Is That Ad Targeting You? Web Ad Aim Improves

Excerpted from WSJ, “More Web Ads Improve Their Aim” By J. Vascellaro and E. Steel, Feb 5, 2009

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As marketers scale back their ad budgets, some new technologies that make it easier for marketers to track the impact of their online advertising are gaining ground.

Products based on these technologies — such as customized ads that show different products to different users, Web ads hidden inside links in text, and online coupons — are part of what is called “performance-driven advertising.” That’s because the products aim to improve and more precisely measure how a particular ad performs.

While no one format is likely to emerge as a silver bullet for marketers seeking to use their ad dollars more efficiently, the advertising industry is betting on these technologies to increase online advertising spending …

Internet retailer is becoming a big user of performance-driven ad products. The company is planning to spend about 20% of its overall marketing budget for this year, on personalized ads from Choicestream, which makes product-recommendation software, says Overstock Chief Executive Patrick Byrne.

To devise the personalized ads … Choicestream relies on data the retailer provides about what customers browse and purchase on its site. Choicestream uses the data to select what personalized products and offers to insert into Overstock ads as they appear to potential customers browsing the Web … While Overstock hasn’t had much luck with online display advertising in the past, the new, personalized ads drove a sevenfold increase in clicks on the ads and a threefold increase in sales relative to other display ads

Internet giant Yahoo and Teracent … offer customized ad products similar to Choicestream’s … Companies like Choicestream, Yahoo and Teracent hope to steal some thunder from search advertising, which remains one of the biggest and fastest-growing ad formats. Since search ads are related to what a person is searching for on the Web, consumers often find them more relevant than other ads, and advertisers typically find them more cost effective.

But as budgets tighten, other formats that can prove they are worth their price are gaining momentum too. Coupons Inc., which makes software to help companies create and distribute online coupons … has seen a recent surge in interest from advertisers looking for more cost-effective online marketing options …

Committed revenue for the year at Vibrant, which creates in-text ads, has doubled from a year ago … In-text ads appear when a computer user hover a mouse over links that appear in the text on a Web page.

The new ad formats are winning over some big marketers. Over the past year, auto maker Chrysler, whose brands include Dodge and Jeep, has shifted its online-ad spending away from lifestyle sites to sites … toward performance-driven products like Vibrant’s in-text ads. Chrysler is also continuing to spend on search ads …

Chrysler says the shift has paid off: The percentage of total retail sales attributed to online leads rose two percentage points in 2008 from the prior year.

Edit by SAC

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