Is Banner Advertising Dead?

24/7 Media Inc.’s acquisition of e-mail firm Sift Inc., Sunnyvale, CA, this month has prompted speculation that the Internet media company is hedging its bets against a dying banner market and that banner network DoubleClick soon will do the same.

“Let’s face it, the banner has taken a pretty bad ripping in the past year,” said Melissa Bane, senior analyst at The Yankee Group, Boston, referring to reports that banner click-through rates average well under 1 percent. “People are getting much higher response rates with targeted e-mail. When you’re looking at how to break down your marketing budget online, are you going to go for something that gives you a less-than-1-percent response or are you going to go for something that gives you up into the double-digit response?”

Indeed, the Direct Marketing Association’s conference earlier this month intensely focused on e-mail to the point where at least one e-mail seminar was standing room only.

“Any network that plans on being around for the future needs to have some sort of strong e-mail division,” said Jay Schwedelson, corporate vice president of media placement company WebConnect, the online arm of list firm Worldata, Boca Raton, FL. “If not, they will never be a strong solution for any Internet advertiser.”

24/7’s acquisition of Sift was not a move away from banners, said David Moore, CEO of 24/7, New York.

“Banners, when they’re targeted right, still get the response you’re looking for,” he said.

Along those lines, 24/7 and the NBC unit of the General Electric company have signed a three-year agreement to collaborate on television and Internet advertising solutions for local advertisers.

Meanwhile, acquiring Sift along with its e-mail database of 3 million addresses was a logical extension of 24/7’s strategy of building a database “to target better than the next guy,” Moore said.

In October, 24/7 announced it had teamed with data company IntelliQuest to build a co-op database that will allow marketers to target Web surfers by demographics. The database, which he said will include profiles on between 10 million and 15 million people, is slated to be available in the second half of 1999.

When asked to assess the competition, Moore said, “I would be surprised if DoubleClick didn’t have their own e-mail strategy under way.”

Indeed, sources told iMarketing News that DoubleClick, New York, recently was in talks to acquire at least one e-mail company, list development firm NetCreations, New York, but that negotiations fell apart. When asked about the negotiations, DoubleClick chairman /CEO Kevin O’Connor and NetCreations president Rosalind Resnick would neither confirm nor deny the report.

“It is safe to say that any way to promote services over the Internet is attractive to us,” O’Connor said. “E-mail is just another way to reach somebody on the Internet.”

He added that asking if the banner is dead illustrates fundamentally flawed thinking. “When the half-page ad came out in print, did people say the full-page ad is dead? No. As in all media, different models evolve.”

Also, e-mail’s high click-through rates may be short lived, said Evan Neufeld, senior analyst with online research firm Jupiter Communications, New York.

“In 1995, banners sometimes got a 30-percent click-through rate,” he said. “Our research has shown that the same problem you have with banners – that you have too many of them and not too many people responding to them – in all probability will happen with e-mail.”

Brand advertising is still a tough sell to online marketers, he said.

“I think what you’re seeing, rather than a shift away from banners, is a shift toward more direct-response oriented offerings, which e-mail does well,” he said.

Also, marketers should take more of the blame for banners’ perceived shortcomings, he said.

“This industry has done a pretty horrible job at putting creative talent to work on banners,” Neufeld said. “It’s a funny thing. Good creative gets good response rates. Bad creative gets bad response rates.”

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