- The Internet is rapidly maturing but there still remain differing strategies for both new and more established websites. However, the major developments point towards:
One Way Information Websites
- Point of information or service websites, intend to be first and only point of call or the main suppliers of content or exchange.
- In the past there have been races to be seen as the largest and most dominant in their category, such as in books (e.g. Amazon); MP3s (e.g. iTunes); electrical goods (e.g. Empire Direct) or news (e.g. Guardian Unlimited). These tend to be examples of one way portal where people enter the website to navigate to the data they want and read it, purchase it, download it or not.
Web 2.0: The Next Generation In Two Way Information Points
- The main races for market domination tend to be to update contemporary cultural outlets, in reference (e.g. Wikipedia) discussion (e.g. Blog); socialising and bands (e.g. Myspace); photography (e.g. Flikr); television (e.g. YouTube); music videos (Cmons) and animation (e.g. Newgrounds). These channels intend to replace existing media outlets, as can be seen be Newscorps purchasing of Myspace, MTV’s creation of Cmons and television channels’interest highlight the importance of these new mediums.
- These leaps are made possible as a result of new and more popular methods of sharing information, such as Wikis, Blogs and Podcasts. Often they are merely facilitating processes which have been possible for a long time. However, the need for multitasking, peoples time pressures and the benefits of standardisation of content within these sites has increased users appetites for Web 2.0 websites.
- These portals are investing heavily to encourage either free or subsidized usage as these companies recognise that if they become valued websites with customers constantly returning then they will have strong marketing potential. Like conventional newspapers and television services they intend for their main revenue streams to be from advertising.
- More established websites such as Amazon now have a significant market share, enabling them to hold a very large amount of data on different users and their preferences. This is now enabling these companies to hold greater influence beyond the mere distributor level. For example, Amazon has recently invested in a film project and is assisting with marketing and positioning of its product. If successful we should expect a raft of Internet companies expanding beyond their current influence.
- "It makes available to them computing capabilities that have been out of reach so far," he says. As such services are designed for home users, this makes them easy to adopt, and they work through web browsers or other freely downloadable software.
- Web 2.0 services allow collaboration, both between staff and with the outside world: "The idea is to reduce the amount of control over the information you are creating and encourage participation and contributions that will help you plan, design, build, test or distribute," says Drakos.”[1]
- “online services to create "mash-ups" of multiple data sources, although this may require some technical nous. Nikos Drakos says MashMap is a good example: it combines Google Maps with US cinema listings from Fandango.com, to display film times on a street map.”[2]
Search Engines
- Search engines initially existed as gateways to other content hand, usually edited by the companies directly, such as Yahoo. Newer technology such as meta tagging and a greater application of algorithms enabled more sophisticated automated systems, notably Google to emerge.
- Taking advantage of the ability to find users searches quickly and more accurately has given Google a significant foothold in the internet, with the term ‘Google it’ entering common language.
One Stop Shops
- “Through a single Internet site, users will be able to conduct various transactions, regardless of whether the actual functions are the responsibility of other ministries, local government, law enforcement or even the private sector (such as car makers, dealers, financial institutions or insurance companies). With this extensive collaboration in place, the piloted system is targeted to go live in December 2005.” (ACC P41)
- “The flagship electronic service Directgov (www.directgov.gov.uk) should help boost adoption of services significantly, by aggregating users and services in a single location with a user interface designed around the customer’s needs. Current examples of cross-government topics on Directgov (with more in the pipeline) include money, caring for someone, learning, employment, home and community, health and well-being, travel and transport, and Britons living abroad. Directgov also has links to the home pages of all county, district and unitary authorities in the
- “The eGU successfully launched Directgov in 2004 and it is being well received by customers. Eighty percent of users state that Directgov gives convenient access to public services and information, and nearly twice as many respondents rated Directgov as “good” overall, compared to its predecessor,
- “It soon became clear that the "network effects" of the internet led to a greater, rather than a lesser degree of concentration online, despite the openness of the internet's formal structure.
Blurring The Lines Between Websites
- This advantage has been built up upon using advertising techniques such as promoting websites who pay to be promoted when certain words and phrases are included in searches or webs content. This method has made Google the largest advertiser on the Internet (then Yahoo and Microsoft).
- Google is confident that although its first mover advantage with search based technology will decline that its creep into other areas of the Internet with its other products will counteract this.
- There is heavy competition between the major three search engines to form partnerships with other major websites, particularly the larger social websites such as MySpace and YouTube. An integrated platform that combines both qualities seamlessly should be the most profitable vehicles, enabling low cost but high quality content and high levels of personal choice for users in return for greater information and targeted advertising.
Demand From Consumers
- “Citizens today are more informed and have higher expectations than ever before. Many governments are responding to these pressures by investing in improving how they interact with citizens, businesses and other government agencies. They are adopting and implementing many of the services delivery and customer relationship management capabilities commonly found in leading-edge customer service organisations…. Citizens’ willingness to embrace a new generation of services outpaces governments’ ability to deliver them. Citizens want more from government, in terms of cross-governmental collaboration and outreach. In fact, most are willing to make available a wide range of personal data.” (Accenture 2005)
Filling A Niche
- There is a lot of movement at the moment finding a niche covering contemporary culture on the Internet as sites such as MySpace, YouTube and Flikr are starting to reach critical market share points where it will become increasingly difficult to compete on a large scale, as these more established platforms will become more difficult to budge with better services (and more costly).
- Therefore there is the choice between taking a highly niche role with less profit or updating an existing model that hasn’t already been developed enough on the Internet.
- Preferably this product or service should be complementary with existing websites but also offer something not currently offered sufficiently.
