The Internet is the fastest growing major advertising medium. According to research firm ZenithOptimedia, online advertising grew more than 30% last year and 2007 should bring more of the same. The news gets better: by 2009, the amount spent on online advertising will near $43 billion and comprise about 9% of all advertising spending. That’s significantly more than the 5.8%, or $24.5 billion, advertisers spent online last year.

Recently, three advertising experts shared their industry insights with students at Emory University’s Goizueta Business School. Though speaking to different audiences, a common theme emerged: With each and every click, online consumers tell advertisers what they want; unfortunately, most companies don’t pay as much attention as they should.

Currently, the biggest chunk of Internet advertising (totaling $7.8 billion in 2006) comes in the form of paid search, or paying for placement in search results on sites like Google. GroupM, a media investment management company, anticipates that spending on paid searches will approach $20 billion by 2009.

The reason is simple. “The most targeted way to advertise is to serve an ad that matches what a person is telling you he/she’s wants/needs at that exact moment.” says Bryan Kujawski, a Goizueta alumnus and co-founder of 360i, a search marketing firm.

A consumer searching for “Plasma TVs” is most likely in the market for a television, but retailers then have to do a lot of work to ensure that that user will actually buy a television. What can a company do to make it more likely that the consumer will buy its television? “So many variables go into this… you can bring a horse to water, but you can’t make him drink (always)” notes Kujawski, speaking at a meeting of the Goizueta Business Technology Association.

Those variables are not only keywords and phrases—there are dozens of ways one can search for televisions—but include when the ad runs (the time of day, the day of the week, and the month), the particular phrasing of a keyword or phrase, ad placement and of course, the landing page /web site. Since Google ranks ads according to bid prices and user relevancy, figuring out what to bid and what rank to go in order to achieve the best outcome is almost impossible.

“How do we frame the massive amount of moving parts advertisers have to manage (particularly in regard to search engine marketing)?” Kujawski, who left 360i last year to pursue other interests, asked the group. The answer, according to Kujawski, is mathematical modeling; specifically, Searchignite, a search marketing bid management software solution affiliated with 360i that uses decision science, predictive forecasting, technology infrastructure and genetic algorithms to develop keywords and optimize bids for ad placements on search engines. It also creates and categorizes data. JC Penney, Office Depot and Saks Fifth Avenue, to name a few, have all used 360i and SearchIgnite to optimize their online spending.

Via mathematical modeling, notes Stephen Stuk, associate professor in the practice of decision and information analysis at Goizueta, Searchignite determines the likelihood that certain keywords lead to certain types of behavior. It also predicts the likelihood that searchers will buy the company’s product. Searchignite’s models, therefore, reasonably predict what their advertising clients’ return on investment will be for certain keywords and ad placements and, subsequently, what their clients should pay.

“If you can figure out how much revenue is generated, you can figure out the advertising return on investment,” explains Kujawski. Often times, being lower down on a keyword search list works just as well or better than being in the more expensive top spot.  Being lower generates slightly lower clicks and conversion rates, but often dramatically higher net returns. But many advertisers over-bid to secure the number one spot. “Many customers view spending more as strategic, but in many cases spending less is actually the smarter move.  The right analytics will always affirm or negate a client’s existing strategy,” says Kujawski. “Without SearchIgnite, many clients were spending too much and shooting in the dark.”

According to advertising veteran Louis Sawyer, co-managing director and Chief Strategy Officer of Blattner Brunner/SRC, the old rules of marketing don’t apply to the Internet. “Just because they can reach consumers more frequently doesn’t mean they should,” says Sawyer. “Consumers are a little fed up with it.”

Speaking to students in an advertising class at Goziueta, Sawyer cited a 2004 Marketing Resistance Survey by Yankelovich Partners, Inc. that indicates 61% of consumers feel the amount of marketing and advertising has gotten out of control. “It’s not just reach and frequency. They want something meaningful,” says Sawyer. It’s about engagement, he notes, and offered five “thought starters” for companies in terms of how to engage consumers.

Think about qualitative engagement, not slamming them with information, Sawyer suggests. Second, let the consumer take control. Do what you can to allow the consumer to create good word of mouth on the company’s behalf. “The Internet is so much more interactive today. There is this whole virtual world where everybody is talking to everybody and marketers are still talking at them,” notes Sawyer. “Look at ways to share, not tell.”

