The Internet - the advertising medium of the future?
Transcription
The Internet - the advertising medium of the future?
The Internet - the advertising medium o f the future? Cliona Daly Submitted in partial fulfilment for a Bachelor of Arts in European Business Studies and Languages The National College of Ireland, Sandford Road, Ranelagh, Dublin 6 April 1999 ACKNOWLEDGEMENTS Dedicated to my wonderful parents fo r their unlimited love and support throughout my college years. I owe a special debt of gratitude to Mr. Barry McIntyre, my dissertation supervisor. His constant advice and guidance were imperative in compiling this study. I would like to thank all the respondents to my questionnaires without whom it would have been impossible to complete this thesis. Special thanks must be given to the staff of the Institute of Advertising Practitioners in Ireland for their assistance in this study. I thank also, Ms.Siobhan Whelan for her assistance throughout the year. Finally, and most importantly, a special heartfelt thanks goes to my good friends in K4 whom I have spent the last four wonderful years with. I will always remember the good times we have shared together. TABLE OF CONTENTS Acknowledgements i Table of Contents ii List of Figures v Abstract vii Introduction page 2 The Internet page 1.1 Origin of the Internet page 3 1.2 The Internet as a Resource page 6 Ireland and the Internet p a g e ii 2.1 Internet Surveys page 14 2.2 Internet Service Providers in Ireland page 16 Advertising on the Internet page 3.1 Methods page 18 3.2 New Developments page 21 Chapter One Chapter Two Chapter Three ii i n 3.3 Objectives page 23 3.4 Advantages page 24 Traditional Media versus the Internet page 26 4.1 Traditional Advertising Media page 27 4.2 Internet Advertising page 27 4.3 Interactive Advertising page 28 Research Methodology page 33 5.1 Preliminary Phase page 34 5.2 Secondary Data page 34 5.3 Primary Data page 3J 5.4 Pilot Study ' page 36 5.5 The Population page 37 5.6 Sampling page 38 5.7 The Sample page 39 The Survey page 40 5.9 Questionnaire Design page 41 5.10 Recording Results page 43 5.11 Research Analysis page 44 Chapter Four Chapter Five 5.8 ' Chapter Six Chapter Seven Research Findings page 45 Key Findings page 70 Discussion page 73 Recommendations and Conclusion page 76 Bibliography viii Appendices Appendix One Cover Letter Appendix Two Survey on Internet advertising for , advertising agencies Appendix Three xiii xiv Survey on Internet advertising fo r advertisers xvii Appendix Four List o f the top advertisers in Ireland xxi Appendix Five Membership list o f The Institute o f Advertising practitioners in Ireland xxin IV LIST OF F I G U R E S Figure I Figure 2 Figure 3 Figure 4 Section A Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 Figure 11 Figure 12 Figure 13 Figure 14 Figure 15 Figure 16 Figure 17 Section B Figure 18 Figure 19 Figure 20 Figure 21 Figure 22 Figure 23 Figure 24 Figure 25 Figure 26 Figure 27 Prediction for the number of people in Ireland with access to the Internet Internet advertising spend in Ireland Internet Service Providers Irish market share Number of years it took major media to reach 50 million US homes-Intemet set to achieve by the year 2000 Advertising Agencies Role within the organisation Level of billings Number of clients Number of employees Number of agencies that developed a separate division for Internet advertising How effective advertising agencies believe the Internet is for advertising Awareness of applications for Internet advertising Awareness of specific applications for Internet advertising Views on whether Internet advertising outweighs existing methods Percentage of clients using the Internet for advertising Belief that the Internet has an advantage over existing media Agencies perceived advantages of Internet advertising Opinion of advertising agencies on whether the Internet is the medium of the future Advertisers Role within the advertising organisation Number of people employed Use of traditional media Organisation’s awareness of the Internet Percentage of companies that developed an Internet advertising strategy Time of development Development of the Internet strategy Development of the strategy In-house Why the organisation developed the strategy Methods of Internet advertising implemented by the companies surveyed \ Figure 28 Figure 29 Figure 30 Figure 31 Figure 32 Budget for Internet advertising campaign in comparison to the budget for traditional media campaign Impact of Internet advertising on company sales Effectiveness of Internet advertising as perceived by the advertisers Belief that the Internet has an advantage over traditional media methods Advantages of the Internet over traditional media methods J vi ABSTRACT The aim of this dissertation is to illustrate whether the Internet is more than a V complimentary advertising medium for use by both advertising agencies and advertisers in Ireland. And, also to answer the question, is the Internet the advertising medium of the future? The author used secondary data in order to, firstly, obtain a background on the Internet, its development and its resources. Secondly, to become aware of the extent of the Internet in Ireland, its usage and the Irish Internet Service Providers. Thirdly, secondary data was used to gain knowledge of the methods of Internet advertising, their objectives and their advantages. And, finally, to establish how advertising on the Internet compares to traditional advertising methods. The author availed of primary data through the use of postal questionnaires to obtain the opinion of the advertising agencies and advertisers in Ireland. The results gathered for the survey indicated that both of these groups are aware of the Internet as an advertising medium. A majority of these groups believe that the Internet is an effective advertising medium and that it has significant advantages over traditional methods of advertising such as television, radio and newspapers. They realise the growing potential of this evolving medium and its importance as an advertising medium as we approach the twenty first century. vii The information superhighway may be mostly hype today, but it is an understatement about tomorrow. It will exist beyond people's wildest predictions.................... (Negroponte, N; 231). l INTRODUCTION The rich global network of information, the Internet was initially developed at the CERN physics laboratory in Geneva in 1989. Since then it has grown and developed at a phenomenal rate. The Internet is now accessible by an estimated 20 to 30 million people around the world. Currently, there are 2 million websites with new sites being developed at the rate of one per minute. The increasing population of the Internet as a business tool can be attributed to its current size and prospected growth. The Internet’s potential to provide an efficient channel for advertising is overwhelming. Every facet of traditional advertising strategy is challenged by this new medium. The Internet allows companies to advertise in ways, which were not possible before with traditional methods. These ways permit the companies to reach a wider audience, to compete in new markets and to interact with their customers. The Internet is the fastest growing media ever, collectively created by almost 200 million people worldwide, consisting of more channels than all the television stations and possessing more information than all the libraries in the world. Firms must consider the Internet as part of their advertising strategy today or risk getting left behind tomorrow. 2 The author has based this study on the concept that Internet advertising is more than a complimentaiy advertising medium for use by both advertising agencies and advertisers in Ireland. It is her belief that the Internet is the advertising medium of the future and the purpose of this dissertation is to prove this hypothesis. Chapter one of this study introduces the reader to the subject of the Internet. I ^ > The author describes the history of the Internet and how it was created. The Internet as a resource will then be discussed and the World Wide Web and electronic mail will be explained. The second chapter will deal with the notion of the Internet in an Irish context. The author provides statistics from surveys with regard to Internet use in Ireland and the predictions for the future. Details will be given in relation to the market share of the four main Irish Internet Service Providers. The concept of advertising on the Internet is explained in chapter three. The chapter outlines the various methods of Internet advertising and the new developing methods along with their objectives. Finally, the reader will then be made aware of the principal advantages that advertising on the Internet possess. In order to assist in answering the research questions the fourth and final chapter of the literature review compares traditional advertising methods to the method of advertising on the Internet. The fifth chapter will brief the reader on how the research for this study was carried out with the use of both primary and secondary data. The author will outline how the data gathered from the primary research was analysed and recorded. The results gathered from the surveys carried out for the purpose of this study are presented in the sixth chapter with the use of various charts. The seventh and final chapter of this dissertation discusses the main research findings and their relevance to the whole purpose of the study. Finally, the author will give recommendations to companies in relation to Internet advertising and highlights the immense importance of this growing medium. 4 “The Internet has been described as the most revolutionary development since the invention of the motor car or the telephone”, (Aughney, J & Plenderleith, J; 1997). 5 CHAPTER 1 The Internet Introduction This phenomenon is significantly altering the way the world communicates; gathers information and more significantly the way companies do business. Firstly, in order to gain total understanding of this huge technological advancement it is imperative to discuss its origin in the 1960’s and review its progress right through into the 80’s and 90’s. Secondly, it is necessary that one is aware of the resources available on the Internet, how exactly they function and their specific uses. 6 Understanding the history of the Internet is paramount to understanding what is happening today on the Internet. Customs, rules, and many layers of technical protocols were designed with goals and objectives of the sponsors and inhabitants of the original networks.