*K2 Touts Rich-Media Response Rates Amid Web Debate Over Effectiveness

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Interactive ad agency K2 Design Inc. slashed online subscriber acquisition costs 57 percent for Standard and Poor's Corp. by integrating rich media into a registration drive for the S&P Personal Wealth investment advice Web site (www.personalwealth.com).


"In the fourth quarter, we really experienced some dramatic breakthroughs," said Lynn Fantom, president/CEO of K2, New York, noting that the agency has been marketing on behalf of S&P for about a year.


The term rich media refers to the integration of animation, sound, interactivity and commerce into space typically filled by GIF-based or noninteractive and graphically simple banner ads. The S&P registration drive banner ads tested a particular type of rich media, @Home Network's Enliven technology, which lets prospects sign up for a trial subscription inside the banner without leaving the site they're visiting.


K2 tested a series of offers using GIF-based banners and Enliven banners, and the rich media banners beat the GIF-based control banners every time, contributing to a more than 200 percent lift in trial subscribers.


"What is significant is the return on our marketing dollar," said S&P marketing director Mark Roth.


K2's claim comes amid an ongoing debate among new media marketers on whether rich media is key to boosting the often-maligned banner's low response rates or just more Internet hype. Though marketers report rich-media response rates as high as 15 percent compared to GIF-based banners' average of less than 1 percent, it's estimated that less than 1 percent of online ads employ rich media. That number is low because rich media is generally a bandwidth hog and slows the performance of a 28.8K modem -- currently the typical user's connection speed. Many site owners avoid accepting rich media because they're afraid visitors will get impatient waiting for it to load and click away to a competitor.


Also, critics contend that while the novelty of rich media's more attractive graphics and interactivity may cause a spike in response, it also may attract more tire kickers and, therefore, drive down conversion rates.


Still, Jim Nail, senior analyst with Forrester Research, Cambridge, MA, predicts that rich media will account for 20 percent of banner ads served by the end of this year. The prediction stems from Internet service provider @Home Network's agreement last month to acquire Enliven's creator, rich-media firm Narrative Communications Corp., for $89 million in stock. Redwood City, CA-based @Home's offer of Internet access by the cable infrastructure eliminates bandwidth problems for its advertisers.


"Now, you've got some money behind Enliven, which is the clear leader in the field, plus you've got a whole bunch of case-study success stories that are making the rounds at all the conferences," Nail said.


Some of the big ad agencies waiting for rich media to mature so they can put their television skills to work online still have hurdles to overcome before they can make online ads pay -- mainly in personnel.


"[Just as] it's a lot harder to do good direct mail than it is to do good television, it's a lot harder to do good interactive stuff that provides value to the customer than it is to do flashy, high-production, mini-movies, which is what a lot of the creative guys really want to do," Nail said.


As a result, much of Madison Avenue lacks the creative staff needed for effective Internet advertising, he said. "These guys have no interest in doing stuff that will build the client's business. They want to build their portfolio and fly to Australia and meet Michael Jordan, which is fine, but it isn't what this medium is about."
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