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Journal of Advertising
Research
Vol. 47, No. 2, June 2007
www.jar.warc.com

Lessons from Online Practice: New Advertising Models

Stephen D. Rappaport
The Advertising Research Foundation

The Online Advertising Playbook (Plummer et al., 2007) aggregates and synthesizes what has been
learned about advertising online during its first 10 years. The book answers a challenge posed to The
Advertising Research Foundation (ARF) by a number of marketers, and perhaps best clearly expressed
by Gillette's Pat McGraw: "I really don't need another highly charged sales pitch on the power of internet
advertising. What I would like to know is how it works and why it works."

The collection of over 1,200 academic studies, industry research, and professional articles we reviewed,
studied, and learned from allowed us to develop strategic principles and guidelines for effective online
advertising, and to illustrate each one with case studies that spanned the full spectrum of marketing
objectives from lead generation to loyalty.

We discovered traditional marketers like Procter & Gamble acting most untraditionally and successfully
for Tide Coldwater. We witnessed youth brands, like Scion, taking full advantage of virtual role-playing
games or enabling consumers to interact with their brand through rich media that blurred the line between
branding and direct response. We saw that the smartest marketers are not either/or when it comes to mass
media and online advertising-advertisers like McDonald's choose predominately online media for some
items, offline for others, or blend them as appropriate. We learned that online advertising contributes
most to brand performance when it is planned into the brand campaign from the outset, not used to
"cover our bases" or as another experiment for the interactive team. There are many insights and
principles for effective advertising in the book.

If the Playbook were solely concerned with research on online advertising's first decade, that in itself
would be sufficient for most purposes. Substantial value is gained from a comprehensive, analytical look
back. But from a brand building standpoint, that would fall short because it does not deal with the almost
daily innovations in online technology, or the changing relationships of online media and mass media,
consumer behavior, and brands. Looking forward is especially important now because the industry is
crossing an inflection point, passing from the conventional mass media interrupt and repeat model for
advertising to a family of advertising models centered on relevance.

Why now? The first reason is obvious: consumers are spending more time online. JupiterResearch reports
that the time online consumers spend with the internet roughly equals their television viewing time, about
14 hours per week (Dawley, 2006). High speed connections, of course, are a major reason why; nearly 80
percent of U.S. residential web users went online with broadband connections, and those broadband
users spent about one-third more time online than dial-up users with their slower connection speeds
(Nielsen//NetRatings, 2006). Broadband is ubiquitous and always on. It is commonplace at home and
work, and widely available in restaurants, airports, libraries, malls, schools, etc. and not limited to a
particular device-laptops, mobile phones, and handheld devices of all types send and receive the internet.
Faster speeds provide richer, more interactive consumer experiences, and access to and use of more
entertainment, information, and services-commercial and social, when consumers choose to do so.

We should note that it is important for U.S. marketers to remember that broadband developments are global
in nature and not centered in America. While the United States leads in the number of broadband
subscribers, the United States ranks 12th among Organization for Economic Cooperation and
Development countries in terms of broadband subscribers per 100 inhabitants (OECD, 2005). Marketers
should be looking around the world for insights and innovation, and perhaps especially to countries in
the top 12, which include South Korea, Northern Europe, Japan, and Canada that may serve as
bellwethers.

A second reason is that broadband and new technologies encourage consumers to create, contribute, and
share their thoughts and experiences with others through written entries, sounds, and video, as well as
engage with others around their content. Blog tracking service Technorati (2007) claims there are over
67 million blogs, with 175,000 created daily. Today every PC or Mac ships with video editing software
that can burn discs or easily convert video to a variety of distribution formats. Entire multitrack recording
studios rivaling the most professional operations fit on a few discs and have done so for years. Image,
music, and video sharing sites like Flickr, MySpace (originally), and YouTube abound. Studios, labels,
advertisers, or conventional media no longer fully control content, nor do they have a lock on the means
of production and distribution. The "disruption" of these industries and their economic models is daily
news in the business section.

Such disruption is nothing new, of course, and has established historical precedent. Political economist
and pioneering communications theorist Harold A. Innis showed in the 1950s that change comes from the
margins of society, and from the ability of people at the margins to develop or utilize new media that
challenge the central social, political, economic, and cultural institutions of their day (Innis, 1964,
1986). Just take the original Napster and peer-to-peer file sharing services as an example. The upshot is
that the recording industry, which was threatened by such developments from college students, has taken
steps to protect its business model, but while doing so managed to oppose and alienate its consumer base.
The recording industry has been trying to regain its footing ever since. Will other industries learn from
this example or follow it? A final reason we will consider for the emergence of new advertising models is
that broadband penetration and consumer adoption of new technologies have encouraged advertisers to
experiment with and employ banners, search text advertisements, email, interactive rich media, and
streaming audio and video, and for consumers to learn about brands, participate with brands in new ways,
and to create new brand meanings.