(Ellsworth J.H, and Ellsworth M.V, 1994). While the Internet is changing rapidly now, it is still a product of this history. In simple terms, the Internet allows millions of people all over the world to communicate and to share. Thus the Internet is more than a computer network or an information service. The Internet is the first global forum and the first global library (Hahn H, and Stout H, 1994). The Internet never closes moreover no matter who you are you are always welcome. You will never be excluded for wearing the wrong clothes, having the wrong coloured skin, being the wrong religion, or not having enough money. Although we would like to think that there is a grand plan for the design, implementation and expansion of the Internet, in fact it has happened over time almost by accident. The early network experience was primarily with local area^ networks (LAN’s). Wide area networks (WAN’s) that connect other networks were much less successful. (McLaren, B.J. 1997). 7 1.1 Origin of the Internet The Internet was conceived in 1969 by the American Defence Department when the Cold War and the Vietnam War were causing civil unrest. It was an experiment in how to design a network which could still function even if one part were to be destroyed by, say, a bomb attack, terrorist activity, an earthquake or simply someone cutting through a cable. It was called the Advanced Research Project Agency (ARPAnet). (Shelley, J, 1996). Shortly afterwards another Wide Area Network was established in order to create a communication link between researchers. Called CSnet, this network was instrumental in bringing institutions of all sizes together electronically. Enthusiastic professors and students using CSnet were an important factor in accomplishing the implementation of the full Internet at many campuses. The late 805s saw the development of the NSF Net system commissioned by the National Science Foundation, an agency of the American government. This foundation funded five supercomputer centres at the major universities with the intention of making the resources at these centres available for scholarly research elsewhere. y In order to make this connection NSF built their own network, after being denied use of ARPAnets communication, based on ARPAnet technology, consisting of five sites linked by telephone lines and operating at 56,000 bits per second. In order to connect outlying centres, the foundation created regional network centres, which were linked together in a chain formation. These were then linked to one of the five main centres enabling any one of the chained links to communicate with anyone of the computers in the chain as well as with any of the five main centres. This was a huge success, now all the data and research available anywhere in the network could be accessed by regional centres. But it worked too well and became overloaded. In 1987, Merit Network Inc. was given a contract to manage and upgrade the network. Faster telephone lines and faster computers were installed and this process of upgrading has had to continue to the present day and must do so in the future. (Shelley, J, 1996). The NSF project was such a success that it funded connection for some other centres on the sole condition that others were permitted to connect to them. The Internet was bom. The Internet may be defined as a system of linked computer networks, world wide in scope, that facilitate data transfer, electronic mail and newsgroups. The Internet is a way of connecting computer networks that greatly extends the reach of each participating system. A recent EU survey found that over the last number years the increase in Internet awareness has been dramatic. In 1995 almost 45% of Europeans had no concept of the Internet, now this figure is 3%. (ICAN). 9 “The Internet is a network of networks. There are more than 88,000 networks connected to the Internet and more are created every day”. It is now extended to over 70 countries and accessible by an estimated 20 - 30 million consumers. (McLaren, B.J, 1997), with the rate of a million new consumers each month. (Pfaffenberger, B, 1997). 1.2 The Internet as a resource The two principal resources of the Internet are considered to be • E-mail • The World Wide Web E-mail / Electronic mail, or e-mail as it is more commonly known, is an electronic cross between letters, telephone calls and faxes. E-mail is simply an electronic message sent between computers. It can include attachments like pictures, document files or even pages form the World Wide Web. The message is passed from one computer to another as it travels through the Internet, with each computer reading its e-mail address and routing it further until it reaches its destination, where it is stored in a ‘mailbox’. 10 This usually takes only a few minutes, and sometimes only seconds. (Oliver, P.R.M, & Kantaris, N; 1997). , E-mail has several features making it attractive to users. Firstly, when one types and sends a message, the person at the other end does not have to be there or have his or her computer switched on to receive a message. Asynchronous communication from the Greek word: not at the same time comes into practice as the receiver can log on to their computer at anytime to view their mail. r A second feature, is the speed of e-mail. One can type and send a message from anywhere in the world to anywhere in the world in seconds. The conventional method of sending a message through post has now become more commonly known as ‘snail mail’. And thirdly, one can send any size message to any number of people for the exact same cost. Now, with the development of a new protocol, Multi - Purpose Internet Mail Extensions (MIME), graphics, sounds, spreadsheets and word-processed documents may be attached to an e-mail message. Previously the use of multimedia was not possible with the original Simple Transfer Protocol (SMTP). Once you have your computer set up and connected to the Internet, all you i need to handle your e-mail is a suitable software programme. 11 There are four main programmes freely available and which may be downloaded from the Internet. Two of them are built into the main Web browsers, Netscape and Microsoft Explorer. The remaining two programmes are the very commonly used, Eudora and Pegasus. “Most Internet users agree that e-mail is the most useful thing that you can do with the Internet Just about anywhere computers are used, e-mail is quickly becoming indispensable'9. (Pfaffenberger, B, 1997). The World Wide Web Not too long ago, one nearly needed to be a computer expert in order to work both effectively and efficiently on the Internet. However, this is not the case today due to the existence of simple packages hiding all the technicalities employing a concept called the World Wide Web. (Shelley, J, 1997). "No from o f electronic communication in history has occurred on the same scale as rapidly as the Web” (Lewis, P 1994). 12 " The concept o f the World Wide Web dates back to the I960-s. Ted Nelson, a student at Harvard University, had a vision that one day every citizen would have instant access to information via computer screens” (Shelley, J, 1997). The Web did not actually exist until 1989, when it was conceived at the European Laboratory for Particle Physics in Geneva (Lewis 1994). The Web was originally a method of distributing text to high-level physicists across the globe. A few years later, the National Centre for Supercomputing Applications (NCSA) at the University of Illinois Urbana-Champaign developed the graphics-based browser Mosaic, upon which most browsers are based on today. The World Wide Web, or WWW, is based on the technology called HTML, or hypertext mark-up language. Hypertext is a method of presenting information where selected words in the text can be expanded at any time to provide other information about the word. These words are actually links to other documents, which may be text, files, pictures, or sounds. The presentation of information on the Web is much more friendly than the older, more traditional methods, and uniform interface provided by Web-browsers which provide for a user-friendly environment (Rudyk,R 1995). 13 This friendly atmosphere, combined with the ability to use any of the Internet’s tools within the hypertext culture, has been the catalyst for business to rush to the Internet in record numbers. Summary In conclusion, with the number of people with no concept of the Internet down by 42%, an estimated access rate of 20 - 30 million people, and web sites cropping up at one per minute, it is obvious that the Internet has significantly developed since its conception in the 1960’s, from an experiment of five main computers to 88,000 networks. With the World Wide Web and e-mail becoming a natural part of every day life it is difficult to imagine life without such a medium of communication and information. 14 “The changes in telecommunications will be immense. Depending, possibly, on personal income, the average household will be linked by multiple cable or by radio with an immense variety o f services, bringing people closer together all over the world There will be a multiple o f TV services available from all over the world by dialling. With the use o f a large screen people will have television discussions by telephone as a family party. The home newspaper, printed by magnetic characters, made available by dialling different numbers might emerge. There will be a very elaborate adult education service available on every conceivable subject Records might be superfluous as it might be possible to hear almost any music or even to see it being played, by dialling code numbers9\ This vision was put forward in 1967 by Erskine Childers during his time as Minister for Transport, Power, Posts and Telegraphs. This thirty two-year-old prediction prior to the conception of the Internet is today becoming a reality. 15 ' CHAPTER 2 Ireland and the Internet Introduction The number of people with Internet access will quadruple by 2005 according to an Internet Market Forecast released by Ovum on the Global Growth of the Internet between 1998 and the year 2000. The report predicts that by the year 2005 there will be “206 million dial-up connections and 17.5 million permanent connections world wide" (Irish Marketing an Advertising Journal; 20). In this chapter the author will give statistics from Irish surveys on the Internet and their predictions for the future of this network in Ireland. Also, details will be given on the Internet Service Providers in Ireland. 16 “The Internet is about to experience unprecedented growth ", (Irish Marketing and Advertising Journal; 20). There are approximately 200,000 people in Ireland accessing the Internet. However in the next six years this figure is set to increase to between 750,000 and 1 million people. (Irish Marketing Journal, 10/1998; 30). Prediction for the number of people in Ireland with access to the web 1000000 0) - 800000 - - q. 600000 - § 400000 - Q. 200000 0 i,? -'- i....... l- r- ’> ■. ■i. . ■■i ■r :■ i l l i l l i i i i i i i i i l l l i l l l l i i i i l l ■ ' ' ■ :l : : ! . ■A’ : ‘ KV 1•::i V 1 iiSltiSBilsaSlilihI i ■. ' fi,. i ' - ' - ' :-■j :i . . . . : ill 1 - .-w - ■■ 1 1998 1999 - y ',v ■v ■ : 2000 r. 1 y i:.. ' ■'■ aim i ~| T T f-jirfr ■?.Ib-Ete ii; | I f; 111 P ? * 1n-i-i-i- M ;r i-V “ !!■! v i - 1 r, i i l l ft*’!' IW M a i tSZSBt M "!■ •H : * \ • ilJiU 'ailii ! V T: ■’ 2001 ip g ■ 2002 2003 2004 2005 Year Figure 1 2.1 Internet Surveys The Irish Internet Association (HA) released the following results from its online survey carried out in October 1998. The average age of Internet users in Ireland was 32, with 69% of users being male 31% female with an average income of £34,800. 