Online Advertising 101: An Introduction to the Industry
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1 Online Advertising 101: An Introduction to the Industry Heath Row Research Manager DoubleClick Inc. Jan. 31, 2008
2 My address
3 What you will learn About DoubleClick What is third-party ad serving? A brief history of online marketing Market breakdown Kinds of media How online ads perform Major trends
4 About DoubleClick
5 DoubleClick at a glance Global third-party ad management platform Headquartered in New York 17 offices and development hubs 14 data centers worldwide More than 1,300 employees Billions of digital ads every day
6 One integrated platform Media planning and buying Ad serving Paid and natural search Rich media and video Mobile
7 DoubleClick s mission Deliver your ads anywhere, worry free Make your sales, operations, and finance processes more efficient Give you tools and data to make smarter decisions Grow your revenues from advertisers
8 DoubleClick research Rick E. Bruner, Director of Research and Industry Relations Heath Row, Research Manager Jai Singh, Research Manager Ashley Watson, Research Analyst
9 Core research department projects Original thought leadership reports Custom campaign benchmark reports Ad serving trend reports On-site and Web-based training sessions Research product strategy
10 What is third-party ad serving?
11 The media value chain Pre-Order Order Management Billing & Reconciliation Proposal Generation Inventory Management Trafficking Ad Delivery Reporting Optimization Invoicing Sell Side Buy Side Media Planning & Buying Creative Generation Trafficking Ad Delivery Reporting Optimization Invoicing
12 How online ads might be delivered Device Application Creative/ Format
13 How DoubleClick serves the value chain Pre-Order Order Management Billing & Reconciliation DoubleClick Rich Media Sales Manager DART for Publishers DART Adapt Sales Manager Proposal Generation Inventory Management Trafficking Ad Delivery Reporting Optimization Invoicing Sell Side Buy Side Integrated Platform Integrated Platform Integrated Platform Media Planning & Buying Creative Generation Trafficking Ad Delivery Reporting Optimization Invoicing MediaVisor DoubleClick Rich Media DART for Advertisers & DART Search MediaVisor DoubleClick Rich Media
14 A brief history of online marketing
15 Online advertising, in general Online advertising refers to any advertising delivered through media connected to the Internet.
16 The birth of online advertising The first spam was sent in 1978 when a DEC employee announced a new computer by inviting everyone with an ARPANET address on the west coast to a reception. (They were chastised for breaking the ARPANET appropriate use policy, and a notice was sent out reminding others of the rule.) Computerized Bulletin Board System, the first BBS, launched in The first commercial online services, CompuServe and the Source, were founded in 1979.
17 The first online (service) ads The IBM and Sears-run dial-up online service Prodigy ran banner ad-like ads as early as the mid- to late- 80s.
18 The birth of online advertising, continued NCSA Mosaic released in 1993, leading to the rise of the graphic, commercial Web. Netscape Mozilla becomes the first commercial Web browser in October 25, 1994: The first banner ad runs on HotWired. The IAB s Ad Sizes Task Force releases the first real ad standards in March 13, 2006: Rocketboom runs what might have been the first video ad.
19 1994: A banner year Source: AT&T s You Will campaign, ran on HotWired in October It was among the first Web ads.
20 1996: Web advertising gets interactive Source: HP s Shockwave Pong banner, the first rich media ad (you could play Pong in the banner). It was made by the San Francisco-based agency RedSky Interactive in 1996.
