Discuss about  practices in the field of advertising research, advertising media planning and/or integrated marketing communications……………..

 Introduction

Recent years have exhibited increasing funding of popular internet content such as blogs, e-mail, and social networking by advertising firms. Many online internet content and service providers (web publishers) obtain most of their revenues from online advertisement. Behavioral grouping of internet users is a strategy used by internet content providers to increase the value of advertisement.

Contextual advertising has been gaining momentum since the advent of online search engines and mobile phone usage. This form of internet marketing targets customers with specific traits such as demographics, nationality, origin, purchasing power and history. The use popular social media network such facebook and twitter has further increased the use of online contextual system on mobile browsers targeting the youth population.

A study conducted by Beales[1], (2009) found that this method of target advertisement has been effective and successful in securing huge amounts of revenues to web publishers which are gained from fees charged per every successful click on the advert link by the web user. This has and continues to generate more revenues as Compared to non target run of network advertisements. Beales (2009) also found contextual advert to be much more effective at converting users of the web to buyers of advertisers’ goods and services. His study findings therefore points to the increasing importance of targeted advertising by many companies.

Contextual ad is beneficial to consumers because they are treated as individuals rather than collectively making the method applicable in behavioral marketing of products and services, (Chen, et al 2001). In this form of advertisement, Consumers’ behavior and purchasing habits can be easily determined through the system and necessary adjustment made to win consumers with certain behavioral traits. The advertiser is able to reach more targeted consumers who have strong preference for their products hence eliminating wastage advertising experienced in other forms of advertisement. This saves unnecessary costs and leads to high profits.

Nevertheless, this method has raised some fears and concerns more specifically on the privacy rights and policies. The system has invaded on the privacy of individuals by way of interception web traffic without the consent of the web user. Most targeted fans surveyed in USA have cited violations of their privacy rights through tracking of their online behavior.

Overview of contextual advertising

  Advertisement is usually treated in two ways, i.e.[2]  from the advertisers and the consumer point of view. Advertisers make decisions of planning, creating and conveying an ad whereas consumers react to the ad created by advertisers. Interaction of these two key players is facilitated via the communication process, (Sliburyte, 2007).

The effectiveness of an ad is determined by how the content influences the target consumer and this requires proper ad research to help increase the effectiveness of an advert. Schollten, (1996) and Wilkie, (1994) identified four main goals of advertisement as persuasion, reinforcement, reminder and acceleration of purchasing.

Contextual advertising incorporate four main players:

The first one is the publisher who is the owner web pages to which the advertisement is displayed. His main aim in advertising is maximimize on the revenue generated through provision of good user experience to the clients.

The second player is the advertiser who provides the supply of advertisements. In traditional form of contextual advertisement, his aim is to promote the products and services. In the modern online environment, the activities of advertiser are organized around product campaigns through a series of ads to market and promote their products and services.

Another player in contextual advertisement is the ad network who mediates between the advertiser and the publisher and selects the adverts to be displayed on web pages. He shares revenue generated from advertisement with the publisher.

The final players are the users who visit the web pages of the publishers and interact with the ads. This are the targeted consumers of the products and services being offered by the advertiser in the market.

Contextual advertisement is classified under direct marketing because its campaign is expected elicit direct response and reaction from the audience. The measurement of user’s reaction and response to the advert can be easily measured in online contextual advertisement because the user can easily follow up by clicking on the link and get to the advertiser’s website within seconds. The payment for this form of advertisement is based on the number of times the advertisement link was clicked.

Workings

A contextual advertising system works by scanning keywords in the website and returns advertisement to the webpage and is based on what the user is viewing. Advertisement is sent via website or pop-up ads. An example is when the viewer is on sports website which uses contextual advertising, he is likely to see advertisement of sports companies; those offering/selling sport ticket, sports wear and sport lottery companies.

Internet search engines such Google and yahoo displays advertisements related to the search results.  A Person searching for educational trainings education is likely to see advertisement by colleges and universities offering educational training related to the field the user is searching.

The content thereto is related to the webpage and search results the user is viewing. This ensures that only advertisement correlated to what the user is interested in are displayed, for instance when searching information on travelling in North America, the most likely contextual ad to pop are airlines and flight prices in North America. Contextual ad system automatically changes to a different relevant ad after some time if the user doesn’t click on the link.

