Internet

What is the internet used? Part 2

Advertising

It is a well-known fact that the world's best Web site is useless unless the site is clearly advertised on the Internet for others to browse.

Market research suggests business advertising on the Internet (via graphic images or links inserted on popular web sites) is in demand. In fact, advertising has emerged as the dominant business model for the Internet. And among the businesses that thrive on advertising are those who create search engines because of their ability to attract many users.

Advertising requirements by businesses on the Internet is well-supported by an article entitled, Internet Advert Revenue up 83pc, by Dick Satran:

"Advertising revenue on the World Wide Web soared 83 per cent in the first half of the year, and the Internet is on track to become a $5 billion-a-year commercial medium by the year 2000, according to research firm Jupiter Communications.

US advertising spending totalled $71.7 million in the first half of the year [$US138 million for the first nine months of this year], and Jupiter estimated it will balloon to $312 million for the year as a whole, forecasting near-triple-digit annual growth for 1996.

But the survey showed that, despite the optimistic growth in spending, a majority of advertisers were still high-tech companies advertising on each other's sites.

The consumer product companies that are the biggest advertisers for national magazines and broadcasters continued to tread cautiously on the Internet.

"When those companies get going, that will be the trumpet call that Internet advertising has really arrived," said Peter Storck, senior analyst for Jupiter. "But that's only going to happen gradually."

...The survey [called Adspend] has been criticised by some who say it fails to take into account the bartering and rate-cutting that are prevalent in the business, especially for Web-related advertising.

"Right now you could say that the Internet companies are just taking money out of each other's pockets," said Storck. "But as the pie grows you'll see the Web-related companies [like Microsoft] taking a smaller share of the total." (1)

In an article entitled, Few Making Web Profits(2), only the top 25 Web site providers are sweeping in 88 per cent of Internet revenue so far this year. As for the advertisers, most are technology companies.

Major consumer product companies like Coke, McDonald's, Nike and others are not immediately spending big bucks on Internet advertising, as confirmed by journalist Heather Green for The Australian:

"...big consumer companies [are] reluctant to put a lot of advertising money online until it sees a payoff in the form of more Net-surfers sipping its drinks and better measurements to gauge who they are....

That creates problems for online services such as America Online, which are counting on advertising to boost profits as revenue from subscribers wanes.

Internet start-ups such as Yahoo! are also pinning long-term success on advertising sales.

"It's going to be at least four years before more companies think integrating Internet advertising into their media budgets makes sense," an analyst at Forrester Research, Mr Bill Bass, says." (3)

Nevertheless, some consumer product companies are increasing their Internet advertising budget over the 1996-97 financial year:

"Procter & Gamble is gearing up for the expected changes [in the world of computers and the Internet].

The company, which sells everything from nappies to detergent, predicts that by 2000 a third of all households will use the Internet, either through TVs or personal computers.

It is increasing its budget for Web advertising this year, although it declined to say how much.

"Consumers are moving to the Web," P&G spokeswoman Ms Elizabeth Moore says.

"It's an investment we simply have to make." (4)

Internet advertising rates can vary enormously. For example, HotWired Ventures LLC charges $15,000 per month to major companies who wish to place banners about their products and services online. Expect between $8,500 and $20,400 for advertising space on Netscape Communication's prime Web site (revenue for Internet advertising reached by the company in 1995 was $1.2 million).(5)

On the other end of the spectrum, small businesses looking for cheap advertising, could pay anywhere between $0 to $250 per month for space on less popular and smaller Internet sites. But if you are serious about making it big on the Internet, you must pay a high price for good quality advertising on other people's top quality web sites.

Or instead find an inexpensive way to get people to notice your web site (and no you don't have to run around naked on the streets with your web site address prominently tatooed all over your body!).

Changes to online advertising

Advertising is still an important online activity. But because Internet users are of a certain type and not everyone will be actively seeking a specific "readily-available" product on the Internet, advertisers have wised up to the fact that not all products can benefit from online exposure.

To increase revenue, advertisers are now teaming up with other online content providers who can provide the popular video on-demand web-streaming technology, especially for those users signing up for the high-speed broadband digital network such as ADSL. Eventually, TV, PC, games and even the telephone will merge into one system, allowing a large number of people to benefit from a single "pay-per-view/listen" technology. And that is likely to benefit the online advertisers in a big way.

