The strategy conversation you can only have here
If 1995 was the year of the internet then 1996 must surely be the year of the world wide web. The web, barely 2 years old and growing exponentially, is driven by companies striving to discover models to make it financially viable.
Home shopping - an area predicted to be the commercial powerhouse of the internet - has returned paltry profits for companies, while online advertising has been catapulted onto centre stage as an internet commercial success story.
Online advertising, just like print and television advertising, must produce a return on investment or the advertiser is wasting he or her time and money. The internet offers many ways to put the message across, with advantages over traditional or off-line advertising.
Earlier this year three of the largest search engines on the world wide web went public on the NASDAQ stock exchange. While their stock prices didn't maintain their initial "high flyer" status, the companies, Yahoo, Excite and Lycos, all have their revenues based on advertising. With over two million people visiting Yahoo in a single day, even internet sceptics have to recognise that there aren't many newspapers or television channels around with such large audiences.
Netscape, probably the most famous of the internet start-ups, charges companies in excess of $20 000 per month for a banner advert on its web site. Banner adverts are a graphical "strip" containing advertising that appears across the top of the screen when users are trying to find information. Netscape guarantees that the advert will receive one million impressions or views.
Advertisers, initially excited by the idea that millions of people would see their advert, have now started placing more demands on the web publishers. Enter the definition of "click", which is when a person viewing one those banners actually clicks on it to find out more information.
It is now common practice that web publishers provide a choice to their advertisers of a cost per impression or a cost per click. While there are arguments for and against each method, the advertiser is the winner, being able to choose a rate best suited to each particular advert.
The world wide web is not the only place where advertisers are marketing their wares on the internet. Pointcast , a company based in California, beams news and information to users' desktops using the internet and their own software program.
Features include a Reuters newsfeed, online editions of major newspapers, stock quotes, weather and pollen counts. While users are receiving all this news and information, a block taking up about 20% of the screen continuously shows adverts.
Not being limited by the constraints of the world wide web, Pointcast adverts show clever animations without the delay usually associated with web graphics. The service also allows adverts to be tailored specifically to users.
If you are looking at sports scores then you may see an advert for Nike as opposed to an advert for a drug company when you are getting the latest pollen counts. This trend has also crept into the search engines. When searching for a key word you are likely to receive advertising associated with that word wherever possible.
Another (non-web based) entrant into internet advertising is Juno. Launched in March 1996, Juno offers a free e-mail service to anyone who needs to use the internet for communication without having the need for access to the world wide web. If the service is free then how do they make their money? Advertising, of course.
In order to qualify for free e-mail, users need to supply detailed information about themselves so that Juno can build up a profile for their advertisers. In return for free e-mail, users are obliged to receive a small postage-sized advert with every e-mail message they receive.
Juno says it aims to make the advertising more palatable than that received in other media. Unlike television, Juno will be able to target advertising at specific income groups, ages, sexes and interest groups, preventing situations where business executives have to see washing powder advertisements.
Internet advertising, still in its infancy, is likely to take major strides as people look for innovative ways of utilising the technology to target specific people.
The winners will not only be the advertisers getting their message across and the web site publishers who are able to charge for ad space, but also the consumer who should start to see an increase in advertisements that interest them rather than being bombarded with a deluge of unfocused adverts.