Understand Online Consumer Behavior

Success in online advertising is based on understanding the Internet as a communications medium and how it differs from television, radio and print media: Online consumers want much more control of their experience.

Household computer penetration is approaching that of TV and radio, with more than half of U.S. households having a computer and going online at least once each day. Advertising on the Internet takes the form of Web sites, banner ads, e-mail solicitation, key words on search engines, skyscrapers that run down the right and left sides of Web pages, minisites, pop-ups, Superstitials, full-screen ads (with video capabilities) and networks.

With all these options, why is there a perception that online advertising is ineffective? Could it be because response rates to banner ads average 0.15 percent? Are banners just ignored, or are they considered distracting messages? Spam also has become a prime issue. Except for a few cases, online advertising seems to be distracting or ignored.

What is the explanation? Online advertising hasn’t figured out how to adapt to the usage behavior of the medium. Advertising in every other medium reflects how people use the medium. When someone watches TV, they are relaxing and don’t want to think too hard. They want to be entertained and TV commercials suit that expectation. Print advertising varies by nature and target market of the publication. Radio advertising relies on dialogue, jingles, music and other auditory cues to hold the consumer’s attention.

One of the biggest challenges to the advancement of the Internet as an ad medium is the lack of viable, standard measurement of its audience. Though the Internet has many elements of the TV medium, it is sold much like print with CPMs and space as opposed to time. The Internet’s biggest advantages are that database analysis helps generate customized messages for receivers and its ability for interactivity. These have not been leveraged to the fullest.

Advertisers have begun to leverage their database through e-mail. E-mail can reach carefully selected targets with messages crafted especially for them at a markedly lower cost per piece than mail. Because computer users have become frustrated with spam, opt-in and permission marketing have evolved to screen out unwanted messages.

Rich media can enhance e-mails with graphics, sound and animation, making the effect closer to a broadcast experience, the key difference being that it is a personalized and relevant message. This is partly why e-mail response rates are, on average, more than five times as effective as banner advertising.

Internet marketing must adapt to the usage behavior of the medium. In each medium, the approach to advertising adapted to the posture of the audience. For print we want to read, for radio we want to listen and for TV we want to be entertained. So what do consumers want on the Internet?

They want to control their experience. E-mail and search are the most common Internet activities because consumers go online with a purpose. One of the Internet’s most unique benefits is that it gives individuals a great deal of independence. This challenges traditional approaches to advertising.

Advertising has been mostly a form of mass communication. Audiences typically are broad and difficult to define. Media buyers use demographics, focus groups, tracking studies and the like to try to calibrate to whom they deliver their message. What results is more of a one-way communication that speaks to consumers versus engaging them in a two-way, interactive conversation.

But on the Internet, advertising can be more purposeful and create a dialogue with the consumer. The key is to get more creative in how online advertising goes about initiating this relationship.

We can start by targeting messages to the context of the content, creating advertising that is useful and meaningful to the consumer in that moment. This can be done by tailoring creative to site content or by determining what motivates the target consumers and creating messages to attract them.

There also are several advertising networks that sell ad placement based on specific vertical content categories. So they deliver advertising only when they know something is of interest to the consumer. For example, if a consumer is searching online for moving information, this may be a good opportunity for Verizon to contact them about switching to Verizon phone service as part of their move.

With the technology currently available, advertisers know what consumers are looking for and at, so they can target online advertising accordingly.

Advertisers have other opportunities to leverage a database beyond e-mail. If advertisers can get consumers to opt in to receive Internet communications rather than just e-mail, this opens opportunities to reach consumers with targeted, one-to-one messages when they are on the Internet. There are networks that let advertisers customize advertising being delivered to consumers who opt in to receive messages from the advertiser. For example, Bank of America can reach existing customers on the Internet and deliver important account information or cross-sell services and plans.

To create successful Internet marketing programs, advertisers need to understand the behavior of their target consumers. We need strategic integration into content and exploration of how to use interactivity effectively. Online advertising should become about matching the right consumer with the right offer at the right time.

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