The acceleration of online searches was connected with the incredible growth and proliferation of smartphones, including such brands as iPhone, Blackberries and Googlephone (Android). Thus, the acceleration of online searches has led to the increase and facilitation of online sales as people became more capable of finding and buying those products which interested them most of all.
The industry of online advertising continues to grow and expand. Since the time of its inception, a wide range of different types of advertising have emerged. There are no good or bad kinds of internet advertising as every singly type has its advantages and disadvantages. The strengths and weaknesses of internet advertising are dependent on the needs of the advertiser, the kind of site it is being run on, and the audience the advertising will reach.
The success and effectiveness of online advertising depends on the functional and structural elements of online ads which make them discernible from offline ads. Functional elements of online ads particularly include the motives of online users and their behaviour within the online setting.
Most of managers in the world tend to envision online advertising as the growth ‘hotspots’ over the next 1-2 years, because of the functional and structural peculiarities of online ads. In other words, both the uniqueness of online advertising and the increase in numbers of internet users make this type of advertising more and more popular.
The main idea of this report is to explore various types of internet and mobile advertising in order to ascertain which markets and types of Internet and mobile advertising are likely to be the growth ‘hotspots’ for marketing managers over the next 1-2 years. Moreover, the present research shed light on the major reasons leading to the growth of different types of Internet and mobile advertising. To that end, the current study may be briefly characterized as an exploratory research which draws on pertinent theory and concepts in the domain of contemporary and traditional strategic management. Also, the present study relies on the qualitative research method of case study.
The main question of this research is the following: Which markets and types of Internet and mobile advertising are likely to be growth ‘hotspots’ for marketing managers over the next 1-2 years? In this connection, the main objectives of the present report are:
In order to prevent semantic ambivalence and ensure the academic nature of this study, it has been decided to provide succinct but intelligible definitions of terms. Thus, the following terms are used in this report:
Branding – is the process of promoting a service or product by way of associating it with a particular brand (mark).
Consumer behavior – is a discipline which studies different phases a consumer moves through before buying services or products for his personal use.
Digital marketing – is a subdivision of marketing which relies on the use of electronic (digital) devices such as computers, smartphones, tablets, mobile phones, digital billboards, and game consoles. Internet marketing is a main constituent of digital marketing.
Pricing – is a complex process of determining what a business entity must receive in exchange for its services or products.
Marketing analytics – is the conglomeration of technologies and processes which enable marketers to estimate success of their marketing incentives by measuring performance using various business metrics.
Strategic marketing – is a process which helps a business entity to accumulate all its resources and direct them on the optimal opportunities in order to achieve the purposes of sustainable competitive advantages and increasing sales.
3.1. The nature and managerial implications of internet mobile advertising
Before making any conclusions concerning the capabilities of internet/mobile advertising of being the growth ‘hotspots’ for marketing managers over the next 1-2 years, it is essentially to investigate the nature and managerial implications of these contemporary sorts of advertising.
The main thesis of this section of literature review is the statement that the popularity of internet advertising and mobile advertising is predetermined by the popularity of the Internet in the contemporary world. This viability of this thesis is acknowledged in the study by Graham and Lee (2011). The researchers write that, in recent years, the Internet has become more and more ingrained in the daily lives of people (Graham and Lee 2011, p. 1). It is possible to agree with the aforesaid statement. The fact is that the contemporary society becomes more and more dependent on digital technologies and the Internet. The technological progress as well as the informational environment of the present world has no future without the possibility of online communication and sharing.
Moreover, Graham and Lee (2011) are disposed to think that the acceleration of online searches was connected with the incredible growth and proliferation of smartphones, including such brands as iPhone, Blackberries and Googlephone (Android). In this sense, it is possible to presuppose that the acceleration of online searches has led to the increase and facilitation of online sales as people became more capable of finding and buying those products which interested them most of all.
