case methodology - eyeblaster

8/13/2019 CASE METHODOLOGY - Eyeblaster

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ABSTRACT

In business, advertising is a form of marketing communication used to encourage,

persuade, or manipulate an audience (viewers, readers or listeners; sometimes a specific group)

to take or continue to take some action. Most commonly, the desired result is to drive consumer

behavior with respect to a commercial offering, although political and ideological advertising is

also common. This type of work belongs to a category called affective labor. As the mediaapproached the Information Technology/IT world of internet industry, the concept of advertising

also evolved from just a banner into the rich-media quality performance. One prominent

company that took the grant opportunity to venture into such business was EYEBLASTER. As

the case evaluated the business successful endeavor, its comparative advantage was analyzed for

future sustain.


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INTRODUCTION

EYEBLASTER had been ranked as the leading rich-media vendor (by Nielsen/Netratings) interms of number of ad campaigns and ad impressions served (165 million per week in December

2002). The widespread adoption translated into financial gains as revenue soared nearly fivefold

over a one-year period, reaching nearly $5 million in 2002. All through 2002, the privately held

company was profitable with operating margins just over 30%. It has catapulted itself into being

one of the leading rich-media providers for online advertising.

Rich-media is a rapidly evolving industry; it included a variety of advanced technologies

that had the capacity to incorporate animation, sound, video, or interactivity into websites. Rich-

media ads also allowed interactivity between the advertiser and the consumer. In 2001, rich-

media accounted for only 2% of online advertising, but in 2002, rich-media increased to 7.5%,

making it the fastest-growing advertising segment that year.

EYEBLASTER provided advertisers, ad agencies, and Web publishers a singleplatform to create, deliver, manage, and track rich-media ad campaigns in multipleformats and designs. Its ad management interface was very easy to use and enabledall parties involved to seamlessly run online campaigns.


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EYEBLASTER was founded in 1999 by four Israeli

technology developers and was backed by funds from

private investors. Originally, the founders believed that as

the Internet took off, there would be a huge need to manage

interactive audio messaging on e-commerce sites. Instead

there appeared to be much more interest in creating a tool

for real-time management of visual messaging. Therefore

by mid-2000, EYEBLASTER engineers had created a

product that fit the bill. So while running ads was not very

important for e-commerce sites (due to relatively low

traffic), EYEBLASTER believed it had developed a user-

friendly product that could improve the general

effectiveness of online advertising.

As the Web began to catch on in terms of consumer Web browsing, and with increased

levels of investment pouring into Internet-based companies, advertising online ballooned. By

2000, online advertising represented more than 3% of all media spend, with 79% of all national

advertisers featuring ads online and spending, on average, $2.4 million annually. Advertisers

were also able to buy search-engine placements, and this form of advertising grew rapidly, from

$82 million in 2000 to $288 million in 2001. Advertisers could specify keywords with which

they wanted to be associated, and ads (or link ads) were placed alongside search responses.

Once EYEBLASTER had sufficiently penetrated an industry, it would focus sales effortson convincing the first client of a different industry. Beyond acquiring new clients,

EYEBLASTER soon boasted that 70% of current clients had run additional campaigns.

EYEBLASTER was also the only rich-media vendor to be enabled on AOL, Yahoo!, and MSN;

the BIG 3 that received 70% of all revenue from online advertising.

The first campaign that EYEBLASTER ran was in May of

2001 for 20thCentury Fox Studios. It was a trailer for the movieMoulin Rouge and was a huge success in terms of the number

of Web surfers clicking on the ad to learn about the movie.


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EYEBLASTER was among the first to introduce the floating-ad format, which could

roam on any portion of the page, and the full-page overlay format. This was made possible

through technology that let the ad run on a transparent layer over the publishers Web page. Yet

as rich-media gained acceptance and new formats began appearing, EYEBLASTER felt that

reliance on specific formats could be a hindrance rather than an advantage. Instead by supporting

all popular formats within a single platform, it would alleviate the need for agencies to shift

among third-party servers and interfaces. EYEBLASTER management made a decision in early

2002 to be positioned as the leading platform for enabling rich-media advertising in all formats

and not be associated with only the floating format.