At first marketers, quite naturally, considered online media as extensions of the space and time media-TV,
radio, and print. Advertisements during most of online advertising's first 10 years filled measured spaces
on webpages with variously sized banners, rectangles, buttons, or leaderboards. In fact, a good amount of
early advertising industry work focused on defining such spaces, called Interactive Marketing Units, in
order to standardize practices for the sale and delivery of paid advertising.

For a short while following the dot-com collapse, the internet was nearly written off owing to the failure
of many highly touted website businesses, many of which were based on advertising-supported revenue
models or assumptions about consumers. The problem, we know now, was not the internet, but in the
business plans, management and in the unreasonable expectations for their success. Postcollapse, as
consumers and companies continued moving online, more practical business models emerged and started
proving themselves, such as search advertising (now 40 percent of online advertising spending) and e-
commerce. Along with these came refinements in targeting advertising, understanding how websites build
and hold audiences, and acquiring deeper insights into online consumers and their media
and buying patterns. New technologies and broadband adoption enabled advertisers to make enormous
creative leaps and create landmark campaigns, such as that for BMW Films. These leaps are likely to
continue as marketing and advertising are increasingly peopled with individuals for whom the internet,
eBay, Amazon, Google, and YouTube were always there and which played some role in forming their
worldviews, just as television, film, radio, and print did for prior generations.

From the developments we described, we can see that the sine qua non for interrupt and repeat advertising-
one-way communication from advertiser to consumer-is vanishing from online advertising. We learned
from expert contributions to the Playbook that marketers are moving to three new models of advertising.
The first, the On Demand model, is based on consumers' abilities to select and choose their content and
interactions with brands. The second model is the permission-based (opt-in) model, centered on
engagement, not exposure. The final model is one of advertising as service to consumers.

ON DEMAND MODEL

Central to this model is the consumer as content aggregator, filterer, scheduler, exposer, and disposer.
From a marketer's viewpoint, consumers might be regarded as homo communicatus, "man the
communications manager." The era of consumers reading, watching, or listening on the medias'
schedules seems almost quaint; today nearly every media organization is promoting their ability to be
seen or heard when consumers want to see or hear them. TiVO and DVRs, increasingly found in set top
boxes, are emblematic of this trend. Even network television, which built its business on aggregating
viewers at specific times, is experimenting with On Demand models. Episodes of some programs, even
wildly popular ones, are sold on Apple's iTunes or made available from their own online distribution
systems like CBS' Innertube, or through the shows' own websites. While commuting this Monday morning
on Metro North, my seatmate watched video podcasts of business news programs originally aired over the
weekend. In fact, many media have enjoyed a serendipitous benefit from the on-demand trend: their
archives have become hot properties because consumers seek access to materials from hours, days,
weeks, or years ago. Storage, retrieval, and on-demand access have transformed the media business and
increased the value of its content.

Broadly adopted information search tools are important developments supporting the On Demand model.
Before search engines and good websites, consumers were at the mercy of manufacturers, retailers, and
distributors for brand information. If the store was closed or consumers missed an advertisement,
consumers were out of luck. Capable search and websites optimized for search engines changed that
situation. Today consumers routinely access, evaluate, and act on brand information on their schedules
24/7.

Another important aspect of the On Demand model is content personalization. In addition to produced
content, consumers want to leverage and harness the knowledge power of brands by customizing content to
their interests, needs, and tastes. This takes the form of managing preferences: "I want to see the weather
in the 10016 and 90210 zip codes on my home page," "Update me only when there's new information
about Brand X."

With choice comes responsibility. Professor Jeff Cole of the University of Southern California notes in the
Playbook that "people like choice, but not too much choice" (Cole, 2007). Too much choice can be
frustrating, overwhelming, or immobilizing, and counterproductive from a brand viewpoint. Furnishing
consumers with tools to manage a reasonable number of choices is far better than giving them every
possible option (Wagner, 2007). These can take any number of forms, from reducing the number of
entrees on a restaurant menu, to MyBrand preference centers, or implementing sophisticated business
rules that present the most relevant choices.