45% of those surveyed had been using the Internet for one to three years. 17 A third survey was released by the IIA in January 1999 giving more details of Internet usage in Ireland. This survey recorded an increase of 2% in the number of females accessing the Internet, from 31% to 33%. In relation to online advertising 76% of respondents occasionally click on banner advertisements showing that this is indeed an attractive form of advertising. This survey indicates a 7% increase in those who have already purchased goods online from 29% in February 1998 to 36% in October 1998 showing the growth and acceptability of E-Commerce in Ireland. 87% of those who did purchase online were content and intend to do so again in the future. It is predicted that the amount of money spent by Irish companies on Internet advertising is set to soar during the next year. Internet advertising spent in Ireland ..: ■ ....__ .J lilllililiilliiiii ................................................... ; ---------------------------- ■ 11111..... mmm fis.! . . . . . . . . . . . . . if . . . . . . . . . . . . . . -T T t i r .......---------------~~ .... ........... ;--------: Year Figure 2 (Irish Marketing and Advertising Journal, 10/1998;30). 18 Another survey of this kind the Midas-Net survey showed that there was an increase of 14%, from 74% to 88% in the number of the Top fifty companies with an Internet connection from March 1997 to October 1998. In relation to the Irish Internet Service Providers, 56% of Irish owned companies are connected to Ireland online, 14% to Telecom Eireann Internet, 12% use Ireland’s Indigo Service Provider and 8% use the most recent entrant to this market, ESAT. \ 2.2 Internet Service Providers in Ireland Internet Service Provider's Irish market Share Mown company connection H Telecom Internet (3 Indigo □ ESATNet IS Ireland Online Figure 3 (Irish Marketing and Advertising Journal, 01/1999; 20) 19 In relation to those companies who have their own website, there was an increase of 18.7%, from 42% to 60.7% with 10.8% of these companies using their website as a means of advertising and for public relations. On the other hand 39.3% of those companies surveyed did not have a website but 31.5% were currently constructing one and 12.3% planned to have a presence on the web by next year. Summary As the Internet grows, the vision put forward by Erskine Childers as far back as 1967 is today becoming clear. With Internet usage both in private homes and companies rapidly increasing it is evident that the predictions for the year 2000 onwards are realistic. More importantly, the prediction that Irish companies are set to spend an increasing amount of money on Internet advertising illustrates the fact that companies are realising the potential of the Internet as an advertising medium. 20 “Computers will soon be in 80 per cent o f American homes. Smart companies are jumping on the Internet bandwagon, using it as a research tool, a communications tool and a selling tool Marketing will never be the same again” (Kotler, P, 1996). 21 CHAPTER 3 Advertising on the Internet Introduction The Internet is an easily implemented marketing tool that businesses, if they have not already, should and will establish and implement into their marketing programmes. It must be presented to marketers as a successful, dominant marketing tool as we enter the twenty first century. Advertising is a principal part of companies marketing strategy. Traditionally, companies use methodssuch as television, radio, magazines and newspapers. However, the Internet presents a new and more effective method of advertising. In this fourth chapter the author will discuss the methods of Internet advertising available to companies, the new developments, their objectives and their advantages. 22 The world online “refers to the ability to instantly access database information from your computer”. (L.Keeler, 1997; 1). Internet Advertising otherwise known as Online Advertising is the placing of advertisements on the network of networks, the Internet. 3.1 Methods of Online Advertising V There are two main methods of online advertising which are widely used by advertisers. 1). WebSites A website is defined as: In the World Wide Web, a computer system that runs a Web server, and has been set up for publishing documents on the Web. (Pfaffenberger, B, 1998). \ When the World Wide Web was first discovered as a marketing tool, the website was considered to consist of company’s advertisements, their brochure and their store. A huge array of information is offered by a website such as customer service, product promotion, sales details and company feedback. (Janal, D.S, 1998). “A website is remarkably like a baby.... It needs a lot of time, attention, nurturing.... Once it grows up though it could support your company, in a future that we do not yet fully.comprehend". (Little Red Book; 34) 23 Along with creative graphics and clever writing a company implements a business strategy when creating a website. (Janal, D.S, 1998) The mission of a website is “ to provide information in an entertaining and interactive manner that helps to not only make a sale but create a customer for life". (Janal D.S, 371). A home page is the opening page of a company’s website. In this precise location a company can display a large quantity of information. Companies who wish to give consumers more information may create additional webpages connected to their homepage creating a whole website. (Janal, D.S, 1998). Advertisers design their websites with relevant and interesting content, which attracts and persuades consumers into becoming interested in their company and its products. 2). Banner Advertising “Banner advertisements are advertisements that companies buy and place on other companies advertising vehicles, such as search engines, chat rooms, online magazines, and websites". (Janal, D.S, 1998; 189). 24 They are called banner advertisements because of their rectangular shape. The advertisements vary in size, colour and picture and may be placed at the top or the bottom of a screen. Banner advertisements may be either static or interactive. In relation to static banner advertising, a restricted place is allocated, where the advertiser must place a small but effective advertisement. On the other hand, interactive banner advertisements are linked to the advertising company’s information whether it is a home page or another page giving the consumer additional information and an offer on their products. With this method of online advertising, companies are able to create targeted messages for specific groups attracted to their products. (Janal, D.S, 1998). “Banner advertisements are instantly accountable, they build brand awareness and nearly all sites will accept them. They have animation, they are massively targetable and you can integrate them with off-line promotions”. (Little Red Book, 1998; 34). 3.2 New developments in Internet advertising Aside from websites and banner advertisements, there are other methods of online advertising being used by companies. These are: • Keywords • Interstitials or Intermercials • Push Technologies or Webcasting • Coupons (Janal, D.S, 1998). 1). Keywords Keywords on search engines can be bought by advertisers as a method of increasing the exposure of their company. The consumer types in a keyword, a banner advertisement, which is connected to a specific page on a specific website, appears and the consumer can then click on this advertisement to reveal related information and companies. This is a great concept because users are identifying themselves as being in the market for these products at the time. This is one of the great advantages of advertising on the Internet. (Janal, D.S, 1998). 2). Interstitials or Intermercials Interstitials originated in 1997 but have yet to become a widely used online advertising method. “Art Interstitial advertisement is one that pops up when the user loads a new page". (Janal, D.S, 202). 26 A Therefore as soon as the individual clicks to link to a new page, this advertisement appears until thenew page is loaded. A software publishing company, who uses this advertising technique, Berkeley Systems, believe that this method generates “higher brand recall than online banners and are more effective than traditional media such as television and print”. (Janal, D.S, 1998; 202) I 3). Push technologies or Webcasting t This method requires consumers to subscribe to channels, which are published by advertisers. Information and advertisements are then regularly sent out to the consumers by the advertiser. For example one can “subscribe to a news channel and read the business news updates.... Along with the news, comes advertisements... (Janal, D.S, 1998; 203). The publisher may ask the customer to list their interests so they can then send them out specific targeted advertisements. 4). E-Coupons This online advertising method involves companies placing coupons on their website which clients can print and use in the company’s real life store. This method can have advantages as it attracts customers to both your website and your physical store. It builds brand awareness and encourages the public to > sample your products. t 27 Consumers are able to search for the coupons, which interest them by product type, brand or manufacturer. Companies, which do not have a web presence, i.e. a website, can even publish coupons online. (Janal,D.S, 1998). "These strategies ensure that only customers who want your coupon will receive it This is a great way to implement one-to-one marketing” (Janal, D.S, 1998). 3.3 Objectives of Internet Advertising Internet advertising can be used to achieve four basic objectives: 1). Brand Awareness Companies are now able to make the world aware of their products and compete in international markets. 2). Increase Visitors To Your Website Internet advertisements help in steering consumers to your website, where they can be educated about your companies5 products and services. 3). Develop Qualified Leads Your website with elaborate words and graphics can entice prospective buyers to do business with your company. 28 4). Conduct Sales As your prospective buyers become more interested in your company and your products, you can close sales online. (Janal, D.S, 1998) 3.4 Advantages of Internet advertising 1). Rapid Presentation It may take weeks or even months to run an advertisement in a business journal or magazine. However, an online advertisement can be displayed the same day you create it. Your message gets straight to your consumer without any delay and quicker than your competitors. 