DAN, Are You Following Me?

Online marketing traditionally focuses on gathering volumes of data ranging from basic demographics to past purchases and personalized “wish lists” in an effort to analyze the past in order to predict future interest. Lost in the shuffle is the here and now—that is, the customer’s current interest.

Marketers have shifted media as technology has advanced, continuously improving their ability to target the customer. For the innovative marketer, the Internet opened new doors early on. And now that the Internet is part of everyday life for hundreds of millions of potential customers, companies must re-evaluate their online marketing strategies to ensure effectiveness.

One question marketers should ask is, “How do I reach the consumer with the right offer, when the consumer is most likely to act on it?” 

Americans turn to the Internet more and more as their source of entertainment, commerce and community. According to a recent Pew Internet and American Life Project survey, the size of the online population on a typical day grew from 52 million Americans in March 2000 to 66 million in August 2003—an increase of 27 percent. The numbers alone show that the opportunity for marketers is clear.

An opportunity unique to the Internet is marketers’ ability to target a large population with relevant offers based on their current, at-the-moment, demonstrated interests. The original premise of online advertising focused on the ability to deliver targeted advertising, but the reality is that it was (and continues to be) mostly based on guesswork and aggregate information about a site’s demographics. Results from online marketing staples such as banner ad networks, pop-ups and email marketing have plummeted, largely because of their decreasing novelty and low relevance to the viewer. 

The key to unleashing the power of the Internet for marketers is to reach consumers when and where they are most likely to purchase#this is where Desktop Advertising Networks (DANs) join the online marketing mix.

The Rise of Desktop Advertising Networks

There is an important architectural distinction between site-based messaging and that of a Desktop Advertising Network. While an advertisement or offer on a Web site can’t be seen if someone’s not visiting that site, DANs are able to reach consumers anywhere they go on the Web. This emerging advertising model offers marketers access to millions of willing consumers through software that resides on their computer desktops. In contrast to a Web site, which typically delivers either a large, but untargeted audience, or a targeted but small audience, the DAN can deliver both precision targeting and mass reach. By interpreting each consumer’s current activity#with algorithms that analyze keywords, URLs, HTML code, and search terms in use on the consumer’s browser#the software is capable of making highly relevant offers to each consumer in real time.

This desktop advertising approach is gaining traction with consumers and marketers alike. First, marketers are seeing click-through rates that dwarf those of traditional online advertising, and producing dramatically better results through the relevance of the DANs’ instant marketing offers. Second, consumers are benefiting from relevant offers that save them money when it is most useful, such as travel vouchers offered as someone is booking an airline ticket.

Consumers participate in a DAN in exchange for free popular software—such as P2P file sharing applications or desktop weather applications. This is similar to the network television model marketers are familiar with where viewers get free programming in exchange for viewing commercials.

The popularity of DANs among consumers has vaulted a handful of them into Nielsen//NetRatings’ ranking of top Internet properties#with tens of millions of active consumers across the leading DANs#regularly outdrawing brands such as Walt Disney Entertainment Group, Terra Lycos and RealNetworks. The combination of audience size and targeting capabilities has made DANs a near requirement in today’s online marketing mix.

How It Works: An Online Travel Service Targets Reservation Hunters

A leading Internet-based travel service wanted to jump start its online marketing efforts, and decided to try the DAN approach. The travel service supplied the creative content to a major DAN along with a series of keywords it wished to target in hopes that the software could target consumer activities that most likely matched its offer.

As consumers on the DAN researched travel options across the Internet using specific dates and destinations as well as URLs and keywords such as ‘flights’ and ‘reservations,’ the desktop advertising software presented them with relevant offers for the Internet-based travel service. The campaign drew 8 percent click-through rates, dramatically better than the service’s other advertising buys.

The ability to make marketing offers at the very instant the consumer is most likely to purchase has seen DANs achieve click-through rates that average 4 percent and rise to as high as 20 percent. The most popular DANs can deliver an audience across the entire spectrum of topics, such as automotive, travel, retail, finance, entertainment and dating.

Challenges Marketers Face With DANs

As a new advertising model, DANs face confusion and skepticism#a combination that hinders rapid growth and mainstream acceptance. For instance, some large brand name companies have said that DAN-generated marketing offers placed in front of or beside the browser displaying their Web sites violate copyrights or trademarks and they claim that DANs are taking away sales.

However, in recent months, federal court decisions have upheld the legality of DANs and their contextual advertisements, supporting the consumer’s right to choose to use advertising software and invite content onto their desktops. As the Internet was intended, control of the online experience remains in the hands of the individual.

Marketers are also cautious of DANs because of the frequent association with pop-ups. Pop-up advertisements are used by nearly all online entities, most of them by Web site publishers. Much of the consumer frustration stems from pop-ups’ lack of relevance, and being overwhelmed by them at every Web site they visit. This has even prompted some consumers to install pop-up blocker software to eliminate them from their online experience.

To overcome these concerns and benefit from the types of response rates seen with DANs, marketers should work with desktop advertising providers to ensure:

  • User privacy must be priority No. 1. Marketers should be assured that no personal information will be gathered from the user’s desktop or browsing habits, and choose a partner whose software uses ad-serving algorithms directly on the user’s desktop rather than via a third-party server. This will strengthen the marketer’s brand and relationship with the consumer by ensuring their privacy is respected. A DAN should outline its privacy policies in plain English with their partner’s user agreement.
  • They enable delivery of relevant marketing offers in a number of formats, including but not limited to pop-ups. Formats such as panoramics, sliders, leave-behinds, transparencies and branded product images give the marketer the greatest flexibility in how to present its marketing offers.
  • Marketing offers are clearly branded. This will help differentiate to the user between an instant DAN offer and the ocean of irrelevant pop-ups they are fighting with.
  • Its software partners (file-sharing, weather applications, etc.) offer consumers a choice between a paid version free of advertisements and an equal but free, ad-supported version. This helps drive consumer awareness, participation, and acceptance, thus driving up the value of the DAN concept and the advertising within it. Just consider the network and commercial-free paid TV analogy and consumers’ acceptance of that model.
  • Control the number of offers presented to a consumer in any given period of time. A very low frequency, combined with precision targeting abilities of an effective DAN, will result in better response rates and an improved user experience with a given brand.

Scott Greenberg has been VP of Sales Channel Partnerships at WhenU.com since early 2003. He has led WhenU’s sales efforts and increasing engagement with mainstream marketers. Previously, Scott served as head of business development for Yahoo! Internet Life magazine, and worked as the VP of Corporate Development at Phase2Media. He graduated with an MBA from the University of Pennsylvania’s Wharton School.

     

    Comments

    Seth Gisser
    Seth Gisser March 5, 2008 at 12:38 PM

    As a partner in DesktopWidgets,org, I found your article enlightening. it is informative and offers insight into what we are trying to accomplish.

    Our custom desktop advertising solutions are the forerunner of this new wave of advertising.

    Feel free to have a look at http://www.desktopwidgets.org

    Regards,

    Seth