Content providers

The main providers of target advertisement are popular internet search engines, video sharing websites, micro-blogging sites and social networks who have embraced advertisement as the their preferred revenue generation avenue. Contextual advertisement is much more preferred among the above mentioned sites because of their high penetration among the internet users across the globe.

Contextual advertisement has been practiced by advertising agencies in the ads industry for many years in history through the use of media such TV and newspapers; which depended on the type of product being advertised, (Narasimhan, 1988). For instance, TV channel that air sporting activities have been used to advertise products of sporting companies such adidas, Puma and Nike. However, most thrilling developments in contextual advertisement have taken place in the online environment.

The use of sports section in the newspaper to advertise sporting products has been practiced for many years. The reason behind this approach is that lovers and users of sports wears are likely to see the products and buy unlike when they are advertised in other sections of the newspaper. This also applies to advertisement through other forms of media including magazines, indicating the enormous use of target advertisement as a marketing promotion strategy.

According Loewenstein et al (2011), the structure of the plot in television ads can improve consumers’ brand attitudes and promote brand recognition. Contextual ads through the use of media such TV and newspapers has been used over the years before the advent of online target advertisement and their effectiveness entirely depended on several factors. The study by Clifton, et al (2006) indicates that the effects of contextual ads through TV and newspapers can be measured just like the online one.

Internalization of Brand attributes and messaging is reflected by increased emotional impact which can be measured using biometric response. Accordingly, the higher and stronger emotional connection to both the scene and an ad indicates the effectiveness of contextual advertisement to the consumer. The study offers satisfactory evidence to confirm that television advert with proper and relevant contextual priming scene can lead to significant increases in the effectiveness of an advert.

Effectiveness of contextual ads

For target advertisement to be effective as a marketing tool research is needed to help advertisers to determine consumer preferences and media habits to enable them formulate optimal content. However, the ability of firms to target advertisement does not necessarily reduce the cost of advertising as implied by Esteban et al. (2001). In addition, the effectiveness of an advert is limited whenever it is expensive and uniform. Consistent with this statement, a study by Zhang & Catona (2011) confirmed that targeting through more relevant content may not always be beneficial to the advertisers. 

In online target advertisements, user’s response can be easily measured unlike the traditional forms of advertising. An ads intuition is relevant to the interest of the user hence avoids degrading of the user’s  experience, increase the response probability and reduces ads wastage leading to low cost and high profits for the advertiser in line with the findings of the Chingning, (2002) .

Comparing contextual and search engine ads, the later is less expensive because is has less target because it is only accessed when the visitor is viewing related web and contents, and web user had no prior idea of the ad unlike in the search ad where the user has prior idea and uses keywords to get the ad, (Financial marketing re-defined, n. d).

Contextual ads being a target advertisement helps advertiser to eliminate wastage advertisement to customers who have different preference for the competing companies products and services and this helps to increase the profits of the firms by eliminating unnecessary advertisement costs.

Targeting of consumers with preference for advertiser’s products and services improves the effectiveness of the advertisement. This is achieved by eliminating advertisement wastages to consumers who have no interest in advertiser’s goods and services and this lowers advertisement expenditures. The advertiser is better placed to make worthwhile advertisement expenditures.

Target advertisement enables advertisers to choose different advertisement levels for different segments of customers, (Ganesh, et al, 2005). According to him, target ads leads to higher profits irrespective of whether or not the firm is able to set targeted prices. Target pricing leads to unnecessary price competition among companies. Target ads may be used by many firms because it’s more relevant compared to target pricing strategy.

This form of advertising has gained popularity in recent years because it increases product differentiation than target pricing (Gal-Or & Dukes, 2003) which reduces product differentiation and this (Ganesh, et al 2005) reduces competitive implications. The benefits gained in target advertisement are never lost even if the competing companies carry out targeting ads of their own in response to it, reduced ads wastages makes it possible for all companies to benefit from target ads.

Zhang and Catona (2011) found similar results. He found that target advertisement in competing firms has reduced product market price competition without necessarily engaging in target pricing, his findings are consistent with the findings of (Ganesh, et al, 2005). He also reiterates the target accuracy and content relevance of contextual advertisements just like other previous studies.