From the perspective of marketing, internet advertising and mobile advertising open unique opportunities of reaching customers, both actual and potential, in the places they are looking for information, and not merely in places where the purchases are made. Thus, following the arguments of Graham and Lee (2011), it is possible to make inference that the act of search is the initial step of internet-based activity of customers. The specificities of the Internet-based search determine the success of internet marketing in general. Graham and Lee (2011) differentiate between two possible ways of searching information in the Internet: a) Internet-based Yellow Pages directories, and b) Web-based search engines.
As far as the first type of web-based search is concerned, it needs to be clarified that the online yellow pages provide the customers with the possibility of finding necessary information about local businesses in a much more convenient and much faster way than the printed version of yellow pages. In the context of the second type of online search is concerned, a wide spectrum of the Internet-based search engines provides customers with the opportunity of finding products and services in a very simple way – by way of entering the key words for a search.
Similarly, mobile advertising is a very unique type of advertising which rests on the achievements of the technological progress. According to the findings of the Department of Health and Human Services at the National Center for Health Statistics from January to June 2010, about 24.9 % of all adults reside in their households with only wireless telephones (Graham and Lee 2011, p. 4). This means that people are more prone to giving up landline phones in favour of mobile phones.
All these factors indicate on the uniqueness of the Internet and mobile phones as the mediums of advertising. Apart from the stage of searching, internet and mobile advertising have specificities at other stages of customer behaviour as well. Thus, according to Evans (2009), the methods of online advertising lead to substantial reductions in transactions costs between consumers and merchants (p. 3). This means that the Internet is not only a means towards searching information about a concrete product or service, but also a mechanism of cheaper transactions between consumers and merchants. In other words, the Internet provides benefits at the stage of transactions between merchants and consumers.
Another salient feature of online advertising lies in its evolutionary character. Evans (2009) correctly states that online advertising began in 1994, ‘when HotWired, a web magazine, sold a banner ad to AT&T and displayed it on their web page’ (p. 5). Since that time online advertising has been adjusting to the patterns of Internet technologies. Thus, with the emergence of search engines banner ads were sold on a cost-per-mille basis – that is, on the basis of how many Internet users apprehended the ad.
However, the aforesaid approach was found to be ineffective as it led to the conflict for the search engine between assisting users in finding products and services quickly and ‘keeping eyeballs trained on the site to make money’ (Evans 2009). Therefore, search engines shifted their strategy to the cost-per-click model. From the aforementioned facts, it is possible to make inference that internet advertising is a very flexible type of advertising which may accommodate itself to various demands and environmental changes.
Similar to internet advertising, mobile advertising is a unique type of advertising which relies on both high technologies and online environment. Not opposed to internet advertising, mobile advertising manifests such salient features as technological basis and evolutionary character. According to Pearson (2011), the uniqueness of mobile advertising is predetermined by its dependence on a technological device – a mobile phone. The research claims that the mobile phone is always within reach of its owner, and therefore, the advertiser is capable to connect to a potential customer almost within twenty-four hours a day (Pearson 2011, p. 11). Moreover, mobile advertising offers a personalized way of apprehending an ad with the simple push of the button, and thus can be the most efficient and analyzable marketing tool ever created.
The next section of this literature review was designed to cast more light on the specificities of internet and mobile advertising as compared with the traditional (offline) types of advertising.
3.2. The peculiaries and silent features of internet mobile advertising as compared with traditional (offline) kinds of ad
As the foregoing discussion must suggest, internet advertising and mobile advertising are two unique types of advertising which rest on the achievements of technological development and adjust themselves to the demands of consumers. The main idea of this section of literature review is to ascertain the core peculiarities of online advertising (internet and mobile advertising) as compared to traditional (offline) types of advertising.
First and foremost, most online advertising differ from the traditional (offline) types of advertising in that the former is very simple in both the terms of advertising and the means in which ads are sold (Adjuggler’s Guide to online advertising n.d.). The previous discussion has made it clear that the initial method for selling advertising was called the cost-per-mille.
This was one of the earliest and most basic forms of selling advertising, ‘based on a standard rate for every 1000 impressions served’ (Adjuggler’s Guide to online advertising n.d., p. 4). The emergence of the cost-per-click model indicated on the new vision of how online advertising had to be carried out. Also, some experts are disposed to think that the cost-per-click model of online advertising was created as a response to people’s realization of the pitfalls of online advertising.