21 The big picture: five-year forecast for devices and access Source: The State Of Consumers And Technology: Benchmark 2007
22 Online video is here, podcasting is not Please indicate how often you use or do the following % of respondents Source: DoubleClick Touchpoints IV, July 2006; N=6,121
23 Market breakdown
24 Basic terminology Forms of online advertising Display: Banners/graphic Rich media: Enhanced display (special effects such as video, expands, floats) Search: Text (keyword-based) Online campaign types Branding (awareness and message reinforcement) Direct response (ROI/acquisition-focused) Online media tactics ROS (run-of-site rotation) SOV (share of voice) Special sponsorships, partnerships, co-branded advertorials Roadblocks, surround sessions Frequency capping (limiting exposure) Targeting Content, geo, demo, day-parting, psychographic, behavioral Optimization (right ad, right person, right time) Proprietary & Confidential DoubleClick, Inc 2007
25 Additional terminology Transactional elements and currencies RFI, RFP, IO (request for info/proposal, insertion order) Impression: one exposure to one user of a display or text ad CPM (cost per thousand impressions) CPC/CPA (cost per click of acquisition/conversion) Flat rate (special sponsorships such as fixed placements) Workflow terms Planning, buying, proposal generation (campaign determination) Forecasting (inventory availability) Creative generation (advertising units) Trafficking (the flighting of ad units) Delivery and reporting (campaign flight monitoring and results) Post-click and post-impression (view-through) conversion tracking Proprietary & Confidential DoubleClick, Inc 2007
26 The basic landscape Digital Ecosystem Buyers DoubleClick Portals/Engines Sellers Marketers: Advertisers all shapes & sizes Ad Networks Agencies: account, media & creative Unified Suite Exchanges Publishers/Content Sites Communities and Social Networks Proprietary & Confidential DoubleClick, Inc 2007
27 Total advertising spending in the United States, (in $M) Comparative Estimates: Total advertising spending growth in the United States, (% growth) Source: emarketer * = actual EmpoweringOriginalsDesignTemplateUS pot
28 Forecast, total offline advertising spend by segment, 2005 To 2011 OFF-LINE ADVERTISING MARKET Spending Growth ('06-'11) Off-line Advertising by Segment (bn) Broadcast TV $41.6 $44.2 $44.1 $47.7 $46.8 $49.1 $ % Cable TV $20.8 $24.1 $27.3 $30.9 $34.6 $38.5 $ % Radio $20.0 $20.7 $21.6 $22.7 $23.9 $25.2 $ % Newspapers $47.3 $48.1 $49.0 $49.9 $50.9 $51.9 $ % Magazines $12.8 $13.4 $14.1 $14.8 $15.5 $16.3 $ % Yellow Pages $14.2 $14.4 $14.6 $14.8 $15.0 $15.3 $ % Direct Mail $54.9 $59.6 $64.8 $70.5 $76.7 $83.5 $ % Other $51.3 $54.6 $58.0 $61.5 $65.0 $68.6 $ % Total Off-line Ad Spending $262.9 $279.2 $293.5 $312.8 $328.4 $348.3 $ % Year-over-year growth 4.3% 6.2% 5.1% 6.6% 5.0% 6.1% 5.1% Total without Direct Mail $208.1 $219.5 $228.6 $242.3 $251.7 $264.9 $ % Year-over-year growth 4.1% 5.5% 4.2% 6.0% 3.9% 5.2% 4.0% Source: JupiterResearch Internet Advertising Model, 7/06 (US only)
29 Total advertising spending worldwide (by media & region), Source: emarketer EmpoweringOriginalsDesignTemplateUS pot
30 The estimates for US total and online ad spend 2007
31 Kinds of media
32 Display advertising Display advertising refers to web advertising displaying the message using graphic information. Includes image, rich media, floating, transitional.
33 Paid search advertising Paid search advertising refers to paid text links appearing on the search results of a search engine or search page.
34 Text and contextual advertising Text or contextual advertising refers to text links appearing on a Web page, traditionally using contextual targeting to relate the ad to the content.
35 In-stream video advertising In-stream advertising refers to advertising displayed during a video or audio content stream.
36 Mobile advertising Mobile advertising refers to advertising displayed in a mobile device. It includes: Display and graphic, video, text, and SMS.
37 advertising advertising refers to advertising displayed in an environment. It includes: Display, text, opt in. display and text advertising is becoming less popular as some readers do not support images and cookies.
