Serving Up Ads In Software

Industry professionals are constantly bombarded with information about the declining efficacy of banner ads and decreasing click-through rates. Like any new medium that is growing into a legitimate and powerful business, the Internet has spawned plenty of effective and ineffective advertising opportunities.

Advertising in software is the latest opportunity. While it may sound like the wild west to conventional media buyers, in reality, all other major consumer mediums have been supported by advertising: TV, radio, print, and even the occasional passing bus. And until now, the technology simply wasn’t available to integrate advertising into software. But it really makes sense.

The Internet now permits advertisers to dynamically deliver, rotate and update advertising to software applications. Plus, with the Internet’s dynamic connection to the desktop, user and ad activity information can be easily retrieved. Targeted advertising placement in software with precise web-based campaign reporting and management is now a reality.

Everybody’s Doing It

Millions of people buy and download software for free each year to do everything from balancing their checkbooks and monitoring stock portfolios to writing letters and playing games. Most of us spend as much, if not more, time using software as we do watching television, reading magazines, or listening to the radio.

According to a survey published in PC Usage Trends (4/98) conducted by Opinion Research Corp. International, adults primarily use their computers to play games and handle personal finance. And teens use their computers to play games, do research and complete educational assignments. Until now, software could only be considered a task-oriented tool. But it has evolved into a service that users would prefer not to live without. And like TV and radio, advertising is the next logical, complementary step to reaching a mass market.

Downloadable software has spawned a new advertising medium, one in which the audience is highly targeted because of the type of application the consumer selects to download. Downloading software is a deliberate activity, more so than randomly channel surfing or passively flipping through a magazine.

Engaged and Targeted

One of the primary goals of any marketer is to reach an active, potential customer who doesn’t just breeze by the advertising message, but who truly absorbs and considers it. Software users are engaged individuals who can spend hours using one application to complete a task. And greater precision targeting can better quantify the return on investment for an advertiser. Simply put, it’s an ad buy with more reliable, definable results than other randomly placed advertising.

By prominently positioning a linkable ad in the software interface, advertisers are able to reach engaged viewers and provide a “call-to-action” vehicle. For example, a mortgage company could place linkable banner ads for low interest mortgages within a Home Buyer’s Loan Calculator. Realtors would be a perfect marriage in this type of software, too.

An online stock brokerage site could place a linkable banner ad in stock portfolio managers. Each time someone uses the software, the ad would be displayed, and when launched, would take a user to the advertiser’s web site.

In addition to reaching engaged, targeted consumers, advertisers can reach these consumers whether they’re connected to the Net or not. Some proprietary technology enables new ads to be sent to the applications each time a user connects to the Internet, to check email or surf, or whatever. The next time the user opens an application, a different ad will be served, whether it has been a week or a day since the application was last used.

Opportunities Abound

In the ’40s and ’50s, when families gathered around the radio or television on Sunday nights, they relied on their favorite show to be sponsored by brands they consistently used and trusted, like Ovaltine or Texaco. Today, this opportunity for advertisers still exists. A client could exclusively sponsor a popular software application and brand themselves as the provider of the application. This relationship will certainly help build brand awareness and increase user loyalty.

Ultimately, time will tell. But advertising in software has vast potential to create tremendous communication power by its unique ability to reach masses of engaged, highly targeted consumers.

Kathryn Geller-Myers was a contributer to this column.

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