To all intents and purposes, the industry of online advertising continues to grow and expand (Adjuggler’s Guide to online advertising n.d., p. 4). Since the time of its inception, a wide range of different types of advertising have emerged. There are no good or bad kinds of internet advertising as every singly type has its advantages and disadvantages. The strengths and weaknesses of internet advertising are dependent on the needs of the advertiser, the kind of site it is being run on, and the audience the advertising will reach.
Experts are inclined to discern the following kinds of internet advertising: sponsorships, banner run, affiliate, pay-per-click, etc. As far as the first type of advertising is concerned, the primary advantage of sponsorships for the advertiser lies in the attachment of an ad to a particular brand. In the framework of this type of advertising, the advertiser expects to transmit its message across the audience as well as to establish valuable associations in the minds of the audience between the ad and the site which is sponsored (Adjuggler’s Guide to online advertising n.d., p. 7). In contrast to offline sponsorship, internet sponsorship is accessible by the audience at any time and from every corner of the world. Regardless, a major shortcoming of this type of internet advertising lies in the chance of wasting money if the sponsored website appears to be poorly promoted or unpopular.
To continue, the banner run is another type of internet advertising which is praised for its simplicity. The use of this type of internet advertising provides customers with comprehensive information on what is being sold. Nevertheless, the simplicity of the banner run may have its vices and shortcomings. Thus, the major weakness of this type of internet advertising as compared to the traditional (offline) ads is the fact that banner runs may be ignored by customers due to their random appearance on any page view. Also, banner runs may not appear for the second time at the same web-page and thus customers may forget to click on it (Adjuggler’s Guide to online advertising n.d., p. 8).
Affiliate is another type of internet advertising which is based on the principle that an advertiser rewards a publisher (the affiliate) for any business which is brought in. The main benefit of this type of internet advertising as compared to the traditional (offline) kinds of advertisements consists in the fact that the publisher is very interested in the distribution of the affiliation system, because he can earn a lot more profits by not just demonstrating an ad, but expecting that some people buys some products or services in fact, or sign up for something after clicking on an ad. Such possibilities can not be achieved by means of traditional (offline advertising).
Pay-per-click is the last type of internet advertising which is discussed by the experts of Adjuggler. According to the writers, this kind of advertising is inherently connected with the functioning of search engines and contextual advertising (Adjuggler’s Guide to online advertising n.d., p. 9). The main advantage of the pay-per-click model as compared to the traditional (offline) types of advertising lies in the fact that the advertiser must pay only for actual clickthroughs. In other words, the advertisers are not obliged to pay large sums of money for impressions which have never been actualized. In contrast to the pay-per-click model, the traditional (offline) types of advertising requires from the advertisers payments even when there is no evidence that a potential customer was interested in the ad.
In addition to this, the pay-per-click model of advertising creates substantial benefits for the publisher as the publisher do not have to make any specific step, but can earn a significant amount of funds ‘since the clickthroughs are inherently more valuable’ (Adjuggler’s Guide to online advertising n.d., p. 9). In the context of the traditional (offline) advertising, it is incumbent on the publisher to make a series of specific steps in order to make the advertisement accessible to a wide spectrum of potential customers.
After the main types of internet advertising have been reviewed, it is necessary to ascertain the specificities of mobile advertising as compared to the traditional (offline) models of advertising. Thus, Pearson (2011) writes that mobile advertising may be carried out through a diversity of options. One of such options is SMS (Pearson 2011, p. 11).
The main peculiarity of advertising by means of SMS is the capability of an advertiser to convey his message about a product or service by adding a concise piece of information to the content which is subscribed by customers, including sports scores, news alerts, or horoscopes. One of the salient features of advertising via SMS lies in the variety of purposes for which the ads can be used. Pearson (2011) is correct in his observations that SMS as a kind of mobile advertising can facilitate business entity to establish a one-on-one as well as two-way interactive environment with their consumers. In contrast to internet advertising, the apparent advantage of mobile advertising in general, and SMS advertising in particular, consists in the high probability that the ad will attract attention of a customer. In other words, SMS ads are sent directly to customers, while internet ads are published in web-sites and can be disregarded, either deliberately or negligently, by an Internet user.