Third, find ways to connect with the consumer in a more relevant, emotional and entertaining fashion. The world’s number one shoe company, NIKE, Inc. recently ran an online advertising campaign where consumers could send video of themselves dribbling a soccer ball. The company created a film from these videos and posted it on its website. The thinking behind the idea, and NIKE marketers were right, Sawyer adds, was that when a consumer’s video made the cut, he or she told his or her friends and sent them links to the film.

Fourth, Sawyer advises companies to form alliances and partnerships, like Ford Motor Company did with Sony Pictures in order to plug its Jaguar automobile as James Bond’s vehicle of choice in the movie Casino Royale.

Lastly, why not break the rules? There are new opportunities in this new space, notes Sawyer. Traditional advertising rules need not apply.

Recently, Blattner Brunner/SRC brainstormed about ways to promote Golf Pride golf grips. Historically, this would have meant plugging the product on the Golf Channel, in golf magazines and at PGA Events. Instead, Blattner Brunner/SRC approached AvantGo, Inc., a mobile Internet service, and asked them to design a golf game as a way to interest younger golfers in Golf Pride grips. In 2005, it was the number one downloaded game through this type of service. Rather than limit themselves to golfers who consume golf media, they were able to reach a larger audience.

Be aware though, Sawyer notes, some of the Internet’s new advertising tactics might scare consumers. “We look at cookies and then send you a message when we see a certain type of behavior. When you show us a pattern, we deliver an ad,” explains Sawyer, who acknowledged this might bother consumers.  “It is a little big brother, a little spooky. But what if the ads delivered to you were all relevant to you rather than junk? We’re simply making the information relevant to you. There’s a yin and yang to that.”

The impact of Internet advertising was further explored by Minsoo Pak, senior vice president and executive creative director, Sparks Grove, Inc., a customer experience marketing company, another visitor to Senior Lecturer William Sharp’s course on advertising.

 

According to Pak, as more money shifts to Internet Advertising, companies will have to find better ideas to outsmart competitors and reach customers. Simply having customers buy products isn’t the end. It's just the beginning. “You have to build on that engagement,” Pak says. “It’s no longer a one-way marketing relationship with that brand. It’s a dialogue.”

 

Calling it “Consumer Experience Marketing,” Pak expands on the change in marketing Sawyer touched on. He noted that every customer has a circle around them—brands, the media, business, friends and family. This network of people and ideas is connected to another person’s network of people and ideas and so on and so on. If companies “listen on a customer level” by studying blogs and chat boards, they’ll see a pattern. “If you consolidate (that information), you could find out what people think is cool,” explains Pak, who is also an Emory alumnus.

 

In response to customer desires, Delta Air Lines reworked its website so the airline could track consumer preferences. (An entire Sparks Grove team helped them do this while at a former agency.)  Delta continues to utilize that data today to get smarter with each transaction.

 

Not all companies have caught on. Recently, a friend of Pak’s received a coupon from a national sporting goods store for a discount on buckshot. But his friend doesn’t hunt. “Why send that?” asks Pak. “That’s a huge disconnect.” The company isn’t doing a good job using data to get to know its customers.

 

In search marketing, customers tell companies what they want, but it’s not always so obvious. But companies can negotiate with customers to ante up information. Visit The Coca-Cola Company’s music site, and for a bit of information about yourself via the sites MyCoke Rewards section, customers are entered in contests to win concert tickets and the like. “There’s an equity exchange,” says Pak.

 

Through such tactics, Coca-Cola discovered that rap music was far more popular with its 7.4 million registered users than other types of music. The company used that information to better reach its audience in its other forms of advertising, such as television. “For any of this to work, you have to orchestrate across all silos. You have to have the same message across all channels,” adds Pak.

According to Kujawski, Sawyer and Pak, data is key and the Internet is a fantastic way to harness information. When consumers communicate their likes and dislikes, companies need to capture and correctly apply metrics to efficiently market to their customers. It’s not necessarily about garnering the top spot on a search list or inundating consumers with banner ads.

“We have a huge opportunity provided by technology,” notes Sawyer. “This doesn’t mean that reach frequency analysis can’t be part of the equation, but I argue that it should be a smaller part. It doesn’t differentiate you. If every one of your competitors is doing that too, what are you doing that they’re not doing?”