a totally different kind
of advertising.

Complementary technique

Of course, this technique is not a replacement for banners. But it is a model
that media sites may want to try. Dahod says the technique is useful for
publishers who may not want to resort to more intrusive and larger forms of Web
banners, and it complements traditional Web advertising.

iWant.com started out as a destination site, where consumers would come to seek
out deals from a wide range of advertisers. Predictably, that model didn't work
and the company adopted an ASP business model and found partners - mostly large Web
portals - to utilize the iWant.com marketing network service. Now, the company is
expanding its relationships to more media and content sites. The goal is for a
"Want Box" to be a common feature on such Web sites. (To date, the company has no
established relationships with news sites - though it recently identified
the sector as a promising market for its ad network.)

For now, most of the advertisers on iWant.com are those sold by that company
- that is, national (mostly U.S.) companies. For a regional or local media
site, geographic-specific deals can be filtered by the system - so that a
consumer in Philadelphia looking for real estate would be offered only relevant
local offers.

Where this gets more interesting is when affiliate sites start selling
advertising into the iWant.com network, so more local advertisers take part.
Dahod explains that the basic deal is a revenue split with no upfront costs to
the affiliate publisher. iWant.com keeps 20% as a fee for hosting the service;
the publisher gets 40% of the ad revenue; and whoever sells the ad gets the
remaining 40% (which can go either to the affiliate publisher or iWant.com).

As for the advertisers, they will pay considerably more than for banner ads
- either per clickthrough as high as, say, $1, or on a high CPM basis.
Dahod says that because of the high clickthrough and conversion rates, this ends
up being much more cost-effective; the user acquisition cost is lower than
banners, because it takes a lot of banner impressions to grab a customer.

The system also has a scheme for small advertisers, who can subscribe to a paid
service that enables them to view consumer requests on a special Web page and
reply to them if there's a match between what the company offers and the Web
user requests.

A novel approach?

Dahod claims that his company has "broken new ground" in the Web marketing
space, and that there are no other competitors doing exactly what iWant.com is.
This is a different animal than "permission e-mail," where consumers express an
interest in a specific topic (say, snowboarding) and agree to receive relevant
(snowboarding-related) offers from companies via e-mail. (Examples of this
technique are found at NetCreations
and YesMail.)

It's also different from "co-registration" schemes, where users who sign up for
something (say, a subscription to a media site's e-mail newsletter) are offered
related commercial deals at the time they sign up. (For an example of co-
registration, try signing up for delivery of personalized e-mail content from
Infobeat. You'll have the option of signing
up for contextually related content and deals from other companies at the same
time as you confirm your Infobeat subscription options.)

Anne Holland, CEO of MarketingSherpa and an Internet marketing expert,
says co-registration and better use of e-mail marketing is a strong trend this
year. In the past, it was mostly "cheesy" sites that used co-registration -
but now the technique is turning up all over the Web, because more publishers
and site owners are wanting to more efficiently acquire customers, and opt-in e-
mail is a fine model with documented success. Hollands says that co-registration
schemes, which are so good at lead generation for advertisers, are going to be
"the hottest thing in 2001."

Such beyond-the-banner ad techniques as opt-in e-mail, co-registration, and the
model represented by iWant.com will become increasingly important in the months
and years ahead. While the Web banner continues to lose its luster, there are
alternatives that perform better.

Other recent columns

In case you missed recent Stop The Presses!, here are links to the last
few columns:
o Can News Content Save e-Books?, Wednesday, February 28
o How To Make Money, Not Enemies, Online, Wednesday, February 21
o Yes, Interactivity Really Is Good for Your Site, Wednesday, February 14
o Archive of columns


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This column is written by Steve
Outing for Editor & Publisher Online. Tips, letters and feedback
can be sent to Steve at steve@planetarynews.com


Copyright 2001, Editor & Publisher.