In addition to this, Pearson (2011) writes that SMS advertising has its benefits as compared to emails. The author considers that emails are not always read or even opened immediately, whereas SMS is usually read by the recipient instantly. Also, people are prone to respond to SMS immediately, while the replies to emails may be prepared for days. Given this, it is possible to agree with Pearson (2011) that the ability of SMS to be one-on-one advertising tool, anytime-anywhere to any person with a mobile phone is the crucial superiority of SMS advertising to any other marketing options currently available.
Even offline methods of advertising can not guarantee that the ad will be directly and immediately receive by a customer. Another benefit of SMS advertising over traditional (offline) types of advertising lies in the economy of the former. To put it in other words, the sending of SMS may be a very thrifty and economic way of advertising, whereas offline types of advertising require more funds to be spent on the materials by means of which the ads are published.
Continuing the critical study of the pros and cons of mobile advertising, it is vitally to mention such kind of advertising as rich media. According to the Mobile Marketing Association, ‘a rich media mobile ad unit is an interactive and/or non-interactive ad unit displayed on a mobile Web page and/or in a mobile application that offers one or more of the following: I. Inclusion of streaming video content or animated GIF within the ad unit II. Inclusion of sound III. A richer interactive feature set…’ (Pearson 2011, p. 11).
In a nutshell, rich media advertising involves the disposition of ads which include sounds, animation and other interactive or non-interactive unit. The main specificity of such ads is their inherent capability of instant attraction of attention. Surely, an individual who experience a rich media ad will pay attention to the contents of such ad, even he is disposed to buy anything at that moment. Pearson (2011) writes that the targeting by means of rich media advertisements depends on the location, content and specific application of the ads.
These ads resemble banners or other multimedia types of offline advertising. Nonetheless, the main advantage of rich media ads as compared to offline media ads lies in the fact that the former are apprehended directly and immediately by those consumers who are engaging with a particular mobile application (for instance, GoogleMaps, or free versions of applications for Android). On the other hand, offline multimedia advertisements are disposed in certain locations and can not be directly or immediately perceived by all potential customers passing around those locations.
Additionally, Pearson (2011) delineates such types of mobile advertising as location-aware advertising and mobile video advertising. As far as the former is concerned, it is necessary to acknowledge that location-aware advertising is a very sophisticated tool which provides mobile subscribers with the opportunity of receiving ads based on their location.
In the era of globalization, location-aware advertising is an advance mechanism of advertising which is capable to satisfy the interests of different consumers all around the world. The main benefit of such advertising consists in its adjustability to the location of a customer. No offline type of advertising can deliver pertinent message based on the location of customers with such ease and immediacy as location-aware advertising.
As far as the mobile video advertising is concerned, Pearson (2011) differentiates between several types of video advertising units: a) click-to-video or tap to-video; b) video interstitial, and c) InStream video (p. 13).
The first type of video advertising requires from the owner of a mobile phone to click or tap on a banner in order to apprehend the video. The second type of video advertising manifests itself as a reach media ad with video embedded in it. The last type of video advertising is some sort of a media brand’s site which runs with video content.
After the main types of mobile advertising have been discussed, it is essentially to reflect on the statement of Pearson (2011) that the proliferation of smartphones and rise of new platforms such as the iPad are inciting mobile video to move forward (p. 13). There is no doubt that Pearson (2011) is correct. The emergence of new multimedia platforms spurs advertisers to adjust their solutions to new technological novelties. Mobile video advertising is a relatively new type of mobile advertising. Nonetheless, the recent years show that mobile video advertising has chances to become the growth hotspot for advertisers in the following 1-2 years. However, the final conclusions with regard to the aforesaid issue in question will be made after case study is conducted.
