Michael Ahern

Santiago Andujar

Nathan Blouin

Rebekah Gilbert

Min-Jee Hwang

Ana Sviatschi

NYU Stern Firms & Markets Spring 2011

Early Days of IA, and the Rise of the Consumer Internet

Types of Advertising Online(Morgan Stanley Dean Whitter)

1997 1998 1999 2000 2001 2002 2003

Banners and popups

80% 52% 50% 46% 42% 41% 40%

Sponsor 15% 40% 39% 39% 34% 32% 30%

Interstitial 5% 3% 4% 5% 6% 7% 8%

Email 0% 1% 3% 6% 10% 13% 15%

Other 0% 4% 4% 4% 8% 7% 7%

The Early Consumer Internet and the Birth of Internet Advertising

America Online• 1989 AOL founded

and start of ISP Wars

MSN to Bing•1995 MSN Released, then LiveSearch, then Bing

Yahoo!•Started in 1995 as a search directory

Google•google.com was registered on September 15, 1997

How has the industry changed throughout the years?

HUGE growth

How has the industry changed throughout the years?

What is Internet Advertising?• Types of ads• Types of sites that show ads

Definition• Company A has some sort of content to draw audience• Company A sells (in other words, supplies) this audience to company B so

that B can advertise their products

How has the industry changed throughout the years?

Supply has increased Demand has increased

How has the industry changed throughout the years?

What Advertising Models Have Been Most Successful?

Successful Models GSP • “generalized second-price auction”• Advertisers bid for certain keywordswith maximum willingness to pay for a click• Each bidder pays the next highest advertiser’s bid. Yahoo!

•Yahoo! only ranks advertisers in decreasing order of bids and charges the next highest advertiser’s bid.•This model ignores other factors that might be relevant to advertisers

• Google AdWords computes an advertiser’s “rank number,” which is based on Click Through Rate and other factors.

• Ads get ranked this number. Advertisers are then charged an amount that would sufficiently exceed the next advertiser’s rank number.

Google

• Increasing value of alphabet for advertisers • Brands who integrate this method receive more

impressions

• The Quest for a Shoe with Google Instant• S – Skype appears on the whole first page• Sh – Shoprite appears on the whole first page• Sho – Still Shoprite• Shoe – Zappos, Payless, DSW

• A consumer could be led to another product and not even end up shopping for what they originally intended. This places huge value on bidding on letters.• Ensure your ad shows up on pages where your letters appear.

What Advertising Models Have Been Most Successful?

4%

4%

5%

7%

7%

8%

8%

11%

12%

13%

21%

Media

Entertainment

Pharma & Helathcare

Leisure and Travel

Consumer Packaged Goods

Others

Computing products

Auto

Financial Services

Telecom

Retail

$18.4

$44.5

$11.9 $11.2

$49.5

$8.2

$15.3$17.6 $17.6

$22.5 $22.8$26.0

Radio Broadcast TV Magazines Cable TV Newspapers Internet

2000 2010

Industry shifting ADV budget to internet advertising

Become a chicken fun!

Consumers look for ads instead of

ads reaching consumers

Community Building web pages

Main concerns for advertisers in this industry

Effectiveness / ROI

• Do more ads and clicks necessarily translate into higher sales/profits?

Main concerns for advertisers in this industry

Restrictions & Bans

•Adblock, Noscript, etc

Main concerns for advertisers in this industry

Ethics

• Manipulating Adwords - methods to falsely up the advertising revenue• Content Farms – spamming search results

Consumers Do Not Want to View Ads

• Internet Privacy & Data Security Concerns; Consumer Distrust• Over saturation

Constantly Evolving Market

• Developing New Strategies Based on New Technologies/ Trends

Main concerns for advertisers in this industry

Points, Badges and Quests

Big Data

Big Data has been around for a long time between credit card transactions, phone call records and financial markets. Companies like AT&T, Visa, Bank of America, Ebay, Google, Amazon and more have massive databases they mine for competitive advantage. But lately, Big Data is finding its way to the smallest startups. The Web and cloud computing brings Big Data everywhere. But what exactly is pushing Big Data forward?

Socialnomics

Inverting the paradigm