This is probably a good time to address the notion of "consumer control" that is in vogue right now. The
ARF Chief Research Officer Joe Plummer is correct when he says, "... nobody's really in control, not the
brand or the consumer." The communications era we are living in is not one-way, either way, and it would
be an error to think that control has shifted fully to the consumer. For the most part, brands still set the
stage and establish the rules. What is true, however, is that consumers have new and powerful options
to accept or reject brand messages that go way beyond the on/off switch.

For brand marketers today, it is not just about stimulating demand for their products and services, but
also stimulating interest among consumers to include their brands in the choices consumers make about
what to see, read, or listen to. Because consumers' media consumption is becoming uniquely individual
through their exercised choices, there are many implications for brand advertising. Taking only one
example, pointed out by Playbook contributor Rishad Tobaccowala, Denuo's CEO, there is a need to revise
widely held views on targeting. He argues that "In an on-demand world, you have audiences of one
whom you need to re-aggregate into large enough audiences to target with both scale and relevance"
(Tobaccowala, 2007). This idea stands the traditional view of segmentation on its head and signifies that
new types of thinking are needed to exploit the advertising opportunities inherent in the On Demand
model.

The Engagement model centers on two key ideas: high relevance of brands to consumers and the
development of an emotional connection between consumers and brands. Additionally, engagement
occurs, like all relationships do, in a social context that can influence the quality and duration of the
engagement.

"Consumers," Joe Plummer related, "want to get involved with brands they care about, and give brand
marketers explicit permissions, through an opt-in program, to involve them with the brand." For these
consumers, brands provide opportunities (not always taken) that go beyond typical transactional
relationships to a hierarchy of privileged statuses and rewards. The Brand Ambassador is probably the
highest status brands bestow on their best consumers. Ambassadors have insider access to marketers and
gain recognition and social standing in the larger brand community by being a spokesperson or leader.
Microsoft's MVP program, which numbers over 2,600 members in 81 countries, is a classic example of
the Ambassador type of engagement program. Ambassadors are not limited to high tech. Food
companies like Del Monte also maintain small, very focused communities that give guidance and
direction.

Because Engagement hinges on emotions and relationships, marketers adopting the Engagement model
conceive it differently from traditional advertising. Standard learning and persuasion measures common
to 30-second TV spots or online banners, for example, like brand awareness, knowledge of brand
attributes, and purchase intention, are ceding ground to interest in understanding what we can think of as
brands' social aspects-they are the ability to involve, inform, and entertain, and longer term, to co-evolve
with consumers through the creation and ongoing development of brand meaning. Engagement is much
more than "I know you." In its ideal form it is about bonding, shared meaning, and identification. Take
Harley-Davidson as perhaps the ultimate example.

Professionals writing about Engagement, view it as opportunity because once consumers have chosen to
receive brands' communications, the strategy is to make it worth their while by providing compelling
brand experiences. Marketing Insight Corporation CEO Vincent Barabba tells us that consumer choice can
"... lead to greater and more meaningful engagement between the consumer and the provider of products
and services" (Barabba, 2007). A similar and more urgent thought is expressed by Digitas Chief
Marketing Officer David Edelman: "... consumers are seizing control. Marketers have no choice, but to
reframe their perspectives and deliver engaging experiences that inform, educate, or entertain. It is about
defining an engaging concept ... making it come to life ... and enabling consumers to call it their own"
(Edelman, 2007).
Engagement strategies are applicable for B2B marketers and B2C marketers. Targeting small business
owners, Visa USA created its Business Breakthrough program to dramatize the benefit of working with
Visa to become more efficient and more profitable businesses. Visa held a competition to identify small
1–5 person businesses that needed improvements in areas like marketing, organizational development,
technology, or accounting. After selecting finalists they hooked the businesses up with appropriate
consultants, and then created video case studies of them. Although competitors such as Intuit,
American Express, and PayPal offer advice, the video cases enabled Visa to more fully engage their
customers by working the cases through and keeping a laser-like focus on efficiency; they assiduously
avoided becoming a mere provider of business information. Customer insight revealed that online
video would be the appropriate medium-research showed that the target audience watches videos more
often than consumers in general or larger businesses, and those customers are more eager to participate in
contests and related events. In just three months the campaign generated more than 2 million visits to the
Business Breakthrough site (Champagne, 2007a).

