Advertising on the Web - Academic Research


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- Preface -

Many companies believe they know how the Internet works after reading an Internet book. This is not possible. The Internet requires learning by doing. The best advice is, get on-line and get a feeling of what is happening on the Internet. That is the first step to becoming a successful advertiser on the Internet.

This dissertation is written for advertisers, advertising executives and marketers with the aim of helping them to understand the Internet's potential as an advertising medium. After experimenting the Internet and reading this dissertation the reader should have a general knowledge of interactive advertising strategies and be able to make effective persuasive and profitable Internet advertising.

- Acknowledgement -

I would like to thank the following people who were instrumental to the success of this dissertation.

  • My supervisor, Peter Croissant for his time, contribution to and help with the dissertation.

  • My previous boss from Lintas Werbeagentur GmbH in Hamburg, Sven Kuhlbrodt, now Marketing Director Continental Europe for Fidelity Investments. He encouraged me to write about Internet advertising. He has been a great support throughout the dissertation

  • My friend Tamsin Edwards, previous Trade Mark Attorney in Australia, who throughout the Masters has been a great teammate. She helped me in my dissertation research, especially by introducing me to people, who worked in the fields of multimedia.

  • My MBA teammate, Yoriko Matsuda, previous Account Executive in Dentsu Advertising Agency in Japan, with whom I shared and partly gathered my multimedia research with. Our discussions enabled me to get a better perspective of the technological world.

  • My working colleges Lee Wills, Art Director at Powerhouse Creative Services for the art and design work of the front page.

  • My friend Jean Philippe Roux, MBA, who not only shared his computer knowledge with me, but also managed to do the impossible - cutting down several thosands words to met the word limit.

  • My friend Peter Gronne, whom I met through the Internet while conducting this dissertation. He has been a great help in all aspects.

  • The 9 private Danish companies and funds, who financially supported part of my Masters in Marketing.

  • All the people who participated in my interviews.

- Table of Contents -

    Table of Content
    Executive Summary

    1 Introduction

    1.1. Introduction
    1.2. Problem definition
    1.3. Dissertation plan
    1.4. Limitations

    2 Research Methodology

    2.1. Secondary Research
    2.2. Primary Research
    2.3. Construction

    3 The Internet

    3.1. The history of the Internet
    3.2. The development of the World Wide Web (WWW)
    3.3. Internet technology and its limitations
      Basic Internet Equipment
      Security issues
      Property rights
      Trademark protection
    3.4. The Internet users
      Internet Demographics
      Internet Usage
    3.5. Netiquette: Rules and restrictions for Internet advertising
    3.6. Future trends and its impact on the Internet
      Consumer trends
      On-line shopping
      Advertising forecast

    4 Communication Strategies

    4.1. One way communication strategy

      Mass communication
    4.2. Two way communication
      Direct Marketing
      Interpersonal communication
      Computer mediated communication
    4.3. Interactive Marketing
      Targeting & Relationship building
    4.4. Internet and the promotion mix
      Promotion objectives
      Promotion mix
      The Relationship between the promotion mix and Internet promotion
    4.5. Internet advertising and traditional media
      Information capacity

    5 Internet Fit

    5.1. Audience Fit
    5.2. Product Fit

      Information Search
      High Involvement
      Purchase facility
    5.3. General Fit
      Learning effect

    6 Internet Advertising

    6.1. Push-Pull-interact strategy
    6.2. General traffic to the site

      Banner ads
      Search engines
      Conventional advertising
      Word of Mouth
    6.3. Retaining the Visitor
      Informative advertising
      Image advertising
      Direct Selling

    7 Implementation

    7.1. Company commitment

      Service provider
      In-house or out-source?
    7.2. Advertising agency versus multimedia agency
      Advertising agencies
      Multimedia agencies


    - Executive Summary -

    The Internet is the fastest growing medium in the 90's with 25 million users with a average estimated growth of 10-20% per month. It has great potential as an advertising medium. Its feedback and interaction possibilities enable advertisers and Internet users to customise and differentiate the advertisement to met the user's own requirements.

    Internet advertising is becoming part of some companies marketing strategy. However it requires new strategies and thinking. The benefits of Internet advertising are its ability to cover all promotional objectives from awareness to action by leveraging all 5 elements in the promotion mix. The Internet is also a highly selective, cost effective media with greater measurability than any other media. Despite higher global reach Internet is not yet a local mainstream media.

    The Internet offers companies targeting well educated, innovative, affluent males or students great potential for success as their segments are highly represented. Products with high information intensity and high buyer involvement are also appropriate for Internet promotion due to its large information capacity at low costs. Its distribution opportunity is especially suitable for the increasing channel of mail order products. Low product fit or low audience fit companies can benefit by building a brandimage to establish a userlink or simply to learn about interactive media.