Advertising
- “The internet has had a greater impact on advertising in
Gates to open online ad conference
· “After a slow start and the setback of the dotcom collapse on 2000, internet advertising has grown explosively as a combination of cheaper technology, growing broadband penetration and better content drives consumers and advertisers online.
· Last year it overtook radio advertising in terms of overall share, reaching a level of nearly 4% in the
· Last year spending on ad searches, pop-ups and other forms of online advertising rocketed 62% year-on-year to hit £653.3m in 2004, from £407.8m in 2003.”[4]
Internet ad spending surges again
- Advertising spend by US companies on the internet hit $3bn (£1.75bn) in the three months to September - the highest quarterly figure since records began.
- Internet advertising revenues hit a record $3.1bn in the third quarter of 2005, nearly 35% up on the $2.3bn spent by advertisers in the same period last year, according to the latest report from the Interactive Advertising Bureau.
- The figures, compiled by PricewaterhouseCoopers, show that US online ad spending has almost doubled in the last two years from just $1.75bn in the third quarter of 2003, as advertisers move more of their budgets online.”[5]
- "The continued strength in internet advertising reflects in part the medium's unique ability to collapse the business cycle for advertising, marketing and branding, making it more attractive for traditional advertisers. The high percentage growth in revenues is more significant given the larger revenue base,"[6]
- “"[Internet advertising] continues to prove itself as the most cost-effective medium in driving sales and changing consumer attitudes, providing a powerful competitive edge for these marketers."
- Though the IAB only breaks out what sort of internet advertising is growing the fastest, search-based ads - where companies bid to have their ads placed against particular search results - have been the quickest-growing element of online advertising for some time.”[7]
Online advertisers change tactics
- “Overlays cannot be blocked in the same way, because they are actually built in to the web page you are looking at. It is just a case of finding the close button, if there is one.”[8]
Search Advertising:
- “But the largest area of online advertising does not involve fancy graphics or comic ideas - it is simply a case of paying a search engine to associate your product with search keywords.
- "It's the dirty secret of online advertising," said Mr Phillips. "This is the stuff that really works, and the reason it works is because if you search for something on Yahoo! or Google then you actively want it, and these are the people you want to be putting your advertising in front of."
- "Unfortunately, writing a cheque to a search engine is not terribly creative; this is not why advertising agencies have creative departments.
- "So it does not really get talked about a great deal, but it really works and you can measure it works as well."
- However, search advertising is becoming an overcrowded area, and ad agencies are looking for ways to get their clients turning up in the natural search results.
- "Marketers can pay to be in the right hand side of the Google page. That's paid advertising, also known as pay-for-click," said Fadi Shuman of Pod1 Media Solutions, a web development company.
- "However, the ideal place to be is in the centre of the search results, and the way to achieve that is through search engine optimisation. To optimise your site so it's as highly visible to search engines as possible requires a number of different skills - editing content, adding links, etc."”[9]
Social marketing
- Search advertising is where most online ad money is spent, something which has helped Google negotiate a $900m (£470m) deal to become search engine of choice for social-networking site MySpace.
- This will give advertisers access to that hard-to-crack youth market, which seems to be a law unto itself.
- Users of MySpace typically ignore traditional adverts and meet to discuss the latest trends and fads, creating their own hype, something that has been credited with launching pop group the Arctic Monkeys without any other publicity.
- "When it comes to online advertising you cannot underestimate the power of social networks," said Fadi Shuman.
- "Millions and millions of users are building communities within communities on these networks. They're global, they're unstoppable, and they're big, big money to marketers if they know how to communicate with them."
- The web is by far the fastest growing advertising medium, but with so many web pages out there, the chance of us happening upon a particular brand or website is pretty small.
- Advertisers are hoping that search, and social networking, will help point us towards their carefully crafted ads.”[10]
Search ads drive up online spending
- “The rising popularity of search-based advertising helped push up US online advertising spending by 26% in the first six months of the year.
- Advertisers spent a record $5.8bn (£3.3bn) online in the six months to June, up from the $4.6bn they spent in the same period a year before, according to preliminary findings by the Internet Advertising Bureau and PricewaterhouseCoopers.
- The growth in online spending was spearheaded by search-based campaigns - where advertisers bid to have their results displayed against keyword searches - the research said.
- Though search ads made up 40% of online revenues - the same as during the first half of 2004 - the amount spent by advertisers rocketed by 27% to $2.3bn.
- Display advertising accounted for 20% of turnover or $1.15bn, while classifieds made up 18% or $1.04bn.
- David Silverman, a partner at PwC, said as increasing numbers of people spent more time online, so advertisers were upping their internet spending.
- "The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online," he said.
- "This is a natural development as research shows more consumers are spending a larger percentage of their media time online, while the flow of advertising dollars follows."[11]
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Search goes on for way to tackle Google
- “Google, which makes a whopping 98% of its revenues from search adverts, has profit margins of more than 60%. Yahoo!, which makes use of its position as the web's most visited portal to sell display advertising while also trying to increase its share of search revenues, has margins of just over 40%.”[12]
Notes taken by Jonathan McHugh in March 2007
[1] Web 2.0: just kids' stuff? The Guardian
[2] Web 2.0: just kids' stuff? The Guardian
[3]
[4] Gates to open online ad conference The Guardian
[5] Internet ad spending surges again The Guardian
[6] Peter Petrusky, PWC Internet ad spending surges again The Guardian
[7] Internet ad spending surges again The Guardian
[8] Online advertisers change tactics BBC 06
[9] Online advertisers change tactics BBC 06
[10] Online advertisers change tactics BBC 06
[11] Search ads drive up online spending The Guardian
[12] Search goes on for way to tackle Google The Guardian
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