As Roger Peatling, Media 100's technical services manager for Europe, said:

"Currently, most people streaming on the Internet are the companies who already have video assets or are on the leading edge of the Internet. Things are changing quickly: within 12 months, streaming content will be a more vital part of the Web experience, and companies should now be starting to utilize video to communicate over the Web. In the future, streaming media will actually drive web content, making it a more dynamic and rich environment. In the long term, PC, TV and games consoles will probably converge, and you'll view programmes on your "TV" from a mixture of sources - the Internet being one of them." (6)

It is getting harder to make money through online advertising

Internet advertising revenues are going down even for the likes of a major company like America OnLine (AOL). In April 2002, AOL reported a major loss for the current financial year after a reduction in demand for online advertising. Could it be that people are no longer interested in purchasing any old product if companies keep telling their employees to tighten up the financial belt?

And could we see the day when free products and services on the Internet become a thing of the past?

Online advertising is going up again

Yahoo is realising the power of search engine sites in attracting customers. Now the company has bought out other search engines in 2003 and are expanding their online advertising strategy including more advertisements within the pages where people do most of their searching — namely in Yahoo's popular search engine site. The result is a spectacular explosion in money earned from online advertising.

Microsoft is a little stunned by the bold move from Yahoo to purchase some powerful search engine technologies and web sites of other competing companies. Expect Microsoft to come up in 2004 with its own search engine technology capable of matching the likes of Yahoo while it considers online advertising as an additional source of revenue to add to its already bulging quarterly results for the first three months of 2004 of US9.18 billion (A$12.5 billion) revenue, or US1.32 billion (A$1.78 billion) in profit once the expenses and costs are taken out.

VoIP

Ignoring all the uses businesses have for the Internet such as advertising and educational purposes, perhaps the biggest thing the internet will serve for consumers wanting to escape all the geeky stuff of sending and receiving text-based emails and downloading some software, music and movies is the ability to communicate by voice to someone at the other side of the world at extremely low costs.

The internet is quickly becoming the new audio (and soon video) telephony system of the future. As computers become palm-sized or very flat laptop types, consumers are quickly simplifying the aims of the Internet as a communication tool by making direct verbal (and soon visual) communications with someone else in the world at a price that would send shivers down the spine of even the highest profit-making big companies in the world such as Telstra.

If you want to use the internet for telephony services, make sure you have a broadband connection. The faster the speed of your connection, the better the quality of the audio you can transmit and receive. The same is true of the person who wants to talk to you. Because if you have broadband but the other person is stuck on 56K speeds, you will experience a poor quality reception.

The next thing is to get a piece of software to make the magic of VoIP work for you. Of course, you could pay a company to supply you with the software. But better still, try the program Skype. The best thing about this software is not only is it free of advertising, malware and spyware, but it is absolutely free to download and use at your own pleasure.

Skype runs on Mac (both Classic OS9 and OSX), Pocket PC and Windows 2000 or XP.

When you run the program, you will be asked to register and get a log-in name. After that, you're free to make internet phone calls to your hearts content.

Finally, if you want your internet conversations to be a little more private (akin to the standard telephone), we recommend you purchase a microphone/headset unit to plug into the USB port or standard microphone input and speaker output jacks of your computer. You can use the microphone built into your computer. However, it is possible your voice may not project well enough to register on the microphone and get translated into a clear signal at the other end.

Try getting a dedicated microphone/headset unit from an electronics or computer store for the best results.

When making calls to someone, make sure they use the same Skype software. Also write down the Skype username of the person you want to speak to. Knowing the username is equivalent to knowing the international telephone number of the person when dialling on a standard telephone.

Additional Skype services are available for a charge. For example, you can use Skype to call to any landline or mobile phone at a cost of 1.7 euro cents (about 3 cents) per minute. This service is called SkypeOut.

Another service about to be introduced is called, naturally enough, SkypeIn, where you have the option to set up a phone number in another country and people can call that number on a standard telephone at the standard local call rate where you can talk to them using your Skype software. But don't worry, you won't have to be awake 24/7 to answer the calls. Skype has kindly provided a voicemail in case you get a call at some ungodly hour.