EYEBLASTER floating ads for a promotional

campaign of McDonalds in May 2002

generated a clickthroughrate of 6.4%, compared

with 0.1% for the banner ads. The floating ads

also converted 32% of the clickthroughrate into

registrations and opt-in for future promotions.

Supporting all popular

rich-media formats on all

common-agency ad

servers, it alleviated the

need to develop this

capability in-house.

EYEBLASTER development team

worked hard to make the platform

compatible with virtually all existing

publishers ad servers, there were no

major setup costs or delays once an ad

agency specified it wanted to run a

campaign using EYEBLASTER.

The fact that the agency, the

advertiser, and the publisher

were using interfaces that

were seamlessly integrated

meant decreased chance of

problems along the way.

VALUE FOR

PUBLISHERS(by EYEBLASTER)


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Window Ad

2 sub-formats exist: The interstitialwindow that playsinstantly when a new page is loading.

The superstitialpreloaded into abrowsers cache and did not play

until fully loaded.

Wallpaper Ad

An ad image that replaces the

Webpages background

playing for a set duration.

Full-page Overlay

A full-page floating ad (also called a takeover ad) thatinteracts with the full page and plays within a transparentlayer.

Floating Ad

An ad that animates upon a transparent layer over the

Webpage, without the need for an additional window. The

ad can roam on any part of the page being viewed.

Commercial Break

A full page ad (also called an infomercial or webmercial)that plays prior to the browsers entering a new site or in

transition between pages, before loading the new page.

Expendable Banner

An ad that starts as a banner and can launch a floating ad, a full-page overlay, or expanding panels. The ad can either play

automatically or be user initiated, typically as the mouse rollsover it.

Expendable ad onMSN Messenger

Social Ad(Widgets)


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PROBLEM STATEMENT

Gal Trifon (President and CEO of EYEBLASTER) felt that hiscompany was at a critical juncture despite or in part due to its

achievements in the rich-media advertising realm. Competitors

were trying to mimic EYEBLASTERs formula to success.

Rivals were beginning to realize the importance of securing ad agencies and were dropping

creative and adoption fees that they had previously mandated. There was also a trend toward

consolidation, as many of the leading companies were acquiring small technology companies to

secure competitiveness.

Trifon then commissioned Joe Apprendi and Tom

Jenen to explore several paths the company might take in

the near future:

1) He wanted to know what it would take to sustain thelead position in rich-media ad management.

2) He wanted to know whether new markets were to bepursued.

Total online advertising revenues peaked in 2000 ($8.2 billion) but

saw rough times in subsequent years. In 2001, total spending declined by

11% to $7.3 billion and then remained flat for 2002. While the demise of

many pure-play Internet companies and the economic slowdown explained

part of this decline, many industry analysts also pointed to the

effectiveness of the widely used traditional banner ad to yield desirable

results. Moreover studies indicated that most banners went unnoticed, with

view-through ratesaof approximately 0.36%.

Joe Apprendi

(Executive Vice-President of

Global Marketing and Sales)

Tom Jenen (Marketing Director)

awhich assess how many users convert within 30 days of seeing an ad but do not click on the banner.


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From the outset, EYEBLASTER decided to be more of a technology enables than an

actual participant in the creative or administrative sides of the advertising process. With the use

of rich-media expected to increase dramatically in the next couple of years and with competition

fiercely setting in, EYEBLASTER management was actively considering ways to sustain its

growth. On the one hand, there was the challenge of solidifying EYEBLASTERs position in the

realm of online rich-media advertising. At the same time there was a sense of urgency about the

need to explore other uses for the rich-media platform.

EYEBLASTERs current sales strategy was focused primarily on ad agencies. While

most agencies that had online interests were already EYEBLASTER users (over 400), data

collected before the upcoming management conference revealed some noteworthy trends:

1) Approximately 90% of all campaigns run with the platform in Q4 2002 used the floating-ad format.