In consumer packaged goods, Purina pet brands have organized their family of websites from
informational sites to ones around the emotional connection between pet owners and their pets. Today
Purina furnishes customers with picture-sharing sites, free personalized podcasts, ringtones, and
wallpaper-all designed to strengthen the three-way bond among brand, pet, and consumer. Notably Purina
has gone further, furnishing engaging experiences off their proprietary websites-they launched a page of
Purina downloads on iTunes and maintain a presence on Yahoo!'s pet portal, where they contributed the
"Pet Weather" widget that, in addition to the forecast, provides owners with witty sayings from their
dog or cat and gives them the ability to personalize. Says Arc Worldwide account director Chris
O'Brien, who handles Purina interactive, "If you bring them the right tools and the right information, you
are going to build an affinity for your brand" (Champagne, 2007b).

As these examples show, the Engagement model is not mere diversion or mindless entertainment, but a
disciplined approach for achieving brand objectives. Engagement depends on leveraging penetrating
consumer insights that focus the relationship and guide the experiences through which brand meaning is
created, grows, and endures. Solid Engagement strategy is rooted in consumer data, drawing upon
multiple sources that assist marketers in evaluating their engagement efforts, and takes place through
multiple communication channels and touchpoints.

ADVERTISING AS A SERVICE

Advertising as a service aims to provide consumers with information and capabilities that smooth
transactions or enhance brand engagement. Playbook contributor David Kenny, Digitas chairman and
CEO, aptly describes this approach as first identifying the services and information consumers need, and
then creating the messages and experiences relevant to those needs (Kenny, 2007). Planning campaigns
begin with questions from consumers' viewpoints. What services does a consumer need? How does the
service need to function? What is the best platform, or combinations of platforms, to deliver the service?
These questions apply to almost every product category.

Furnishing consumers with messages and experiences occur across media and in both branded and third-
party forms. Take a car. When consumers want to know specifications and details, like engines, trim
lines, or safety features, they turn to branded sources. But when it comes to ratings, reliability, and
quality, consumers are likely to evaluate manufacturers' claims in light of sources they consider more
independent and objective, which can be search engine results, niche programs on cable TV, Consumer
Reports, Car & Driver, or word-of-mouth from friends or family. One task for brand marketers and their
agencies is helping consumers manage the variety of sources brought to bear during brand learning and
decision making.
Or to offer a different example, a colleague wanted to buy New York Ranger tickets online through a
broker. After logging onto the site, he was confronted with an unfriendly, complex process. He tried his
best, but eventually gave up and found another site that, happily, turned out to be just the opposite-a
buying experience that was easy to follow, gave him confidence, and allowed him to easily complete the
transaction. The difference between the two sites selling a commodity-tickets to the same team and
arena-resulted in two different outcomes because the winning broker built its service on consumer
insight that simplified things, whereas the losing site's process appeared to be more for the benefit of
the broker.
Advertising as a service goes deeper than the examples we just discussed to providing personalized
services. Like the good country doctor who treats patients from birth through old age, marketers are
increasingly able to capture their consumers' histories and use them to provide services. This level of
customer knowledge can be used to intervene and assist customers when necessary. Some online retail
websites, for example, pop up a help window when shoppers have performed a certain number of
searches in a short time. It may be that they are having difficulty finding an item or just are not sure what
they want. Staying in retail, Land's End furnishes shoppers with a service that answers the question "How
will this look on me?" Consumers can customize virtual models with their sizes and proportions to see
how a particular bathing suit, shirt, or pants is likely to fit. And service can be even more specific, based
on behavior. These are but a few instances where a little guidance may be very helpful and tip the balance
from browsing to buying and improving the brand experience.

The downside to the good country doctor is that as personal as they are, they cannot provide their
service beyond a local area. A community medicine doctor we know told us, "I can only be as
productive as my own two hands allow." Marketers do not have that problem; they can use technology
to scale their services to large numbers and are not limited by geography or time.

Advertising as a service is perhaps the most personal of the three models we are discussing and, for this
reason, might be considered the most altruistic-brands are helping consumers make decisions in their
enlightened self-interest. Marketers need to make sure they deliver a helpful service at the appropriate
times and avoid the trap of substituting technology for consumer insight and connection.

Now that we have discussed the three models, let us now take a look across them to identify themes that
can guide our practice.

First, it seems clear that while each model may be used alone, we have described a family of models that
can also be used in combinations that marketers deem best for their brands. There are interrelationships
among the three-On Demand furnishes the basis for deeper Engagement, and Engagement leads toward
strengthening the brand-consumer relationship through Service. These models are not the final word;
they may converge or splinter, or new models may appear. One thing we can be certain of is that we will
not have another 75 years of the same model that is dominated by just four mass media.