38 Gartner s hype cycle for media industry publishing Source: Hype Cycle for Media Industry Publishing, 2007, Gartner
39 How online ads perform
40 Overall industry average campaign performances Click-Through Rate (CTR): 0.14% [CTR = Clicks Impressions] Interaction Rate (IR): 11.1% [IR = Unduplicated mouseovers (i.e., mouse over is counted once per impression served) Interactive Impressions (DoubleClick Rich Media only)] Video Completion Rate (VCR): 46% [VCR = Video Completions Total Video Plays (DoubleClick Rich Media, video format, only)] Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to June 2007
41 Click-through rates have held fairly constant over the past year Click-Through Rate Over Time Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to May 2007
42 Interaction rates have also held steady in the past year Interaction Rate Over Time Source: DoubleClick ASTRA, U.S. DFA campaigns, DoubleClick Rich Media format ads, Jan 2006 to June 2007
43 Roughly half of in-page video ads play through to completion Video Completion Rate Over Time Source: DoubleClick ASTRA, U.S. DFA campaigns, DoubleClick Rich Media video format ads, Jan 2006 to May 2007
44 Rich media drive higher click rates than Flash or image Click-Through Rate by Ad Format Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to May 2007
45 Interaction rates slightly higher for video ads Interaction and Video Completion Rates by Ad Format Source: DoubleClick ASTRA, U.S. DFA campaigns, DoubleClick Rich Media format ads, Jan 2006 to May 2007
46 Response rates vary by vertical sector Various Performance Rates by Industry Sector Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to May 2007
47 Bigger is generally better for response rates by ad sizes Various Performance Rates by Ad Size Source: DoubleClick ASTRA, U.S. DFA campaigns, Jan 2006 to May 2007
48 Key takeaways Moderate decline in click rate has leveled off Rich media click rates outperform Flash and image Bigger ads tend to perform better
49 Initial awareness: web sites, point of sale, and word of mouth dominate How did you first hear about the product you purchased? (Choose one) % of respondents Source: DoubleClick Touchpoints IV, July 2006; N=6,121
50 Consideration: search and advertising play greater role How did you further learn about the product you purchased? (Select all that apply) % of respondents Source: DoubleClick Touchpoints IV, July 2006; N=6,121
51 Most influence: website, in-store and word of mouth lead key influencers Which of the following most influenced your decision to purchase this product? (Choose one) % of respondents Source: DoubleClick Touchpoints IV, July 2006; N=6,121
52 Major trends
53 The top five Online ad industry growth Online video Behavioral targeting User-generated content Advertising exchanges
54 US online ad market has grown for eleven straight quarters Source: Internet Advertising Bureau / PricewaterhouseCoopers, Q IAB Internet Ad Revenue Report, US Market
55 Search and display biggest parts of online ad pie Source: Internet Advertising Bureau / PricewaterhouseCoopers, Q IAB Internet Ad Revenue Report, US Market
56 Retail, financial services, and auto biggest online ad sectors Source: Internet Advertising Bureau / PricewaterhouseCoopers, Q IAB Internet Ad Revenue Report, US Market
57 Internet ad spending projected to surpass radio, magazines, and network TV
58 Social networks, mobile, and gaming still relatively small share of ad spend
59 Search marketing, , targeting, rich media work best, say online advertisers Best performing online ad strategies, according to online marketers Source: MarketingSherpa, January 2007, survey of Ad:tech attendees
60 Other things I m following Social media Widgets Digital out of home Video on demand, IPTV, and interactive TV Viral advertising
61 Next steps
62 What we discussed About DoubleClick What is third-party ad serving? A brief history of online marketing Market breakdown Kinds of media How online ads perform Major trends
63 DoubleClick research agenda 2008 Ad Serving Trend Report Best Practices for Rich Media Best Practices for Online Ad Effectiveness 2.0 Best Practices for Publishers to Maximize Yield Best Practices for Conversions and ROI Quantifying View Through Search + Display Ad Synergy Frequency on Conversion, Engagement, Brand Correlation of Brand and Response Client Surveys: Publisher/Advertiser 2008 Successes, Challenges, and Priorities Touchpoints V imedia v. 6 63
64 What do you want to know?
65 Thank you doubleclick.com/knowledge
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