2). Easy Modifications It can be very time consuming when trying to make changes to a colour advertisement or a direct-mail piece. On the other hand making changes to an online advertisement is quite quick and easy. All that is involved is typing in a new message or positioning a new graphic on the digital page. 29 3). Buyer Involvement Print and direct mail advertisements can include involvement devices like coupons and free phone numbers, which can be used by prospective clients to obtain more information. However an online advertisement offers much more to involve the buyer. They offer many levels of information, which can be selected from a menu They can select the information, which is of interest to them, and retrieve it immediately. 4). No limits on space of time Internet advertising does not have the space limitations that other media such as television, radio or newspapers have. There can be as much or as little information as possible in the advertisement, it does not matter how many people see it or how long it lasts. 5). Low Cost The most expensive part of online advertising is actually getting your advertisement online, once it is published, it does not cost very much to continue or maintain. Whereas one must pay a fee for placing an advertisement in a magazine or newspaper on a continuous basis. 30 I Summary As an advertising medium, the Internet offers various opportunities to companies. From websites to e-coupons, advertisers are presented with unique methods of advertising their products or services. The objectives and numerous advantages of this medium differentiate the Internet from the traditional methods and provide incentives to companies to integrate it into their advertising strategy. ( / 31 CHAPTER 4 Traditional media Versus The Internet Introduction For this study, it is imperative to define traditional media and outline the difference between this and Internet (Online) advertising. In this chapter, the author will define traditional media and compare both in order to highlight the effectiveness of the Internet as an advertising medium. 4.1 Traditional Media Traditional advertising is defined as "a paid form o f non-personal communication that is transmitted through mass media such as television, radio, newspapers, magazines, direct mail, public transport vehicles and outdoor displays" (Dibb, Simkin, Pride and Ferrell, 1994; 402). Some advertising informs, persuades or entertains, some of it bores or even insults. However, this is no longer the case since the development of Internet Advertising otherwise known as Online Advertising. 32 4.2 Internet Advertising Internet (online) advertising is becoming the medium of the future. According to Forrester Research (1997), companies will spend an estimated $2.2 billion a year to advertise on the Internet by the year 2000. “Advertising is a $300 billion world wide industry that, until now has been mainly a one-way street, with consumers passively absorbing advertising messages. Advertisers hoped that potential buyers would remember their slogan or jingle long enough to make a trip to the store and purchase the product That is changing with the advent o f interactivity. Interactivity turns the traditional concept o f advertising upside down by \ putting the buyer in the driver’s seat Interactivity allows consumers to. ■^ increase their control over the buying process. Given the opportunity, w ell be more selective about the kind o f information we chose to receive. Interactivity gives us that option" (Keeler, L, 1995; 168). This is exactly what Internet advertising is----- Interactive, “Interactive advertising is as different from traditional advertising as TV commercials are different from radio commercials”. 33 “At its very best, a 30-second commercial on TV or radio can only begin to tell a company's story”. (Janal, D.S, 1998; 171). 4.3 What is Interactive Advertising? PETE Snell, general manager of CKS Interactive in Cupertino, California defines interactive advertising as “the ability to interact with the source o f the message you are receiving to either stop the playing o f the message, to divert it to another area within the message for additional information or to have the source o f the message respond to your desires" (Janal, D.S, 1998; 172). This cannot be done with traditional advertising methods. The purpose of traditional advertising is to make a message heard by as many people as possible with little expense. Therefore, the advertiser seeks to buy space in the medium which they are sure will reach their desired audience. The communication is only one way. A different strategy is used by the online medium. Consumers can request information and search for more data if they wish. A company representative may interact personally via e-mail. When the research is complete, the consumer and the company have built up a relationship, which propels the consumer to take interest in the company and buy the companies products. This is a more impressive and successful strategy as the consumer, not the advertiser, initiated the process. In relation to the other traditional ,media such as the radio, television and cable, the Internet has developed at a much quicker rate and reached more people faster. N u m b e r o f y e a r s it to ok m a j o r m e d i a to r e a c h 50 mi l l i on US. h o m e s I n t e r n e t s e t to a c h i eve by t he y e a r 2 0 0 0 Radio TV Cable I nt er net Source: McCann, Erickson, Kagan Associates & Morgan Stanley Figure 4 Is the actual impact o f a website visit comparable to other advertising communications? I f efficiency were the only measure, every marketer would use posters or billboards. TV thrives as a medium in so many nations because it delivers its message with the impact o f sight, sound and motion. What can the web do beyond that? Properly done, a web effort can exceed that impact, pulling users into a site where they can explore the brand message, and they interact with and learn about the p r o d u c t (Smith, G, Irish Marketing and Advertising Journal; 23). 35 With the Internet, the balance between the roles of advertising take on an added dimension, representing the traditional cycle that advertising drives. Awareness > Purchase Influence > Loyalty > Purchase Influence By offering a service or information to possible clients prior to purchase can greatly assist in building product awareness. It is now possible for marketers to close a deal and conduct a purchase rather than simply influencing the consumer purchasing decisions. Through the use of e-mail, marketers can now build up a relationship with the consumer by talking and listening to them. The web is an “everyday tool” which means that an ever-growing amount of time is being spent online. . (Smith, G, Irish Marketing and Advertising Journal; 23). This means that if people are spending time on the Internet then they are not watching television or reading a newspaper or magazine. The advertiser, the media owner or the editor does not control the Internet, the individuals control it, and therefore advertisers cannot follow the same traditional methods. (Irish Marketing and Advertising Journal, 1998). "The main attribute o f the net is its ability to host and foster a one to one relationship between individuals or between advertisers and individuals. 36 Something which no other media has managed to achieve”. (Ryan, D, Irish Marketing and Advertising Journal; 10/98; 30). Summary ^ Before the birth of the Internet, traditional methods were the only advertising tools available to companies. Today, companies can reach audiences, compete in markets and conduct sales that would never have been possible with the traditional media. As an advertising medium, the Internet possess numerous advantages and offers revised objectives to companies. Companies must advertise their products or services using a method, which is most beneficial to them, presently that method is the Internet. 37 CHAPTER FIVE Research Methodology Introduction The objective of this chapter is to outline the research methods used by the author. The primary research methods that were used to support the information gathered by the secondary research will be outlined. The reasons as to why these methods were implemented will also be given along with their advantages and disadvantages. In addition the methods of recording and analysing the data collected will be outlined. 38 5.1 Preliminary Phase In the preliminary phase of the study, a telephone discussion was held with the director of an Internet Communications company. This was done in order for the author to gain some insight into the subject. Also, discussions were held with a Website designer in order to establish the potential of the research question. These discussions assisted in defining/the focus and scope of the study. Following this, a review was carried out of the literature relevant to the study. When determining the specific information needs of this dissertation, the author decided that it was necessary to carry out both primary and secondary research. 5.2 ' Secondary Data According to Kinnear and Taylor (1996; 175), “secondary data are already published data collected for purposes other than the specific research needs at hand9\ . The author made use of such data during the course of this research project and the information gathered can be found in chapters one to four of this dissertation. 39 At the beginning of the research process the author gathered information from the following secondary sources. Published books and journals, Periodicals, Newspapers, Published surveys and Internet articles. The author made use of secondary sources of research for the following reasons: • It is cost efficient • It save time • Sources are easy to access • They aid in the formulation of the decision problem • The data is wide ranging The second form of research employed by the author is primary research. 5.3 Primary Data According to Kinnear and Taylor (1996; 143), “primary data are collected specifically for the research needs at hand" There are two real alternatives of research design: a) Observe or survey people or processes b) Question or survey people about various topics To survey is to question people and record their responses for analysis. (Copper, D C, andEmry,C.W, 1995). 40 The survey method of research is associated with quantitative data collection. Surveys are an efficient, cost effective method of gathering information. With the use of well chosen, precise questions one can gather the relevant information needed for the study. Also, this method enables the researcher to expand geographic coverage, which is not feasible with observation methods. Observation is a lengthy process, which requires much more time and effort. This method is not economical and the researcher is limited to the geographic areas that may be covered. The author employed a postal questionnaire as the research technique for this study. 5.4 Pilot Study The research technique was tested in order to determine any difficulties in its administration. The questionnaire was given to people known by the author who had expertise in the area of the research. The questionnaire was not too long and took 20 minutes to complete. Thei questions were deemed to be clear and unambiguous and the instructions were easy to follow. After the pilot study was complete, the author had to select a population from which a sample could be drawn. 