    Traditional advertising is consumed passively, yet on the Internet users have to actively select an advert. This changes the way advertisers generate and retrain customers. To persuade visitors to revisit and spend time on the website advertisers must fulfil real customer needs on continuos basis. This requires clear objectives and targeting. Informative quality content, advertainment with interesting entertainment or direct sales possibilities can add value to the customer.

    Internet implementation requires understanding, commitment and resource allocation from corporate management to operate successfully. The marketing department should be responsible in conjunction with advice from a competent advertising agency for Internet strategy development and implementation.

    - Conclusion & Recommendations -

    What are the differences between Internet advertising compared to traditional mass advertising strategies?

    The performance levels of existing standardised mass communication are insufficient in fulfilling today's advertisers high requirements of efficient and accurate targeting which encourage a dialogue with the customers. This report point to interactive marketing as a future standard, decreasing the role of traditional mass advertising.

    The interactive Internet could be the solution to advertisers requirements. But new advertising strategies are needed in this medium. The Internet is a two-way interpersonal communication flow. The key distinguishing features are the interpersonal feedback and interaction process in real time, which traditional advertising cannot provide.

    This interaction process provides relevant customer information in order to serve them more effectively in the future. Users can also interact with the Internet medium itself through machine interactivity. Compared to traditional media the user is fully in charge of the information pull.

    Internet is a hybrid medium which can combine all three identified communication strategies including mass communication, interpersonal communication and machine interactivity communication.

    How is Internet advertising linked to the promotion mix?

    Despite Internet's idiosyncrasies this advertising is recommended to be integrated into the overall promotion mix. This will ensure consistency whilst leveraging the company's marketing knowledge. Internet allows advertisers to utilise all five elements in the promotion mix. It therefore provides the means of covering all promotional objectives from awareness to action. No other media can utilise the promotion mix as such.

    What are the pros and cons of Internet advertising compared to general media?

    The Internet has great potential as media carrier compared to traditional media. It offers higher selectivity with tailored adverts to the users profile. The customer can also customise the advert as he is in charge of his own navigation. Through the Internet the advertiser can get easy, quick and inexpensive feedback in real time, which no other media offers, providing a higher feedback rate. However, research reveals that not many companies take advantage of this opportunity.

    The Internet offers unlimited low cost space compared to the expense and limited capacity found in traditional media. Breath and depth of customised product information assist customer purchase decisions. Nevertheless, the original company brochure is unlikely to generate success if it has not been adjusted for interactive purpose. However, many companies have not recognised this.

    Compared to traditional media, costs on the Internet are fairly low. The costs of setting up a web site ranges from several hundred dollars to as much as several million dollars depending on the companies objectives and resources. This means that even a small company can take advantage of the Internet. But prices are rising sharply as demand increases. Novel webpages are very important in attracting new or repeat visitors.

    The Internet offers high measurability by the use of software registration processes. But which criteria should be used to measure Internet success is still being debated. This also depends on the companies objectives as well as the measurability options the company requires. Without any clear objectives, investment measurability seem pointless.

    What are the critical success factors for advertising on the Internet?

    The advertiser must assess what he wants to achieve through an Internet presence. Initially this calls for an evaluation of how well the advertisers target audience and product portfolio suit the Internet. Companies targeting well educated, innovative, affluent males or students have great potential for success as their segments were found highly represented on the Internet. Products and services with high information intensity, high buyer involvement were also found suitable for Internet promotion due to its ability to carry large customised information at low costs. Mail order companies can also take advantage of Internet purchase facilitation. Low product fit or low audience fit companies can still take advantage of building or reinforcing a brandimage or getting a learning experience with interactive media.

    Traditional advertising is consumed passively. On the Internet, users have to do something actively to select an advert. This alter the way advertiser generate and retrain customers. Banner ads, malls, search engines, word-of-mouth combined with use of conventional media can generate visitors to a website.

    Since users are in charge of the navigation, advertisers must persuade users to revisit and spend time on the website by fulfilling real customer needs. This requires clear objectives and targeting to add value on a continuos basis while retaining the user. Informative quality content, innovative advertainment or direct sales possibilities can add value to the user's site visit.

    How should Internet advertising be implemented ?

    Both secondary and primary research confirmed that many companies lack Internet missions and vision. Homepages and customer handling were in many cases poor and did not take advantage of the opportunity for feedback, interaction and customisation. Advertisers cannot expect any success when they treat the Internet like any other media. Internet advertising demands management understanding and commitment for success. Management must determine Internet objectives and strategies to allocate efficient resources such as capital, equipment and people.

    Research validated that the Internet should be integrated in the companies overall marketing strategy. The marketing department together with a competent advertising agency should therefore manage the site. The IT departments together with multimedia agencies lack the strategic marketing knowledge which is required for Internet implementation. However, their competencies in technology should be utilised and be incorporated which calls for a closer working relationship across departments and industries.

    Understanding the Internet, following the guidelines and recommendations should ensure that Internet advertising works effectively in the future.

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    We encourage you to forward any comments orsuggestions - Margrethe Dal Thomsen

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    Last update September 1997