2) Usage was not uniformly distributed among agencies, in terms ofthe number of campaigns run or campaign size.

3) Although revenues were growing, sales staff and relatedmarketing costs were escalating quickly.

The complexity required to enable many ofthe formats was nontrivial.

The increased consumer integrity withrich-media ads made ad serving, tracking,and reporting more dynamic and subject toreal-time chan es.

Most publishers already had ad-serving

technology geared toward banners. Ideallysolutions for running rich-media would becompatible with their existing ad servers.

RICH-MEDIA

CHALLENGES

1

2

3

EYEBLASTER estimated that the cost of generating anew revenue dollar was currently 4 times higher than itwas in the first 18 months of the companys existence.


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Trifon also wondered if it was time to shift more of the limited sales effort (8 salespeople

in the United States) to Web publishers. If so, there was a question of what message to

communicate to them as well as whether to keep the current pricing structure. However, there

were unconfirmed speculations that prices were to fall at the beginning of 2003, with some

companies rumored to charge publishers as low

as $3 CPM for serving rich-media ads.

Management also wondered if, instead of

lowering the regular price charged to

publishers, it would be more effective to offer

occasional discounts or volume credits.

In 2001, 48% of the advertising deals were based solely on the CPM model. The CPC (or

PPC) and CPA models; also called performance-based models, together accounted for 12% of

online advertising deals. In the remainder cases, arrangements were negotiated that included a

hybrid combination of both CPM and performance-based pricing.

From a financial standpoint, Trifon stated the companys goal for 2003 was simply:

Sales should double and reach $10 million whilemaintaining the same operating margins.

But as Jenen and Apprendi prepared their detailed recommendations for the upcoming

management conference, taking into account the limited sales force at their disposal, they knew

the marketing challenges of reaching these goals would not be so simple to overcome.

The CPM price anadvertiser (would pay forrunning an ad) obviouslydepended on the specificnature of the website andthe format used.


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SWOT ANALYSIS

STRENGTHS

1) A leading company inonline advertising

2) Technology advancement3) Capable of supporting

multiple rich-media

formats within a single

designed interface

4) ad-management interfacewas user friendly

5) Rich-media ads allowedinteractivity between

advertiser and consumer

WEAKNESSES

1) Pricing model that differedby consumers behavior

2) Multiple formats of rich-media offered were

comparative

3) Too loaded of clientsdatabase without proper

sorting

4) Less competitive brand5) Campaign oriented

W-O

EYEBLASTER needed a

lot of ideas in developingcampaigns as not every

campaign was effective

and short lived. With ITdemands increasing on

online advertising,

database should be

remodeled to good price.

S-O

EYEBLASTER can obtaina competitive advantage byimplementing value-creating strategies, notsimultaneously beingimplemented by any

current competitor. Thesestrategies need to be rare,valuable, and non-substitutable. It must notbe competed right away orit is not sustainable.

OPPORTUNITES

1) The increasingnumber of

internet users

2) IT industry hadbecome new

business

orientation

3) Escalated demandon onlineadvertising

THREATS

1) Rich-media formatssimilarly used by

competitors

2) The entry oftraditional banner-

ad third-party

providers into rich-

media

3) No patented valueon online advertisingmodels

W-T

Online advertising only

depends on 3 pricing model(CPM, CPC & CPA).

Advertisers hold the

demand on pricingquotation while providers

revenue generates by

consumers approach to ad

banners Webpage selected.

S-T

EYEBLASTER was not thefirst online ad provider and

will definitely not the last.

Competition was at its

endless speed with therapid growth of online

businesses. Experienceneeds to be enhanced withlots of new idea for

differentiation to gain

creative enhancement.

Always develop!


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COMPETITORS

CONCLUSION

Trifon, the president of EYEBLASTER felt that a big part of the companys successresulted from having convinced ad agencies to allocate part of their clients online budget to

rich-media using EYEBLASTERs platform. To encourage such adoption, EYEBLASTER did

not charge agencies any usage fees.