3.3. The critical inquiry into the markets of the internet mobile advertising
There is no doubt that each sort of advertising is connected with a specific market. According to Evans (2009), online advertising is carried out by a set of interlocking multi-sided platform, also known as two-sided markets. To continue, Rubinfeld and Ratliff (2010) write that defining a pertinent market in online advertising should correspond with the principles of a particular acquisition or specific challenged conduct. Thus, the authors explain that, ‘for example, in a case of alleged monopolization of a local market for newspaper advertising, it will be important to understand the degree to which online advertising competes with, and disciplines the prices of, those local newspapers’ advertising’ (Rubinfeld and Ratliff 2010, p. 11). In the aforesaid example, Rubinfeld and Ratliff (2010) consider online advertising as an alternative to offline sorts of advertising.
The aforesaid statement makes it clear that online advertising should never be regarded as a pioneer in the domain of advertising which aims at discovering and developing new markets of advertising. Contrariwise, online advertising is correctly posed by Rubinfeld and Ratliff (2010) as an intruder which infiltrates the market being previously dominated by offline advertising. In other words, online advertising does not create new markets, but conquer the available markets through the rigid competition with offline kinds of advertising. Given this, the success of online advertising in a particular market is determined by its capability to compete with offline advertising through pricing, branding, shaping of consumer behaviour, etc.
As far as internet advertising is concerned, Mangani (2000) expresses confidence that the internet advertising market is a very complex phenomenon which tends to growth and expansion. By means of statistical data and estimates, Mangani (2000) takes efforts to prove that the Internet imposes a real menace on television and newspapers (p. 801). One of the crucial superiority of internet advertising to offline advertising lies in the pricing methods.
According to Mangani (2000), the markets of internet advertising are much wider and much more stable than those of offline advertising. This is particularly because ‘the Internet combines the ability of the mass media to create a message reaching wider audience with the feedback and interaction possibilities deriving from providing individualized information: traditional advertising is consumed passively, whereas on the Internet users have to actively select an advertisement’ (Mangani 2000, p. 301). In the above-mentioned statement, Mangani (2000) correctly highlights to twofold nature of internet advertising which ensures that this type of advertising spreads itself to more markets than offline advertising. The truth is that the Internet resembles such kinds of offline advertising as television and newspapers in that the Internet produces a message which is directed to the public – an unidentified number of consumers. However, in contrast to television and newspapers, the Internet not only produces the message to the audience, but also involves interaction possibilities which provide customers with the possibility of actively respond to the message, select and customize the advertisements.
Analyzing the market situation in respect of mobile advertising, it is possible to agree with Neidhardt (2011) that, notwithstanding the disparity and complexity of mobile advertising in various countries, one thing remains immutable – ‘publishers of mobile web sites and applications have lucrative options to venture in new markets outside the United States and the Western world’ (Neidhardt 2011, p. 83).
In his statement, Neidhardt (2011) is likely to assert that mobile advertising is a marketing solution with the global significance. Also, it should be presupposed that Neidhardt (2011) associates markets of mobile advertising with certain countries and geographical regions. Interestingly, Neidhardt (2011) detects a tendency that the popularity of mobile advertising as a marketing solution is more and more shifting to new markets of Asia, and, that is, outside the United States and the Western world.
For instance, Neidhardt (2011) verifies that the leader in mobile advertising spend in 2010 was Japan. Japanese advertisers spent approximately one billion US dollars for mobile ads in 2010 (Neidhardt 2011, p. 83). The second leader in mobile advertising spend in 2010 was South Korea, having spent more than two hundred million US dollars on mobile advertising. The United States was the third leader. It followed by China, Turkey, the United Kingdom and India.
All this data means that Asia is becoming the most lucrative and promising market for mobile advertisers. In this sense, Neidhardt (2011) correctly states that, when having business with Asia, it is always the best option ‘to place everything in context, as the millions rapidly become many millions, even billions’ (p. 83). Also, following the findings of Neidhardt (2011), the Asian market of mobile advertising may be divided into three markets which are not only the leaders of mobile advertising in Asia, but also the flagbearers for mobile advertising in the global context. They are Japan, South Korea, and China.
