Impact of the Internet on Advertising
Advertising in the consumer world has historically been relegated to only a few major, national information distribution services. These kinds services vary widely depending on nation or locality. However, the most widespread historical advertising platforms in the 20th century were newspapers, hobby magazines, topic magazines, telegrams, regular mail, books, journals, radio, and television. These marketing channels were countless in number originally, but over time they were bought up by only a handful of media conglomerates. These conglomerates exercised control over what content was published as directed by the Federal Commission on Communications (FCC), and had irregular influence on most of the content that the public would consume on a daily basis. Raising awareness about a new product line or launch event would require drawing advertisements and paying media distributers to circulate their advertisements. This was a slow and difficult system, but it worked for the majority of the post-war era.
The creation of the World Wide Web (internet) was the spark that drove the advertising revolution. When companies such as Amazon and eBay began to sell products online instead of instead of in a physical store, marketers took advantage of new advertising space that cost far less than what traditional media were charging. When Google invented the analytics software to let people track ads, marketers had the power to upload their own ads while pointing the ads to websites where products could be bought, sold, and traded. The Internet revolutionized everything from how ads were viewed even to deciding which viewers saw them.
The literature and its authors sought to answer the question of whether the collapse in newspaper advertising revenue is due to online consumption of news. The authors attempt to find a relationship between the two factors by introducing a new modeling platform where two-sided news reports are produced with similar ads targeted at the same viewers. The study had several implications. First, impressions are wasted without tracking mechanisms for who sees the ads. Secondly, that this is because the ad tracking on behalf of advertisers is heterogeneous: it's more profitable to use two homing mechanisms than just one. This paper also found that outlets showing few ads attract readers from traditional outlets, and that loss is offset by increases in ad prices. Finally, the authors found that including a pay wall will reduce both readership and advertising revenue.
Growth and Progression of Advertising
A. MARKETING AND ADVERTISING PRIOR TO THE INTERNET
The growth of any company before the explosion of Internet marketing was the result of using advertisements in large physical places that were geographically strategic due to proximity to daily crowds. Times Square in Manhattan, for example, charges more than 10 million dollars a month for the privilege of placing an ad on one of its billboards. More than one million people daily visit those billboards, and so the cost of placing an ad there would be worth the money for the immediate and widespread circulation. Billboards, however, cannot track who views the advertisements. As a result, advertising on billboards is often a 'shot in the dark', or a hit and miss scenario. The company with the advertisement has no idea who viewed the advertisement and what the advertisement would do to get people to buy the product being advertised.
Radio and television had a big advantage over regular print advertisements. First, they can track where their viewers are coming from. Second, most Americans watch 10 hours or more of television each week meaning that they have a large and regular audience. Nevertheless, the traditional media sources did not have a means by which ad viewers could be tracked or pursued.
B. NEW ADVERTISING TECHNIQUES BROUGHT BY THE INTERNET
- Research Mechanism: The research mechanism used in the literature was a two-sided advertising platform. This platform had an offline and online version. Furthermore, both versions were given heterogeneous and homogenous advertisement styles to see which types of consumers would visit the content and pay to view it.
- From Desktop to Mobile Phones: When the Internet became available on all consumer computers, the desktop computer was the supreme device for going online. This was because software for small screens had not been invented, and because hardware was not sophisticated enough to allow for Internet access on mobile phones. The revolution began when advertisers would pay phone service providers for subscriber phone numbers. The numbers would be sent text messages with simple image ads for certain products. This was the first instance in which advertisers could track viewers with software. The modern era of interactive phone advertisements began in 2007 with he publication of the iPhone.
- Interactive: The interactive age began with smartphones that enables users to interact online using only their phones. Furthermore, this allowed for ads to be placed either directly on the phone or in application software that the users would download onto their devices. Thus, almost 65% of modern ads are sent to mobile desktops and phones as of 2010.