Conclusions

This paper analyzed both the traditional and the modern on-line forms of contextual advertisement. More emphasis has been given to the online form because of its high significance and the role it plays in the advertising industry today. The system is being seen as the major source revenue for various sites in the web. The relevance of contextual ads to the surrounding environment has been cited in many studies as the main reason behind its success.

The effectiveness of target advertisement as a marketing tool demands that more efforts should be put into consumer research to determine the consumer preferences and media habits. The ability of firms to target advertisement does not necessarily translate into reduced advertising spending. The effectiveness of any form of ads as a marketing and promotion tool is limited whenever ads is expensive and uniform. A study by Zhang and Catona (2011) also found that targeting through more relevant content may not always be beneficial to the advertisers; these are consistent with the findings of Esteban et al. (2001).

 

He states that the optimal content[3] choice and targeting precision decisions undertaken by intermediary highly depends on the level of competition within the firms operating in the market and different strategies should be used at different levels of product competition in the market; for instance intermediary should pursue different strategies under low and high product market competition.

 

Contextual ad has been found to benefit both the advertisers and consumers. Consumers are treated individually unlike other forms of product promotion where they are collectively treated. This method allows for proper analysis of Consumers’ behavior and purchasing habits making it possible for the companies to provide more satisfying goods. Target advert enables the advertiser to eliminate wastage advertising experienced in other forms of advertisement which saves unnecessary costs and leads to high profits and performance.

However, contextual advertisement has raised some fears and concerns more specifically on the privacy rights and policies. The system has invaded on the privacy of individuals through interception of web traffic without their consent. Most targeted fans have cited violations of their privacy rights through tracking of their online behavior

 References

Chingning Wang, Ping Zhang, Risook Choi, and Michael D. Eredita. (2002): Understanding consumers’ attitude toward advertising. In Eighth Americas Conference on Information System, pages 1143–1148, 2002.

 

Chen, Y., C. Narasimhan, Z.J. Zhang. (2001). Individual marketing with imperfect targetability.

Marketing Science 20(1) 23{41.

Esteban, L., A. Gil, J. M. Hern?ndez. 2001. Informative advertising and optimal targeting in a monopoly. J. Indust. Econom. 49 161–180

Financial marketing re-defined. Found at www.suasion.com. (accessed on 11^th April 2012).

Gal-Or, E., A. Dukes. (2003). Minimum differentiation in commercial media markets. Journal

of Economics & Management Strategy 12(3) 291{325.

Ganesh Iyer, David Soberman, J. Miguel Villas-Boas. (2005): The Targeting of Advertising Vol. 24, No. 3, Summer 2005, pp. 461–476 issn 0732-2399 _ eissn 1526-548X _ 05 _ 2403 _ 0461

Howard Beales at http://www.networkadvertising.org/pdfs/Beales

John Clifton, Kathryn Larkin, Dr. Carl Marci And Stacey Lynn Schulman. (2006):

Measuring the Impact of Contextual Advertising on Television TVinContext Is Where Reach Meets Relevance

Kaifu Zhang and Zsolt Katona. (2011): Contextual Advertising. Electronic copy available at: http://ssrn.com/abstract=1753881

Laimona Sliburyte, (2007): the Issues of Effectiveness of Advertisement Communication Process: A Case Study of Lithuania Consumers .World Academy of Science, Engineering and Technology 30 2007

M. Scholten, “Lost and Found. (1996): The Information-Processing Model of Advertising Effectiveness,” Journal of Business Research, 37 (October), 1996, pp. 97-104.

Narasimhan, C. (1988). Competitive promotional strategies. Journal of Business 61(4) 427-449

W. L. Wilkie. (1994): Consumer Behavior, New York: John Wiley and Sons, 1994, pp. 67-109.

Privacy international found at https://www.privacyinternational.org/article/online-behavioural-targeted-advertising-%E2%80%93-privacy-international%E2%80%99s-position

Loewenstein, J., Raghunathan, R., & Heath, C. (2011). The Repetition-Break Plot Structure Makes Effective Television Advertisements. Journal Of Marketing, 75(5), 105-119. doi:10.1509/jmkg.75.5.105