Low click-through rates might not necessarily mean the end of online advertising. Rather, some say the region's ad industry will benefit from greater creativity and simple patience.
Many traditional companies in Asia are still skeptical about the Internet economy and are shunning online advertising. This skepticism is well-founded, considering how much bad news we have received on the dot.com bubble burst and content providers operating at a loss.
Based on findings from research group IDC, online advertising in Asia Pacific (excluding Japan) accounted for a little more than 0.5 percent of the total advertising revenue in the region during 2000, as the majority of advertisements continued to go into traditional media such as TV, radio and print.
Additionally, advertisers remain reluctant to allocate budgets to online advertising, according to data from Goldman Sachs. This reluctance has "more to do with whether the online audience has reached critical mass to warrant the expenditure" said the firm's report.
Boom or Doom
Despite current negative market sentiment, IDC remains sanguine about the potential of online advertising. While online advertising spending by dot.coms will decrease, more traditional companies will fill the gap, it said.
Generally, all advertising media in Asia were experiencing a slow-down in bookings last year due to the financial crisis in Asia, as well as the Sept. 11 tragedy that threw the world economy into a negative spiral. But IDC expects the market to correct itself as more traditional companies begin advertising online.
It predicts that online advertising in the Asia-Pacific region to grow from US$225 million in 2001 to US$702 million in 2004, at a compounded annual growth rate of 46 percent. China will be one of the fastest growing regions, in terms of year-over-year growth.
IDC is not alone in its optimism. While they have a vested interest in seeing the online advertising market pick up, several regional players said they are seeing trends supporting the IDC findings.
"Many people often associate the closure of dot-com businesses with Internet advertising doesn't work. There are, however, many examples that show that the online advertising medium is very effective. Even non-IT companies have turned to online advertising, which is a healthy indicator of acceptance of the medium," said Rosemary Lising, country manager, DoubleClick Media of Singapore.
Take Toyota in Taiwan for instance. It launched an online campaign for its Toyota Altis, a sedan targeted at the fashionable and younger consumers, which included banners, to fixed icon and content sponsorship in 2001. Within 28 days, it managed to generate 20,000 leads from the campaign, said Lising.
Or take Yahoo Asia's client, Digi Telecom of Malaysia. It made use of a very creative execution of a jump-out-at-you DHTML advertising format and managed to achieve a 34 percent click through rate.
"Due to the overwhelming success of the online advertising campaign, Digi Telecom is now more committed to online marketing," said Niren Hiro, general manager of Yahoo, Southeast Asia.
Based on its research findings, eMarketer predicted that online advertising spending will rise from US$7.3 billion in 2001 in the US to US$8.1 billion by the end of 2002. By 2005, the industry will grow 67 percent to reach US$13.5 billion by 2005.
The firm also found that most estimates for the major US media of television, radio, print and the Internet, placed online advertising at the head of the growth curve. The Myers Group, PricewaterhouseCoopers and Zenith all predicted that online advertising spending will grow by about 13 percent in 2002, exceeding all or most other major media.
Although acceptance of online advertising is not as widely accepted in Asia when compared to the US, some, like INT Media Group Chief Executive Alan Meckler, believe that it is a matter of time before key barriers are broken down in Asia, as is slowing occurring in the US.
"In terms of acceptance, Asia is behind the US by about 12 months," Meckler said. (Meckler's INT Media Group is the parent company of internetnews.com)
Mix And Match
Supporters of online advertising also say all advertising media have their strengths and weaknesses -- suggesting that mixing Internet ads into a campaign's marketing mix could prove the most efficient way to reach consumers.
"Pooling the strengths of the respective media together and utilizing them accordingly and in the right places is what makes a great and effective marketing campaign," said Lising.
Additionally, supporters point to the past to indicate that like other advertising channels, it will take time for Internet advertising to mature. Take radio as an example, which some did not think would work as an advertising medium. But today, radio has become so entrenched in our lifestyles that advertisers think little of turning to it to reach their target audience.
The same goes for the Web. Many believe that as Internet users around the world increase in number, companies will see the benefit of using both online and offline channels to reach their critical mass. According to eMarkerter, there will be approximately 232 million Internet users in Asia Pacific, as compared to 185 millions of Internet users in the US (including Canada but excluding Mexico) by 2004.
However, advertisers have to think of how to maximize the advantage of the online channel. One of the challenges is finding the right audience -- which led both Toyota and Digi Telecom to focus on developing clear ideas of how and where to reach their intended audiences. "When an advertiser is able to find a focused audience on a Web site, the advertiser will now have a devoted and focused readership," Meckler said.
While the key is to know where the intended audiences are, creativity in drafting online campaigns, too, plays an imperative role.
Said Hiro: "Poor creative execution causes consumers to ignore advertising. This is true of any medium, but because online media buys are accurately measurable, dropping click through rates sometimes discourage advertisers. Clients now recognize the need to be creative and fun when deploying laser targeted online marketing campaigns."
One trend that stands to benefit creativity is the proliferation of bigger size advertising banners, which many believe enhance branding. According to a number of recent studies, larger formats such as 120x600 skyscrapers or 336x280 large rectangles increase brand awareness more than traditional 468x60-pixel banners -- although the costs of such units are greater.
In countries where broadband usage is high, such as Korea, Japan and Taiwan and Singapore, advertisers also could be soon considering innovative and eye-catching interactive, video and audio campaigns as well as better animation and graphics advertisements to grab hold of the audience's participation and attention.
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Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects.
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