Advertising Beyond The Browser
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Though the bulk of online advertising takes place through e-mail or within the Web browser, advertising outside the browser is coming into its own.
"Advertising on the desktop has been around since 1997, with 'push,'" commented Marc Ryan, director of analysis for Nielsen//Net Ratings. "Getting on the desktop has always been an advantage."
But now, a sea change is coming about. Three out of every four home and work Internet users, or 76 percent of active Web surfers, access the Internet using non-browser-based applications including media players, instant messengers and file sharing devices, according to Nielsen//Net Ratings. And these apps provide a fertile ground for advertising. It's an opportunity that more and more advertisers seem to be embracing.
"Internet apps are better than a Web site for targeting people," said Andy Jedynak, senior VP and general manager of desktop app WeatherBug. "You don't have to load from the Web. Since users go to so much trouble to download the app, there's more loyalty, and when there's more loyalty, advertising is more effective." WeatherBug has close to 30 million downloaded registered users and "we're adding 30,000 new registrations a day," Jedynak said.
Internet users spend an average of three hours and 27 minutes per month using desktop apps, according to Nielsen//NetRatings, and that doesn't count the amount of time the app was simply visible to them.
The current variety of desktop apps containing advertising is an eclectic mix. The apps with the most reach fall into two categories, players and messaging services. Media players include Windows Media Player and Real Player. Windows Media Player has 34 percent active user reach, and Real has 20 percent.
"RealPlayer, AOL Instant Messenger, [and] Yahoo! Instant Messenger are changing the face of how we use the Internet," said WeatherBug's Jedynak. "You've got an onboard piece of software driving your experience. It can be customized. You don't have to steer a browser around it."
Windows Media Player and Real Player both deliver content and display ads in digital video format. Unicast just debuted a new ad offering, now in beta, delivering broadband full-screen video in Windows Media Player format. The new format was developed through a technology partnership with Microsoft.
"The player is a component of our overall Windows Media 9 Series platform," said Erin Cullen, lead product manager for the Windows Digital Media Division. "Content from providers like Movielink and CinemaNow can be delivered fast and with super clarity, as well as ads that are broadcast-quality clear." According to Cullen, the ads have the capacity to be as complex, graphically sophisticated and as fast as TV ads.
Messaging Through Messengers
Instant messaging services include AOL Instant Messenger, with 20 percent, MSN Messenger Service at 19 percent and Yahoo! Messenger Service, with 12 percent of the active user base.
"People who use IM (Instant Messenger) do so throughout the day," said Derick Mains, an AOL spokesperson. "According to Comscore, over 50 million independent users are on AOL instant messaging products every month. It's prominent real estate, definitely.
"The Buddy Video is the little ad that runs on the top of your buddy list," said Mains. "Now, for the first time, AOL has been selling it as a video opportunity. Movie companies can repurpose their TV ads and run them in the space." Instead of seeing a static, two-dimensional ad, users see a streaming video ad with audio at the top of the buddy list, timed to appear only a couple of times in a 24-hour cycle. The new format is still being tested.
"In December, when we introduced it, we did a pilot and it sold immediately. Major advertisers loved it. Your buddy list is up all day, so it's un-missable. There are no other ads on the desktop, while on a Web site there could be several other competing ads," Mains noted.
Power to the Consumer
Two of the longest-running ad-oriented desktop apps are also the most controversial. Unlike other desktop apps, Claria (formerly Gator) and WhenU have been the focus of controversy and legal challenges over their pop-up ads. Unlike the other desktop applications, these companies' software comes bundled with free offerings and pops up ads for competitors on other companies' Web sites.
"It does put a significant amount of power in the hands of the consumer," pointed out Gary Stein, an analyst with Jupiter Research, which is owned by Jupitermedia, the parent company of this publication.
Like Claria and Gator, four-year-old WeatherBug gets phenomenal responses. (Scott Eagle, Claria's chief marketing officer, says its ads get click-throughs in the 5 to 11 percent range.) But though WeatherBug is a free download, it does not show pop-ups on other sites. It's ads appear only within the WeatherBug icon.
In a unique approach, the nearly 30 million registered users can choose which advertiser they will see.
"They select a category and then a specific advertiser," said WeatherBug's Jedynak. "Once (the user) sees WeatherBug, the next thing they see is the sponsor's Web site. This only lasts for a few days a month, and then they see no advertising," but for that period, the click-through rate is essentially 100 percent. The sponsors pay for each time their ads are selected for viewing by a user. Not all WeatherBug members choose this program, in which case they are served regular ads, sold on a CPM basis.
The Longhorn Challenge
Google jumped onto the desktop with its desk bar in November 2003. The Google Deskbar, a free software download, places a branded search query window within the Windows taskbar. This enables users to perform Google searches without a browser window open, although users must have installed Internet Explorer 5.5 or higher.
"It's Google breaking out of the browser," said Danny Sullivan, editor of Search Engine Watch, which is owned by this publication's corporate parent. "Google is trying to get a jump [on Microsoft's browser evolution] by trying to make themselves part of the Windows interface rather than the browser interface."
Jupiter's Stein agreed. "The Google deskbar is in response to the Longhorn challenge." Industry figures speculate that Longhorn, the next version of the Microsoft Windows OS, might feature an Internet search function embedded in a variety of Microsoft applications beyond the browser, such as Word.
"The new search capacity (of Longhorn) will help people search the hard drive, and might let you search for files on a shared server, a corporate intranet and the Internet at large," said Matt Rosoff, an analyst with Directions on Microsoft. In general, though, Rosoff said, "I don't even think Microsoft itself knows exactly what it is planning for Longhorn."
Google isn't the only search engine to venture onto the desktop. Yahoo! and Terra Lycos also have deskbars. And by no means is the Google deskbar the only new desktop app to launch in the last few months.
"New apps are turning up all over," said Kam Rope, senior manager of online marketing and sales for Vail Resorts Inc., which launched the SnowMate, a desktop app that gives snow conditions, this month. Other new apps include the Magical Gatherings Planner, which launched this month on the Walt Disney World site, and Kimberly-Clark's Cottonelle desktop puppy, which launched in the U.S. in 2003.
A week after launching, SnowMate had 17,000 downloads, Rope said. The app has snow reports, travel deals, photo and video clips and more. The four resorts represented in the app are all owned by the company, and clicking on a given resort takes the user to its Web site.
"A few years ago desktop branding and marketing were in their infancy." Now, Rope said, the market is maturing.
"We're finally hiring again," said Chris Heitmann, CEO of AdTools, a seven-year-old company devoted to creating desktop applications. His company works with Fortune 500, entertainment and agency clients including Warner Brothers, Fox, Disney and Kimberly-Clark.
"You have a very small chance in today's online world to interact with your users. If they download an application, you've obtained permission to provide them with information in a nonthreatening, noninvasive way. The user does not have to remember to go back to the Web site," Heitmann said. "They have a constant branding experience in front of them."