41 5.5 The Population “A universe or a population is a group in which all the items or individuals are singled outfor the study” (Kane, 1997; 90). The population chosen by the author for the purpose of this research paper was advertising agencies and advertisers in Ireland. The author decided upon all agencies which were registered members of the Institute of Advertising Practitioners in Ireland (IAPI). This consisted of a list of thirty-five agencies spread throughout the country. This population was chosen as these agencies represent a large group in Ireland with the highest volume of expenditure. The author acquired a list of the top one hundred advertises in Ireland in order to chose the companies to survey. The author omitted six organisations from this list, as they were not perceived to be relevant advertising companies. This population was chosen as the author wished to survey companies who placed importance on advertising and did so regularly. Therefore this list was an ideal population to. chose from. Both of these lists were obtained from The Institute of Advertising Practitioners in Ireland, which is located in Dublin. 42 5.6 Sampling “Sampling techniques provide a range o f methods that enable you to reduce the amount o f data you need to collect by considering only data from a sub group rather than all possible cases" (Saunders, Lewis and Thornhill, 1997; 124). Sampling techniques are divided into two types: a) probability or representative sampling b) non-probability or judgmental sampling In probability samples, the probability of each case being chosen from the population is known and each case has an equal chance of being selected. Five main techniques can be used to select a probability sample: simple random, systematic sampling, stratified sampling, cluster sampling and multi-stage sampling. With non-probability samples, the probability of each case being selected is unknown. Non-probability techniques include: ® Quota sampling • Purposive sampling • Snowball sampling • Self-selection sampling 43 • Convenience sampling According to Saunders, Lewis and Thornhill, 1997, a census is when the researcher collects and analyses data from each case or group. The author decided to employ both the probability sampling methods and the census method of sampling. 5.7 The Sample The author chose the census method in surveying the advertising agencies as it was a limited list of thirty-five agencies, which was a feasible number. The advantage of employing this method was that none of the agencies in this group were left out. Data was collected form all of the agencies making the information collected more valid and relevant. In relation to the advertisers, the author decided to implement probability sampling and chose the technique of random sampling. According to Judd, Smith and Kiddler, 1991; 136, random sampling is “selected by a process that not only gives each element in the population an equal chance o f being included in the sample but also makes the selection o f every possible combination o f the desired number o f cases equally likely9\ 44 The author chose every second company from the list of the Top one hundred advertisers in Ireland. This method was chosen as the author deemed it to be a fair and simple i method and it was not feasible both from the point of view of time and in relation to expenses to survey the entire list. The advantage of this method was it allowed the author to cover a large geographical area. It was also both a cost and time efficient method. I 5.8 The Survey The method used for the collection of primary data for this dissertation was a postal survey. Postal surveys involve sending a cover letter stating the purpose of the survey and a questionnaire to a specific person or address. The author chose this method of survey for various reasons. Postal survey is the least expensive of the survey methods. It is also""a time efficient method, which allows for a wide geographical spread. However, there are some disadvantages, which had to be considered when deciding on this method. j Response bias may occur in postal surveys when there are a greater number of respondents from one group. Respondents can decide not to answer the questionnaire due to its length and complexity. Also, respondents may fill in the correct option or an adequate amount of information where necessary. > A The author overcame the problem of response bias by enclosing a detailed cover letter and by stressing the importance of the study. The cover letter stated that the questionnaire would take 20 minutes to complete. The layout of the questionnaire was simple, with understandable questions and instructions. The author allocated adequate space where the respondent was required to give their personal views or when the respondent wished to choose the ‘other’ option. 5.9 Questionnaire Design " A questionnaire is a formalised schedule for collecting data from r e s p o n d e n ts (Kinnear and Taylor, 1996; 353). Questionnaires may measure a) Past behaviour b) Attitudes c) Respondent Characteristics The author compiled two slightly different questionnaires for the samples chosen. The questionnaire must be designed so that the questions measure what the researcher intends to measure. Questionnaire design is important, as it will effect the validity and preciseness of the results. 46 The author designed the questionnaire by employing four types of questions. 1. Open-ended questions 2. Multiple chose questions 3. Dichotomous questions 4. Scale questions “An open-ended question requires the respondent to provide their own answers to the question". (Kinnear and Taylor, 1996; 360). The author employed this type of question as it allowed the respondent to express their views without being influenced by a given set of responses and to gain their co-operation in answering more specific questions. With the use of multiple chose questions the respondents were invited to chose one answer from a provided list of answers. In order to assist the respondent in completing the questionnaire the author used these types of questions, as they are both time efficient and easy to answer. The same can be said for Dichotomous questions which are an extreme form of multiple chose question but only give the respondents two alternatives to chose from. “Scale or rating questions are often used to collect attitude and belief data". (Saunders,M, Lewis, P, and Thornhill, A, 1997; 259). 47 The author approached these questions by administering the Likert-Scale, which enabled the author to determine the exact attitudes of each respondent. The general purpose of the questions was to establish: • Awareness of the Internet as an advertising tool • Whether it is widely used • Views of both advertising agencies and advertisers in Ireland on its general effectiveness and its effectiveness over traditional methods. 5.10 Recording Results The author provided boxes and lines for the respondents to reply to the questions. The respondent was instructed to tick one box only and to insure that it was the appropriate one. Where the respondent was required to give their personal views, an adequate number of lines were provided on the questionnaire. The author requested the companies to complete and return the questionnaire within ten days. The questionnaires were promptly returnedto the author. Ten advertising agencies from the chosen sample replied and sixteen of the chosen advertisers replied. The author used the ten-day deadline as a cut off point and disregarded all questionnaires, which were received after this date. 48 5.11 Research Analysis The author decided to analyse ten agencies and the same number of advertisers. This is an even number and made it relatively easy to analyse and to record the raw data. ^ ^ The author analysed each question from both of the questionnaires by calculating the number of respondents, converting this number into a percentage and illustrating the results with a variety of charts. / 49 CHAPTER 6 Research Findings Introduction The purpose of this chapter is to present the findings of the postal questionnaires. The results of the questionnaires will dominate this chapter. The results are presented following the format whereby the question is presented as in the questionnaire and a chart, which will show the raw data, follows this. After each chart, there will be brief explanations of the results. This chapter is divided into Section A and Section B. Section A contains the results of the questionnaires answered by the selected advertising agencies and Section B contains the data collected from those questionnaires answered by the selected advertising companies in Ireland. 50 Section A Advertising Agencies Question one Please specify your role in the organisation? This question was asked in order to be aware who was completing the questionnaire and to establish which department with the agency that Internet advertising was considered to be under. It was important that a person with the relevant information and knowledge, making the results answered the questions and data collected more relevant. Role W ithin T h e O rg a n is a tio n □ Media Manager I l C l i e n t S e r v ic e s □ Managing Director Figure 5 It is clear form the results that the media department o f the agencies surveyed deals with this subject. 51 Question Two Please indicate your level o f billings. In order to establish the size o f the organisation it was imperative to ask the level o f turnover, the number of employees and in the case o f advertising agencies, the number of clients . This question and the following two will deal with these issues. L e v e l O f B illln gs 80% 60% 40% 20% 0% < £ 100,00 0 > £ 100,000 Figure 6 Over half o f the agencies surveyed had billings o f greater than £100,000 with only two having less than £100,000. Question Three Please indicate your agency’s number o f clients. N u mb e r Of C l i e n t s 60% 40% 20% 0% <25 >25 Figure 7 52 r Six out the ten advertising agencies being analysed had less than twenty-five clients while four agencies had more than this number. Question four N How many people are employed by your organisation? i This was the final question, which was asked in order to establish the company’s size. Figure 8 Again, six of the agencies had less than fifty employees, which is quite normal for an advertising agency as they tend to be considered as small sized / j companies. Only four of these agencies stated that they had greater than fifty employees. Overall, in analysing these three questions, the author established that there was an even amount of both large and small agencies that responded'to the questionnaire. 53 Question five Has your agency developed a separate division to handle Internet advertising? O f the agencies that replied six out o f ten had developed a separate division within their organisation to deal with Internet advertising, while four had not. N u m b e r Of A g e n c y ' s Th at D e v e l o p e d A S e p a r a t e Divison For Internet A dv e r t i s i ng Figure 9 Question six I f you are using the Internet fo r advertising , how effective do you believe it to be? Out o f the ten advertising agencies, which answered this questionnaire, five believed Internet advertising to be very effective, two believed that it is effective, one very ineffective. Finally, two out o f the ten did not know. 54 How Effective Advertising Agency's Believe The Internet Is For Advertising 60% cno/„ DU/o 40% 30% ........................................ :-s„; . f," i ■i1'"! , : ,r !11 :■ ■ . ■,f -i■ ■l•«! \... 't•/'' ., . .!■ ■ ■ ■ -'1 , j /, ■}■ ', 11 ' ,.. , ,. . 11 ...................................................... □ Very Effective 121Effective i1 : ■□ Ineffective 20% | 10% 0% ^ I l i l l l 111 anil ■ ■ ■ □ Very Ineffective ■ Don’t Know _______________ Figure 10 Question seven Is your agency aware o f Internet applications fo r advertising , such as: • Websites • Banner Ads • IntermerciaJs • Webcasting Out of the respondents, six out of ten were aware o f Internet applications for advertising whereas four were not aware o f these applications. 55 Awareness Of Applications For Internet Advertising □ Yes □ No 60% Figure 11 O f these six respondents who were aware o f these applications, two were aware o f all o f the applications, one was aware o f Intermercials, the same number were aware of Banner Ads and two were familiar with Websites. Awareness Of Specific Applications For Internet Advertising 20% 15% 10% 5% Figure 11 56 Question eight Internet advertising outweighs existing advertising methods? This question was asked in order to establish how the advertising agencies view the Internet as a medium in comparison to the existing media such as television, radio, newspapers and magazines. Out of the ten respondents being analysed, four strongly agreed with this statement, while two just agreed .One agency did not know. However, two disagreed with the notion, with one agency strongly disagreeing with none of the agency’s chose to have no opinion. Views On Whether Internet Advertising Outweighs Existing methods No Opinion Strongly Disagree Disagree Don’t Know Agree Strongly Agree 0% 10% 20% 30% 40% Figure 13 57 Question nine What percentage o f your clients currently uses the Internetfor advertising? The options give in this question were as follows: 0-25%, 25-50%, 50-75%, 75-100% Four of the companies surveyed said that 0-25% of their clients currently used the Internet for advertising whereas six said that 25-50% of their clients used it. None of the companies had either 50-75% or 75-100% of their clients using the Internet for advertising. Percentage Of Clients Using The Internet For Advertising 60% 40% 20 % 0% 0-25% 25-50% 50-75% Figure 14 58 Question ten Do you consider the Internet to have advantages over existing advertising media? Seven out o f the ten respondents answered yes that they did believe the Internet has advantages over existing advertising media and three did not believe it to have. From the seven out o f ten agencies’ that answered yes to this question, four believed the fact that the Internet is interactive was an advantage. Two stated that it was a one to one medium and one said that they believed it helped them to reach audiences that existing advertising methods does not allow them to reach. 59 Agencys’ Perceived Advantages Of The Internet 60% 40% 20 % 0% Wider Audience One-One Interactive Figure 16 Question eleven The Internet is the advertising medium o f the future. The agencies were given several options to choose from in order to answer this question. Strongly Agree Agree Don’t Know Disagree Strongly Disagree 60 J Out of ten respondents, four of them strongly agreed with this statement while three just agreed. Two of them did not know, one disagreed and one strongly disagreed with the statement. Opi ni on O f A d ve rtis in g Ag e n c i e s On W h e t h e r The I nt er net Is The Medi um O f T h e F u tu re 40% 30% 20% 10% 0% Figurel7 \ 61 Section B Advertisers Question one Please specify your role within your organisation. This question was asked in order to determine whom was answering and what department this subject was considered to be under in an organisation. Out of the ten advertisers who answered this questionnaire, one was an advertising specialist, two were human resource executives and seven were marketing directors. Role Within The Organisation UAdvertisng Specialists HHuman Resource Executive mMarketing Director 10% Figure 18 Question two How many people are employed by your organisation? The next two questions were asked in order to determine the size of the organisation. 62 Eight of the ten respondents were large company’s, with greater than fifty employees while only two are classified as small with less than fifty employees. N u m ber of Em p l o y e e s 10 0 % 80 % 60% 40% 20% 0% < 50 >50 Figure 19 Question three What type o f media do you predominantly use? The choices given here were television, radio, newspapers/magazines, outdoor or other. Out of the ten respondents, six of them mainly use television while two use radio. One company used newspapers/magazines and again one used outdoor methods for advertising. 63 Figure 20 The author has decided to group the following two questions together due to the similarities of the findings. Question four Is your company aware of the Internet? Eight of the advertisers were significantly aware of the Internet while two answered that they were aware. The other two options of slightly aware and not aware at all were not answered at all. 64 Question five Is your company aware of the Internet as an advertising medium? The same options as the previous question were given here. Again, eight out of the ten advertisers answered that they were significantly aware, two were aware while none of the respondents were either slightly aware or not aware. Awareness Of The Internet In Organisations ~ — '1 " '' I llllllS I llillllllll I llilllS llllllllllll Not Aware At All ! lis s s m ill lilli :§S!|S; :llf||£p£ !!I!§P Slightly. Aware i S s* i J * 1i i ;S ki: i p i i w w S Aware lass rvj............ - J..r.,y.^ ;! s:=!■i-:i-: :i;: sh'-;?"' l i l i 88ll® ilffllillillll :•v.u! ■ Tliv Tr;. ... ............................. •.Ki:a T.3W3fm rv^-ixyr.l; Significantly Aware 0% 20% 40% 60% 80% Figure 21 Question six Has your company developed an Internet advertising strategy? All of the respondents excluding one answered yes to this question, that they had developed an Internet advertising strategy. t / / 65 Percentage Of Company's Who Have Developed An Internet Advertising Strategy 10 % □ Yes □ No 90% Figure 22 O f those nine who answered yes, five had done so two years in 1997, three developed the strategy last year in 1998 and one organisation developed it this year, 1999. Time Of Development Of The Internet Strategy 11 % □ 1997 □ 1998 □ 1999 33% Figure 23 66 The author has chosen to take the nine positive respondents as one hundred percent, as from here onwards the sample is reduced to nine. Only nine companies had developed an Internet advertising strategy. Therefore the five organisations that developed an Internet strategy in 1997 is 56%, there are three which developed a strategy in 1998, therefore that is 33% and finally one organisation which did so in 1999 which accounts for 11%. Question seven How was your strategy developed? The two options were in-house or outsourced, out o f the nine that had developed a strategy, seven had developed it In House while two had outsourced the development. D evelop m en t Of The Internet Strategy 2C □ In-house □ 0 utsourced 70% Figure 24 67 Of the nine organisations that had developed an Internet strategy in-house, two had done so by creating an Internet department within the organisation, one established a special team. Three developed the strategy within the organisations marketing department while one company’s strategy had been developed in the organisations European headquarters. Development Of Internet Strategy In-house I European h o M arketing D e p t E ^ ^ ^ ^ ^ ^ ^ Team In tem et Dept ^ iii-it-f ^ p 0% ■!$!$!$■!$ : - . ■ m m :■l.U'il: ■ ■ ^ C. Y ' . : ,■ ■<: ■ w. -Ilv I-IL, I4*i i1— c. I - i I : I . In. n- 10% 20 % 30% Figure 25 In relation to the two companies that outsourced the development of their Internet strategy, they both chose to use an advertising agency. Question eight Whatfactors contributed to your company's decision to develop an Internet advertising strategy? 68 Once again, out of the nine respondents that developed an Internet strategy, two had done so, as they believe the Internet to be an evolving medium. Four developed a strategy as they view the Internet as an emerging advertising opportunity, one company developed a strategy in order to satisfy customer demand. Finally, the factor that contributed to two o f the company’s decision to develop an Internet advertising strategy was competitive pressures. Why the Organisations Developed An Internet Advertising Strategy □ Evolving Medium □ Advertising Opportunity □ Customer Demand □ Competitive Pressures Figure 26 Question nine What method o f Internet Advertising do you use? The options given for this question were: • Website • Webpage • Banner Ads • Other 69 Five of the nine companies’ stated that they used a Website as a form of Internet advertising, two said that a Webpage was their method. While two company’s also chose banner advertising as a method of advertising on the Internet. None of the companies surveyed chose the other option. Methods Of Internet Advertising Used By The Companies Surveyed 60% iS40% Kills • >' 20% : ■-fei 0% Website Webpage Banner Ads Other Figure 27 Question ten Was the budget for your Internet advertising higher than your budgetfor your traditional advertising? None of the organisations chose the higher options in this question. Therefore, four of the companies stated that their budget was slightly lower, two said that it was lower. While the budget of three of the company’s surveyed was significantly lower. 70 Budget For Internet Advertising Campaign In Comparison To Budget For Traditional Media Campaign Significantly Lower ' ' - - 3 ■ - ", . ; ~ .. . - I I I ..................................................... .............., :SSSf||lji?6i^ .. J]h|:rasi:|:!ii:;:!. Lower ■ _______ ' . . i Slightly Lower Sam e Slightly Higher ,-S-r- ................ , ri-rtS j im ... ■■ !;i:jliilllllllllllll«i!mif jL-X,--- ;____ _ 10% 0% 20 % Higher ,1111 llillll Significantly Higher 30% 40% Figure 28 Question eleven Has your reliance on traditional media decreased since the launch o f your Internet advertising campaign? All of the nine companies that had developed an Internet advertising strategy stated that it had not changed their reliance on traditional media. 71 Question twelve Overall, what impact do you think that the Internet advertising undertaken by your company has had on sales? Four out of the nine companies believed that their Internet advertising campaign had a very positive effective on their sales, while three stated that it had a positive effect. One company considered it that it had only a slightly positive effect and one believed that it had no effect on sales at all. None of the companies surveyed chose the negative options. Impact Of Internet Advertising On Sales Very Negative Slightly Negative Negative No Impact Slightly Positive Positive Very Positive 0% 10% 20% 30% 40% 50% Figure 29 72 Question thirteen How effective do you believe Internet advertising to be? Three companies believed Internet advertising to be very effective, while two companies stated that it was effective. However, one of the companies perceived it to be ineffective and three did not know. None of the nine companies believed that Internet advertising was very ineffective. ' Effectiveness Of Internet Advertising As Perceived By Advertisers I □ Very Effective □ Effective □ Ineffective □ Very Ineffective □ Don't Know 1 1 0 /0 22% ' Figure 30 Question fourteen , Do you believe that the Internet has an advantage over traditional media? Six of the respondents answered that they did believe the Internet to have an advantage over traditional media, while three did not believe it to have any advantages. 73 \ Belief That The Internet Has An Advantage Over Traditional Media Figure 31 O f those six who answered yes, two believed that the fact that the Internet was interactive was an advantage that over traditional media, while another two companies stated that the Internet reached a wider audience than traditional media reaches or could ever reach. one o f those six companies believed that the Internet was a more in depth method o f advertising. One stated that the Internet was a cheaper medium o f advertising. Advantages Of Internet Advertising Over Traditional Media Figure 32 74 Key Findings • 60% of the advertising agencies surveyed said that yes, they had developed a separate division in order to handle Internet advertising • In relation to the effectiveness of Internet advertising, 70% of the agencies believed it to have a positive effect with 50% of the advertising company’s believed it to also be effective • When asked whether they believe that advertising on the Internet outweighs existing advertising methods, 60% agreed to some extent with this statement • 40% of the advertising agencies had between 0-25% of their client base already using the Internet as an advertising method while 60% had between 25-50% of their clients using this medium. • 70% of these agencies and 60% of the advertising company’s surveyed believed that the Internet has advantages over existing advertising media. • When asked whether they believe that the Internet is the advertising medium of the future, 70% agreed that it is the advertising medium of the future, 40% strongly. 75 • 80% of advertisers surveyed were both aware of the Internet and of it as an advertising medium • 90% of the advertising company’s had developed an Internet advertising strategy with 70% of them developing the strategy in-house rather than outsourcing it’s development. • 40% of these company’s developed the strategy as they believe that the Internet is an emerging advertising opportunity • In relation to the money which advertisers spent on their Internet advertising campaign, all of those surveyed said that the budget was lower that their budget for traditional media. • 80% of the advertisers believed that their Internet campaign had effective the company sales in a positive way 76 Summary In this chapter, the author stated each question, which were posed to both advertising agencies and advertisers in Ireland concerning Internet advertising. These questions ranged from the effectiveness of Internet advertising to its advantages over traditional media. The data collected from the questions was analysed with the use of charts, which showed the percentage of agencies and advertisers who had answered the question and in some cases their views. These results will be further discussed in the preceding chapter. / \ 77 DISCUSSION The concept that this study was primarily based upon was that Internet advertising is not just a medium, which solely compliments the traditional advertising methods such as television, radio and newspapers but that it is a medium, which offers much more to the advertiser. It is evident from the research findings that this is in fact the belief of the advertising agencies and advertisers surveyed for the purpose of this study. The literature reviewed indicated that the Internet is the fastest growing media ever invented and that this phenomenon presents companies with advertising opportunities that traditional media could never possible offer. The author established from the research findings that all excluding one of the advertisers surveyed had actually developed an Internet advertising strategy and that half of the advertising agencies had created a separate division to deal with Internet advertising. Therefore it is clear from these results that both of these groups are quickly realising the huge potential of the Internet as an advertising medium. The most documented attribute of Internet advertising is the fact that it is interactive 78 The consumer can interact with the advertisement by simply clicking on it and can subsequently find the exact information, which they desire. To clarify this, over half of the advertisers surveyed believed that this was indeed the principal advantage of advertising on the Internet and the main advantage that this medium possess in comparison to traditional methods where the consumer can only watch, read or simply listen to the advertisement. Over half of the agencies believed that Internet advertising outweighs traditional advertising methods. Both of the groups surveyed believed that Internet advertising has particular advantages over the existing methods. The other perceived advantages include the fact that it is a more in-depth, one to one medium which is capable of reaching wider audiences at a cheaper price. In order for the Internet to be more than a complimentary medium it is imperative that it is a more effective medium. The advantages stated above already clarify that this is a more effective advertising method. Also, seven out of the ten advertising agencies and half of the advertisers agreed with this hypothesis. There is also evidence of the effectiveness of this medium in the fact that eight of the advertisers believed that their Internet advertising campaign had positive effect on their company sales. 79 The most surprising aspect of this study was the fact that none of the advertising companies now rely less on traditional advertising methods since the launch of their Internet advertising campaign. However, this is not alarming as the whole area of Internet advertising is really only in its infancy and this research is looking towards the future of the Internet as an advertising medium. The author was interested in establishing the opinion of advertising agencies on whether they perceived the Internet as the advertising medium of the future. Their reaction was extremely positive with seven out of the ten agreeing with this statement, four of them strongly agreeing. This result is pleasing to the author as it illustrates that the both advertising agencies and advertisers in Ireland acknowledge the Internet as an advertising medium of the future. 80 RECOMMENDATIONS • Companies must ensure that they are targeting a market, which is likely to have Internet access. This is fast becoming a majority of the market, which is evident in the survey results in chapter two of this study. • Companies must implement a cost/benefit analysis to establish whether there will be a return on investment and within what period of time. The advertising companies that responded to the survey stated that their Internet advertising budget was lower than their budget for their traditional media advertising campaign. However, the Internet is a cheaper method giving companies an incentive to integrate it into their marketing strategy. • For those companies already employing Information Technology experts, in-house development of their Internet advertising campaign can be recommended. These members of staff have detailed knowledge of the company and it’s products or services and thus can convey this knowledge onto the Internet advertising strategy. 81 CONCLUSION In conclusion, the principal and most important recommendation that can be drawn from this study is for companies to seriously consider the Internet as an advertising medium for their companies’ products and services. It is evident from this dissertation that in order to be a serious competitor in the global market place of the future, it is essential that companies advertise using a method which is effective and advantageous both from the consumer and the company’s perspective. And, certainly, without doubt, it is evident from the research findings illustrated in this dissertation that the medium which presents these opportunities, is the medium, which is not just a complimentary medium but is most definitely the advertising medium of the future----- The Internet. “Everyone wants to be on the Web today because tomorrow it will be a way o f life”. (Cronin, M>; 1997). 82 BIBLIOGRAPHY Boyle, P., Lloyd, P., (1998), Web-Weaving, Intranets, Extranets and Strategic Alliances , England: Reed Educational and Professional Publishing Ltd Brannick, T., Roche, W. (1997) Business Research Methods, Strategies, Techniques and Sources, Dublin: Oak Tree Press Computer Technology Research, (1996), The World Wide Web, Strategies and Opportunities fo r Business, United States of America: Computer Technology Research Corporation Cooper, D.C and Emry, C.W., (1995), Business Research Methods , Fifth edition, United States of America: Irwin Inc Czaja, R., Blair, J. 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S., (1998), Online Marketing Handbook, How to promote, advertise and sell your products and services on the. Internet, 1998 edition, Canada: John Wiley and sons Inc. Kane, E., (1987), Doing your own Research , London: Marion Boyers Publishing Kantaris, N, Oliver, P.R.M., Understanding and Using the Internet, 1997 edition, United States of America: West Publishing Company Keeler, L, (1995), Cyber Marketing, United Sates of America, Amacom, The America Management Association Keen. P.G.W., Mougayar, W, Torregrona. T, (1998), The Business Internet and Intranets, A manager’s guide to key terms and concepts, United States of America: Harvard Business School Press McLaren, B.J., (1997), Understanding the Internet, 1997 edition, United States of America: West Publishing Company Norton, B., Smith, C., (1998), second edition, Understanding Business on the Internet in a week England: Hodder and Stoughton Educational O’Connor, J., Galvin, E., (1997), Marketing and Information Technology, The strategy Application and Implementation o f Information Technology in Marketing , London: Pitman Publishing Pfaffenberger, B., (1995), Computer and Internet Dictonary, sixth edition, United States of America: Que Corporation Pfaffenberger, B., (1997), Discover the Internet, United States of America: IDG Books Worldwide, Inc Plenderleith, J., Aighney, J., (1995), The Ireland guide to the Internet, / Dublin;: Urban Dynamics Saunders, M., Lewis, P., Thornhill, A, (1997), Research Methods fo r Business Students , London: Pitman Publishing Shelley, J., (1996), The Internet and World Wide Web explained , England: Bernard Babani (publishing) Ltd Journals i j Lewis, P. (1994A “Companies Rush to set up shop in Cyberspace”, The New York Times, November 2nd O’Reilly, Aoife, (1999), “Getting there-but slowly”, Irish Marketing and Advertising Journal, Volume 25, Number 1; 20-21 Ryan, Damien, (1999), “The Intriging Web”, Irish Marketing and Advertising Journal, Volume 24, Number 24: 30 and 34 v j xi Websites Internet Communications and Advertising Network, http://www. ican. ie, March 1999 Internet Marketing Resources, http://www.intermarketing.org, October 1998 Irish Internet Association, http;//www.iia.ie, March 1999 Irish Marketing Institute, http://www.imi.ie, February 1999 Jupiter Communications, http://www.jupitercommunications.com , January 1999 The Irish Times, http://www.irish-times. ie, February 1999 Wilson Internet Services, http://www.wilsonweb.com , December 1998 APPENDIX ONE Cliona Daly 4 Charleston Avenue Ranelagh Dublin 6 23 February 1999 Dear Sir / Madam, Re: Questionnaire on Internet advertising I am a final year student of the BA in European Business Studies and Languages at the National College of Ireland. In partial fulfilment of my fourth year, I am required to compile a thesis, which counts for two subjects of my final year. The topic I have chosen is Internet Advertising and my hypothesis is that “the Internet is more than a complimentary advertising medium for use by both advertising agencies and advertisers in Ireland” and that it is the advertising medium of the future. Your firm was selected to participate in the survey as part of a random sample and consequently I would be extremely grateful if you could assist me by completing the enclosed questionnaire. The questionnaire asks about knowledge and awareness of the Internet and its effectiveness as an advertising medium. The questionnaire is short and will only take about 20 minutes to complete. The information collected in this survey will be treated in the strictest confidence and will only be used to produce statistical tables. No reference to you or your company will be made. I would very much appreciate your co-operation in this survey. If you have any queries, or require any further information, I can be contacted at the following phone number (01) 4911406. Thanking you in advance. Yours faithfully, Cliona Daly APPENDIX TWO Questionnaire No.: Survey on Internet Advertising for Advertising Agencies Please return the completed questionnaire by March 15 to: Cliona Daly 4 Charleston Avenue Ranelagh Dublin 6 1. Please state your full name. (This is strictly for checking purposes only and is not for publication). 2. Please specify your role within the media department Please tick the appropriate box to indicate your preference where necessary 3. Please indicate your organisations level o f billings < £ 100,000 □ > £ 100,000 □ 4. Please indicate your agency’s number of clients < 25 > 25 □ □ 5. How many people are employed by your organisation? < 50 > 50 □ □ xiv 6. Has your agency developed a separate division to handle Internet advertising? If yes, what is it called? 7. If you are using Internet advertising, how effective do you believe it to be? Very Effective Q Effective Q Ineffective Q Very Ineffective O Don’t Know □ If you are not, what is your opinion on its effectiveness? \ ✓ 8. Is your agency aware of Internet applications for advertising such as Web Sites (a computer system that runs a Web server and has been set up for publishing documents on the Web Banner Ads (advertisements that companies buy and place on other companies advertising vehicles, such as search engines, chat rooms, online magazines and websites) Intermercials (an advertisement which is displayed when the user loads a new page) Webcasting (when consumers subscribe to “channels” published by advertisers, who send information and ads to the consumer on a schedule determined by the consumer) Yes □ No If yes, please specify, XV □ 9. Internet advertising outweighs existing advertising methods? Strongly Agree Q Agree Q Strongly Disagree Q Don’t know D Disagree O No Opinion Q 10. What percentage of your clients use the Internet for advertising? 0-25% □ 25-50% □ 50-70% □ 75-100% □ 11. Do you consider the Internet to have advantages over existing advertising media? Yes □ No ■ If yes, please briefly state the advantages, 12. The Internet is the advertising medium of the future? Strongly Agree Q Agree O Don’t Know Q Disagree D Strongly Disagree Q xvi APPENDIX THREE Questionnaire No.: Survey on Internet Advertising for Advertisers Please return the completed questionnaire by March 15 to: Cliona Daly 4 Charleston Avenue Ranelagh Dublin 6 1. Please specify your role within your organisation Please tick the appropriate box to indicate your preference where necessary 2. How many people are employed by your organisation? <50 >50 □ □ 3. What types of traditional media do you mainly use? (Please tick one box only) Television Radio Newspapers / Magazines Outdoor Other Please specify, d EH Cl D O 4. Is your company aware of the Internet? Significantly Aware G Aware D Slightly Aware D Not aware at all Q 5. Is your company aware of the Internet as an advertising medium? Significantly Aware D Aware O Slightly Aware Q Not aware at all Q 6. Has your company developed an Internet advertising strategy? Yes □ No □ If yes, when? 1. How was your strategy developed? In House If Yes, by whom? Q Out sourced If yes, where? □ 8. What factors contributed to your company’s decision to develop an Internet Advertising strategy? xviii 9. What method of Internet Advertising do you use? Web Site Web Page Banner Ads Other Please Specify, □ □ □ D 10. Was the budget for your Internet advertising higher than your budget for your traditional advertising? Significantly Higher Q Higher Q Slightly Higher Q Same D Slightly Lower D Lower Q ^ Significantly Lower Q 11. Has your reliance on traditional media decreased since the launch of your Internet Advertising campaign? (Please tick one box only) Significantly Decreased Q Decreased Q Slightly Decreased No Change Q \ 13. How effective do you believe Internet Advertising to be? Very Effective Q Effective Q Ineffective Q Don't know Q xix Very Ineffective D Q 14. Overall, what impact do you think that the Internet Advertising undertaken by your company has had on sales? (Please tick one box only) Very Positive Very Negative Q Slightly Positive D No Impact D Slightly Negative D 15. Do you believe that the Internet has an advantage over the traditional media? Yes D No If yes, please briefly state the advantages, which you believe it to have, xx n D APPENDIX FOUR The list of the top one hundred advertisers in Ireland as given by The Institute of Advertising Practitioners in Ireland (IAPI) 1. Telecom Eireann 2. Proctor & Gamble 3. Guiness Group Sales 4. Dunnes Stores 5. Electricity Supply Board 6. Kelloggs 7. Van den Bergh 8. Mars 9. Showerings 10. Lever Brothers 11. Power City 12. Tesco 13. Bank of Ireland 14. L’Oreal 15. Cadburys 16. Esat Digifone 17. Sherry Fitzgerald 18. Coca-Cola 19. D.I.D 20. AIB Bank 21. Kraft Jacobs Suchard 22. Murphy Brewery 23. Aer Lingus 24. Super Valu 25. Gunne Auctioneers 26. National Diary Council 27. Toyota 28. Whitehall Laboratories 29. Dixons 30. Hamilton Osborne King 31. Compustore 32. Me Donalds 33. Sony 34. Lisney 35. Beecham (Smithkline) 36. Nestle Rowntree 37. Currys 38. Kerry Co-op 39. Irish Permanent .40. Ford 41. Elida Faberge 42. Polygram 43. PC World 44. Dairygold Food Products 45. Gallaher 46. Cantrell & Cochrane 47. Gilbeys 48. CPC Ireland 49. Nestle Ireland 50. Kimberly-Clark 51. Douglas Newman Good 52. First Active 53. P.J. Carroll 54. Edward Dillion 55. John Player 56. Weetabix 57. Beamish & Crawford 58. Bord Gais Eireann 59. PB Gunne 60. Radio Telefls Eireann 61. Esat Telecom 62. Master Foods 63. Nissan 64. U.I.P 65. Johnson & Johnson 66. Xtra-Vision 67. Ja/Mont (Nokia) 68. Fiat 69. Mitsubishi 70. Independent Newspapers 71. Shell 72. Nestle Cereals 73. Me Ewen 74. Renault Cars 75. Warner 76. Rover Ireland Limited 77. Opel Ireland Limited 78. Colgate Palmolive 79. Superquinn 80. Educational Building Society 81. Warner Lambert 82. Virgin 83. Irish Buscuits 84. Ross Me Parland 85. McVites 86. Irish Distillers 87. Specsavers 88. Champion Sports 89. Amotts 90. Vidal Sassoon 91. Gateway 92. Reckitt & Colman 93. Barrys 94. Grants This list also contained the following: % % * % % % Appointments Small Advertisers Government Departments Personal/Special Notices Miscellaneous Concerts Medical and Nursing Posts The above were omitted for the purpose of this study as the author wished to concentrate solely on advertising companies. APPENDIX FIVE The membership list from the Institute of Advertising Practitioners in Ireland (1999). Agency Name Agency Address All Ireland Media 55 Main Street Donnybrook, Dublin 4, Harcourt Centre 50-53 Harcourt Street Dublin 2 72 Haddington Road Ballsbridge, Dublin 4 9 Upper Pembroke Street Dublin 2 57 Waterloo Road, Dublin 4 Brindley House 17 Upper Mount Street, Dublin 2 9 Terminus Mills Clonskeagh, Dublin 6 6/7 Adelaide Court Adelaide Road, Dublin 2 41a Blackberry Lane Rathmines, Dublin 2 _ 46 Wellington Road Ballsbridge, Dublin 4 106 Upper Lesson Street Dublin 2 3 Christchurch Square Dublin 8 23 FitzwilHam Place Dublin 2 70 Upper Lesson Street Dublin 2 105 Lower baggot Street Dublin 2 66 Middle Abbey Street Dublin 1 6 Lower Mount Street Dublin 2 Castle House, M ain St. Rathfamham, Dublin 14 Clyde Lane, Ballsbridge, Dublin 4 7th Floor Ivy Court 6-8 Harcourt Road, Dublin 2 17 Guildford Road Arks Limited AFA Advertising Bates Ireland The Birchall Company Limited Brindley Advertising Limited Campaign HTDS Campbell Grey & Associates Cawley Nea Ltd CDP Associates Limited CP & A Limited D D F H & B Limited Des O ’M eara & Partners Limited Dimension Limited Doherty Advertising Ltd Eason Advertising Service Limited Gaffney McHugh Advertising Ltd G.T M edia The Helme Partnership Ltd Initiative M edia Dublin Irish International Ltd xxiii Sandymount, Dublin 4 Javelin/Young & Rubicam Ltd Dawson House, 55 Dawson Street, Dublin 2 McCann Erikson Dublin Ltd Hambleton House 19/26 Lower Pembroke Street Dublin 2 Me Connell House Charlemont Place, Dublin 2 Rock House 2 Main Street Blackrock, Co.Dublin 52 Northumberland Road Dublin 4 8-9 Appian Way Dublin 6 Parker House 13 Adelaide Road, Dublin 2 38 Fitzwilliam Place, Dublin 2 The Black Church StMary’s Place Dublin 7 43 Lower Lesson Street Dublin 2 Killoran House Catherine Place Limerick Nutley, Merrion Road, Ballsbridge, Dublin 4 64 Lower Lesson Street, Dublin 2 Me Connells Advertising Service Ltd Media Guilfoyle Communications Ltd O’Connor, O’ Sullivan Ltd Ogilvy & Mather Group JH Parker & Company Ltd Peter Owens Ltd Pierce Media & Advertising Ltd Quinn, McDonnell, Pattison, Ltd Southern Advertising The Media Bureau Young Advertising Ltd XXIV