In summary, it needs to be reiterated that online advertising (internet and mobile advertising) is a serious threat and powerful competitor to offline kinds of advertising. The conducted analysis has shown that online advertising is capable to spread itself to much more markets as offline advertising. Also, it has been ascertained that online advertising do not usually create markets, but conquer the markets in which offline advertising was once dominant. However, this last statement will be completely verified after case study is conducted.
3.4. The study of factors making internet mobile advertising the growth “hotspot” for marketing managers for next 2 years
The preceding discussion has provided enough evidence concerning the superiority and viability of online advertising as compared to offline advertising. The main factors making online advertising (internet and mobile advertising) the growth ‘hotspots’ for marketing managers over the next 1-2 years should be discussed as follows.
First and foremost, Papadopoulos (2009) is disposed to think that the success and effectiveness of online advertising depends on the functional and structural elements of online ads which make them discernable from offline ads. According to Papadopoulos (2009), functional elements of online ads particularly include the motives of online users and their behaviour within the online setting. This means that online advertising is some sort of message which rotates around the user who appears to be the advertising target of the online application. From this statement, it is possible to make inference that the more people spend their time on the Internet, the more popular and effective online advertising will be. In other words, the proliferation and success of online ads depend on the people’s predisposition to spend their time in the Internet. With the rapid development of internet technologies, it is inevitable that more and more people will spend their time on the Internet.
On the other side, structural elements of online advertising particularly include the formats of the ads, the physical presentation, the position, size, type, screen of the ad, etc. (Papadoupolos 2009). From this statement, it is possible to deduce that the success of internet advertising is predetermined not only by the functional capability of online ads to target all online users, but also by the variety of structural solutions of online ads which make online advertising a very adjustable and viable means of advertising, irrespective of the platforms.
To continue, Canadian online marketers foresee that they will expand both future Internet ad expenses and increase their arsenal of online marketing tools (Internet advertising bureau of Canada n.d., p. 24). The Internet advertising bureaus of Canada (n.d.) provides that fifty-five percent of Canadian online marketers will increase spending on internet advertising. This means that Internet advertising has already become the growth ‘hotspots’ in Canada. More than 50 % of online marketers in Canada envision that online advertising will bring them more benefits than offline advertising.
To sum up, it needs to be stated that most of managers in the world tend to envision online advertising as the growth ‘hotspots’ over the next 1-2 years, because of the functional and structural peculiarities of online ads. In other words, both the uniqueness of online advertising and the increase in numbers of internet users make this type of advertising more and more popular.
The results of theoretical research are going to be substantiated with the evidence from empirical research – case study. The case study of Amazon aims at ascertaining whether online advertising will be the growth ‘hotspot’ for the next 2 years or not. First and foremost, Amazon.com is a company created in 1994. Initially, Amazon was created as a book store, but soon expanded into other media, including MP3s, CDs, VHS, and DVDs. Pay-per-click advertising was one of the major pillars of Amazon.com’s marketing campaign. Amazon.com goes on purchasing pay-per-click advertisements on Google in order to provide customers with the direct entrance into their website. Analysis shows that the pay-per-click model of advertising ensures Amazon.com’s success.
Also, Amazon.com pays significant attention to so-called ‘special offers’ advertising which is made by means of its devices – Amazon Kindle. Amazon’s electronic books and table computers – Amazon Kindle – have been specifically designed to facilitate the consummation of Amazon’s products and services. To that end, Amazon’s ‘special offers’ advertising may be characterized as a very productive and advanced way of delivery of ads to the owners of Amazon Kindle tablets. This type of advertising may be regarded as a sophisticated type of internet and mobile advertising. Advertisements are received by the customers when they connect to the Internet via the WiFi.
After everything has been given due consideration, it is possible to generalize that online advertising is much more viable than offline advertising. The conducted study made certain that the future growth ‘hotspots’ for internet and mobile advertising will be concentrated in Asia. Also, it was ascertained that video advertising and other types of online advertising will prevail over offline advertising all over the world. The case study of Amazon showed that every company can benefit from online advertising if it wishes to promote the distribution of its products and services worldwide.
From these points, it is possible to deduce a series of implications:
Also, a set of recommendations for managers of online advertising should be made: