Consumers have fundamentally changed how they use portals, and are now treating them as destinations, rather than as gateways to other sites, according to a study by Booz-Allen & Hamilton. As a result, portals need to adopt new business models to remain financially viable.
The study, “The Great Portal Payoff: Matching Internet Marketing to Consumer Behavior,” analyzes Internet usage data from NetRatings and concludes that marketers must adapt to the new reality of Internet portals (such as Yahoo, AOL and MSN) as destinations, and abandon direct marketing and banner ads in favor of brand building through sponsorships, new service offerings and cobranded ventures, among other methods. At the same time, the portals themselves must redesign their revenue models.
No one can doubt that portals remain enormously popular. Five of the top six Web properties in January 2001 were portals, according to Nielsen//NetRatings. Sixty percent of Internet user sessions include a visit to a portal. By contrast, other types of sites are visited far less frequently: consumers go to entertainment sites only 22 percent of the time they access the Web; news and information sites are visited in 20 percent of user sessions; shopping sites show up in 17 percent; and sports sites in only 5 percent. Internet users also spend far more time at portals than anywhere else online — an average of 4.5 hours per month, three times more than they spend at shopping or entertainment sites. Virtually all users (98 percent) have visited a portal at some point, compared with 80 percent who have visited entertainment or information sites and 43 percent who have tried financial sites.
Booz-Allen’s report found the best way for marketers to capture the eyeballs of Internet users is to treat portals as brand development venues, paying them for the total numbers of impressions they deliver. In addition, companies should consider sponsorships — attaching their names and messages to appropriate parts of a portal site, or creating new sections. For example, Quicken.com sponsors the Money & Investing section of Excite, complete with chat links to Quicken loan consultants. Pepsi and Yahoo teamed up for a Fall promotion in which Yahoo built Pepsistuff.com, a site where consumers redeemed points online for Pepsi merchandise.
Despite these new marketing ventures, the study found that many portals still cling to an outdated revenue model that relies on advertising payments based in part on click-through rates. Despite click-through rates that fell more than 40 percent between October 1999 and October 2000, banner ads accounted for half of all Internet advertising in the second quarter of 2000 according to the Internet Advertising Bureau. Only 0.1 percent of portal visitors click on banner ads, yet Yahoo currently receives 90 percent of its revenue from ads. Among the major portals, only AOL, which gets 64 percent of its revenues by selling access to the Internet, does not rely heavily on income from click-through ads.
“Portals are no longer mere gateways to the Internet, but destinations in and of themselves,” said Booz-Allen & Hamilton vice president Horacio Rozanski said. “Our study found that although 60 percent of Internet user sessions include a visit to a portal, only 6 percent of Web sites are accessed through a portal’s search engine. Marketers must start thinking of portals in the same way they think of mass-circulation magazines and television networks — as major centers of commerce and content that draw huge audiences.”
Expanded service offerings also hold great promise, according to the study. Yahoo Finance and MSN’s MoneyCentral, for example, now offer account aggregation, pulling together all of a user’s financial accounts so they can be seen on a single page. Aggregation sites get a deep view into users’ financial lives, and can cross-sell services tailored to individuals. Banks, brokers and others are likely to invest heavily to get their brands in front of these affluent users with known financial needs. A separate study by Booz-Allen recently found that one-third of account-aggregation customers have selected Internet portals not tied to major financial institutions over the offerings of banks, brokerages and other traditional financial institutions.
“Clearly, a revenue strategy centered around banner ads promises little return, and threatens the future financial viability of the portals,” said Gerry Bollman, Booz-Allen senior associate. “But no one should question the potential of portals as an online marketing venue. This research and analysis suggests that by employing alternative strategies, businesses can maximize the yield of their marketing dollars, even reap order-of-magnitude improvements.”
Election 2016 is already like no presidential race before it, and one of the most striking aspects of this year’s race is the disparity ... read more
Businesses near ‘PokeStops’ are enjoying a huge surge in footfall due to the popularity of Pokémon Go, according to our first major ... read more
An effective content marketing strategy needs to be customised to the demands of each industry. Here are five tips to increase your ... read more
We put China and United States head to head on smartphone sales and smartphone penetration; 4G subscribers; 4G coverage and speed; mobile internet users and m-commerce; to find out where the world’s biggest m-commerce opportunity lies.