Second, the new models shift attention away from traditional one-way models of advertising centered on
reach, exposure, cost-perthousand, and standard brand metrics to measures that evaluate the quality of
the relationships among consumers and brands, of which there are many (Plummer, 2006). In David
Kenny's words, "engagement trumps awareness." And as Vincent Barabba counsels: "Marketers need to
start taking the time and energy to transition their models to take full advance of the desires and
competencies of internet users to reach the right people with the right message, rather than the most people
with the same message."

Third, the new models emerge from new technologies, but they are not determined by technology.
Technology is an instrument of strategy and execution. MSN Corporate Vice President Joanne Bradford
points this out in her Playbook contribution: "Start with the consumer to understand what drives peoples'
passion for your products and services, and then determine how you can use technology to deepen those
relationships" (Bradford, 2007).

Fourth, deepening those relationships depends on collecting and aggregating data on individuals and
combining those findings with additional sources of consumer information and insight. A number of
contributed pieces in the "Futures" chapter of the Playbook spoke to the issue of trust and privacy as
aspects of these new models. There are several dimensions here-the belief that brands are reputable and
responsible, that they will deliver on their benefits or make good when they fall short, and that they
will treat consumers' personal information with integrity. Although these are very topical concerns that
are hotly debated and framed in terms like the "privacy issue," we can look at them from a perspective
different from consumer advocacy, and that is as essential foundations for brand-consumer
relationships and brand demand.

Last, these new models provide marketers with flexibility and a range of options they can apply as
consumers and situations warrant. "The best thing," Joe Plummer tells us, "is for brands to experiment with
the model, or combinations of models, that suit the brand best."

BIOGRAPHY

Stephen D. Rappaport is director of knowledge solutions for The ARF. In this, a new role for the
organization, he is responsible for creating knowledge-based products and services to benefit members and
the industry at large that are in line with The ARF's mission. He is the principal author of The Online
Advertising Playbook, and shares co-authorship with Joe Plummer, Taddy Hall, and Robert Barocci.
Prior to joining The ARF, Mr. Rappaport worked as a researcher, forecaster, and strategist for Interpublic,
McCann Worldwide, BBDO, and DMB&B. Since the late 1970s, he has explored the implications of new
electronic technologies and their impacts on advertising and marketing practice. As the chief marketer
for several business-to-business and consumer packaged goods companies, Mr. Rappaport applied those
insights to the marketing and advertising of new and in-market products and services. His undergraduate
and graduate education at Stony Brook University and the University of Pennsylvania, respectively,
concentrated on communications and society.

REFERENCES
Barabba, Vincent. "The Challenges of Change: Relevance, Empowerment and Authenticity." In Joe
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Bradford, Joanne. "Future: Fast Forward." In Joe Plummer, Steve Rappaport, Taddy Hall, and Robert
Barocci, The Online Advertising Playbook.
New York: John Wiley & Sons, 2007 (in press).
Champagne, Christine. "Dear Visa: How Visa Used Video Case Studies to Give Free-of-Charge Advice to
Small-Business Owners." OMMA Magazine, February 2007a.
Champagne, Christine. "Going to the Dogs ... and Cats." OMMA Magazine, February 2007b.
Cole, Jeff. "Changing Rules and the Rules of Change." In Joe Plummer, Steve Rappaport, Taddy Hall,
and Robert Barocci, The Online Advertising Playbook.
New York: John Wiley & Sons, 2007 (in press).
Dawley, Heidi. "Timewise, Internet Is Now TV's Equal." MediaLife Magazine, February 1, 2006.

Edelman, David C. "From the Periphery to the Core: As Online Strategy Becomes Indistinguishable from
Marketing Strategy, Organizations and Agencies Will Never Be the Same." Digitas, Inc., 2007.
Innis, Harold Adams. The Bias of Communication. Introduction by
Marshall McLuhan. Toronto: University of Toronto Press, 1964.
Innis, Harold Adams. Empire and Communications,
David Godfrey, ed. Victoria, British Columbia: Press
Porcepic, 1986.

Kenny, David. "Advertising as a Service." In Joe Plummer, Steve Rappaport, Taddy Hall, and Robert
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OECD. Broadband Statistics. Organization for Economic Cooperation and Development, June 2005.
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