C. BENEFITS OF COLLABORATING OLD AND NEW TECHNIQUES
There are numerous benefits to using different kinds of advertising media - both physical and digital. The literature describes the benefits as appealing to the major viewer kinds: hetero and homo. Hetero viewers are less traditional and view their online content exclusively on a variety of online sources whereas the homo group is highly traditional and more likely to use print marketing channels.
Internet Advertising Effects on Sales and Consumers
A. ON AND OFFLINE SALES
Online websites and stores have numerous advantages for advertisers from all over the globe.
- All Day Access: All websites are open for shopping 24 hours per day. This means that advertisers can expect to receive impressions at any time of day they desire. It was found that online ads increase offline sales.
- Information Cues: Information, as a result of static ads, can be catered only to certain types of viewers. The software enables marketers to target viewers based on their location data as well.
- Global Reach: The problems of advertising at night on major websites with high traffic is non-existent because anyone with a modem can view the website online.
- Revenue Progression: Consumers, as a result of more ads being shoved at them, do not read as many ads as they once did. This has significantly reduced the CPC and PPV rates for online ads, since users are so averse to viewing ads. Nonetheless, revenue has skyrocketed because of a growing population of users online.
B. ONLINE ADVERTISING AND ILLEGAL ACTIVITY
Illegal activities that had once been outside of the Internet domain were now a part of Internet culture. Tellingly, websites for gambling and pornography became widespread, accounting for 50% of all online content as of 2008. The growth of hacking has become the most significant security problem for banks and social media, as numerous thefts have been made of people's data and financial information.
C.TARGETING SPECIFIC DEMOGRAPHICS
Marketing became a true profession when Google analytics first enabled advertisers to do what they previously could only dream to accomplish. Online advertisements can now be targeted to meet any demographic niche. From white males living in India to programmers who enjoy surfing, the targeting software allows marketers to specifically define which users can see their ads. This is clearly driven by financial data, as marketers are always looking for ways to avoid being wasting impressions on viewers who will likely not purchase their products.
How Online Consumer Monitoring Can Infringe on Privacy
The literature found that the most common means by which consumer monitoring was infringing on user behavior was national governments. The Internet became subject to direct scrutiny because it has become the backbone of the new globalized society. The literature found that an additional means of fraud is advertisements that record viewer's habits when clicked. Thus, it was found that more online ads lead to a situation where users have simply become more wary of ads online. This has driven many people to view ads and then make purchases at physical stores.
In addition, many web browsers and most advertising software will track what users view and do while online. This has lead to legal ramifications regarding the legal ownership of someone's data. Most social media websites have a user agreement where users are required to sign their online data to a large company for storage. The issue of financial security is salient here because web servers store all of user data and are constantly subjected to robbery (known as hacking).
Internet Advertising's Contribution to Information Overload
Offline sales have actually increased during a time when Internet usage has skyrocketed all over the world. Information overload is the phenomenon when Internet users begin to overlook online ads because there are too many ads to give attention to. The overload of information is a form of lost impressions because users who would view them overlook to retrieve a particular set of data. This has had an adverse effect on traditional methods of media (blogs) because it was found that websites with more than five ads on any given page suffered from a reduction in page views. This also led users to visit websites for shorter periods of time than those websites with little to no advertisements.
Advertisements that take the form of spam are always targeted ads. Email, for example, is constantly sent to people of certain demographics. On social media, ads are always targeted towards people who post profile information that is relevant to the content of the ads. The targeted ads have lead to an increase in targeted ad revenue. Moreover, the information glut lead to protests against social media websites, who responded by giving users some control over how many ads were posted on their pages at any given time.
The development of the Internet has revolutionized the marketing industry. Whereas advertisements were once relegated to physical formats that could not be tracked by marketers, ads today are highly statistical by nature and are used to target every kind of user demographic.
The study conducted to deal with how consumers viewed data concluded that determining who will view certain ads depends on the type of media involved and the kind of user targeted. As a result, advertisements online have become more fragmented and highly categorized for different objectives.
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