Desktop Advertising Networks Wed Marketers to the Consumer’s Desktop

Imagine approaching a customer as he’s scanning the television sets offered by a major department store and alerting him to superior offers on television sets at your store across the street. You know he’s ready to buy and what he wants to buy … and now you can get this message to him at exactly the right time.

It sounds far-fetched — and in the real world, it might get you escorted from the department store — but the online analog, Desktop Advertising Networks, is providing tremendous savings for consumers and return on investment for major national advertisers.

Past is prologue … The Holy Grail for marketers is having the ability to offer customers exactly what they want, at the exact moment when they’re ready to buy. But how do you know what that moment is? Marketers traditionally rely on historical information and/or demographic targeting to deliver special offers to customers presumably ready to buy, by mail or telephone.

Yet, demographics and past purchase behavior are only a predictor of interest — high income males ages 30-45 are assumed to be interested in SUVs; consumers who have purchased cruises in the past are presumed to be interested in future cruise purchases. Predictions of interest may or may not be right, and often lead to offers made when the customer is not necessarily ready to buy. Predictions are no match for an understanding of the actual real-time purchase interests of the consumer.

The Internet as a medium offers unprecedented potential to target consumers based on their actual current purchase intentions, not based on who they are or what they bought in the distant past. In fact, this was the original premise of Internet-based advertising that led to so much early optimism and an infusion of marketing dollars.

Unfortunately, early models of online advertising failed to capitalize on this potential: Poorly targeted run of network banners and pop-ups were the norm, annoying consumers and generating very poor ROI results for advertisers. Untargeted mass e-mailings quickly disintegrated into the spam that now clogs many e-mail boxes.

The results have been click-through rates averaging 1/10th of 1 percent and millions of dollars in wasted advertising costs. Though the potential of the Internet as an advertising and marketing medium always was and continues to be phenomenal, many advertisers wrote it off or devoted miniscule portions of their budgets to online marketing.

Desktop Advertising Networks Enter. In the last two years, advertising solutions have emerged that are finally starting to capitalize on the Internet’s potential as a vehicle for determining actual consumer interests and targeting them with appropriate ads. One area that has generated excitement for the advertising world is the emergence of software-based Desktop Advertising Networks.

DANs wed marketers to the consumer’s desktop, allowing them to target consumers with just-in-time offers at the exact moment they’re ready to buy. DANs are powered by technology that interprets consumers’ activity — such as keywords, URLs, HTML code and search terms currently in use on the consumer’s browser — in real time and immediately makes highly relevant offers to them.

For example, if a consumer is scouring travel Web sites to research airfares to Florida, the DAN interprets the user’s activity and generates a clearly branded ad in a separate window on top of, to the side of, or even behind, the Web browser, offering a discounted ticket to Florida from a competing airline.

The click-through rates that marketers are recognizing from desktop advertising applications — more than 10 times the industry average for traditional Web advertising — show that the model is working. Most recently, a handful of DANs have shown up in the Nielsen-Netratings rakings of top Internet properties, regularly outdrawing such venerable brands such as TerraLycos and About-Primedia.

Much like the network television model, where viewers get free programming in exchange for viewing commercials, DANs enter the desktop in support of free consumer software, such as file sharing applications or desktop weather applications. They help provide premium content in exchange for viewing a limited number of advertisements on a daily basis.

The result? A highly targeted approach that sets a new standard for timeliness, potential reach and response rates while minimizing marketing costs. Marketers now have access to a technology that puts an alternative in front of the consumer and ultimately allows them to find a better deal at the exact time they are shopping.

Like many new advertising models, DANs are facing skepticism. Major brands have argued that DAN-generated offers placed in front of or next to their Web sites constitute copyright threat — that these DANs are siphoning sales away from their brand. However, a recent precedent-setting federal court decision has upheld the legality of DANs and their contextual advertisements, saying that consumers ultimately have the choice of whether to keep software that generates competitive offers on their computer desktops.

Choose Your DAN Partner Wisely. Marketers are clearly skeptical of the “pop-up” taint that surrounds the market for DANs. Marketers need to make certain they align themselves with desktop advertising providers that:

· Offer their software and content partners explicitly offer consumers a choice between paying for a “premium” version without advertisements, akin to commercial-free pay networks such as HBO, or free versions that require viewing advertisements, like network television. Customers are going to be more open to receiving your advertisements on their desktop if they feel they’ve been given the explicit choice to view them.

Customers who feel “tricked” by user agreements wherein the advertising information is tucked at the bottom of the fine print are going to be annoyed, and will ultimately remove both the premium software and the advertising packages.

· Make certain that user privacy is upheld as paramount. Ideally, no personal user information should travel off of the desktop to the DAN provider; instead, companies need to develop technologies that process ad-serving algorithms on the desktop. And DANs need to explicitly outline their privacy policies in plain English with their partners’ user agreements.

· Offer marketers the ability to deliver contextual ads in the format of their choosing. For example, while many DANs offer pop-ups only, some of the more advanced DAN technology providers offer tremendous variety of ad display — such as the ability to place an exact graphical replica of a particular cell phone model on the computer desktop that the consumer can interact with as if she were in a physical store.

While millions of consumers have opted into viewing ads on DANs in exchange for free software or content, millions more have grown frustrated and removed the applications from their desktops. The challenge for providers of DANs moving forward, is to continue to increase the value proposition so that more users opt to keep DANs on their desktops.

As DANs meet this challenge, advertisers will ultimately be able to reach such a large audience through this medium, that the combination of scale and targeting effectiveness will make DANs a requirement of the marketing plan for all major advertisers.

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