Given the smooth execution of some rich-media ad formats required fast Internet

connectivity; there was a positive sign that by 2005 there would be 40% of households in United

States used broadband access. In addition, its product was capable of supporting multiple rich-

media formats within a single interface. Overtime, several features and enhancements were

added that had proven important for agencies. Compatibility concerns were alleviated through a

concerted effort to make the platform seamlessly operable with all existing websites on which

ads would run.

While the behavior of competitors was a cause for concern,overall industry forecasts generated optimism. Online advertising

was expected to grow by 22% over the next five years, with rich-media set to grow at 3 times that pace and to reach 20% of allonline advertising.

EYEBLASTER-enabled ads produced other favorable resultsa

recent study revealed that EYEBLASTERs campaign for FloridaOrange Juice was 280% more powerful than a traditional banner

in creating brand awareness, produced 100% more purchase

intent, and increased product likability by 50%.


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Another feature that EYEBLASTER began offering advertiser was a set of interactive

information and registration sheets for consumers to fill out, which appeared on the Web page

after the ad played. The information recorded gave the advertiser a better sense of who viewed

the ad and opened the door for future customer relationship activities and targeted promotions

(through e-mail, regular mail, or future ads). EYEBLASTER had data to show that the rate at

which such information sheets were filled out as part of a rich-media campaign was up to 10

times higher than without such a campaign. The qualitative feedback from ad agencies regarding

the user of EYEBLASTERs technology was also very encouraging.

5A completely integrated ad creative approvalsystem that would reduce the lead time from theads creation until all parties, from media plannerto publisher, could view and approve the ad.

It made use of enhanced ad-frequency cappingand targeting controls that allowed the advertiserto limit the number of times a particular Webuser would be exposed to the same ad.

Included more detailed reports on adperformance (in term of consumer interactivitywith ad).

Included an increased ability to sequence androtate different ads in real-time, whichaugmented ad flightcontrol.

A sophisticated e-mail notification system wasnow in place to update all parties on the status ofcampaigns running on the platform.

Incorporated with better datacompressiontechniques.

Incorporated with better datacompressiontechniques.

The research and

development (R&D)team, headed by Ofer

Zadikaro, was currentlyputting the final touches

on a new version of theplatform, EYEBLASTER

5.0. It would be the firstmajor new product

release to date and wasthe result of customerfeedback, primarily from

ad agencies, based onnearly 1,000 campaigns

for major brands. Theproportion of times an ad

would run in full with agiven platform was called

the play ratioandtended to be much lower

for rich-media ads thanfor banners. Zadikaro

expected an above-80%play ratio with the new

5.0 version.


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RECOMMENDATION

Apprendi, executive vice-president of global marketing and sales believed that anymonetary incentive should be directed to agencies and not publishers. Because in 2001, many

advertisers had decreased their online advertising budgets because of the limited success of

banners and the general economic downturns. With this realization, EYEBLASTER shifted sales

efforts toward ad agencies by pitched sales that emphasized on the creative flexibility of rich-

media afforded and its increased effectiveness over banners.

Maintaining leadership in the ad-serving business also meant continued product

development. As with sales effort, much of the R&D focus in the past was directed towardaccomodating ad agency needs and facilitating their joint work with publishers. Therefore, its is

recommended for the input for future product versions should now come from publishers or even

the advertisers themselves. This would obviously require the company to work more closely with

advertisers to better understand their needs.

Online advertising differed greatly fromother media in the way ads were served

and managed along with the sites

content. Web publishers had severaloptions when it came to serving ads. Oneoption was to DIY (Do-It-Yourself) and

take responsibility for the entire process.Yet another option for publishers was to

outsource the process. This could (ifoffered) include generating sales from

advertisers.

Next would be to support new creation of brand for the company that

will represent strong impression of EYEBLASTER; as not the only platform

to support the rich-media of online advertising, but also supporting other

platforms that it had acquired through a series of merger and acquisitions.

case methodology - eyeblaster

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