The Online Essays: Lorenzo Wood

Oyster's Lorenzo Wood argues that the participatory nature of the online experience means advertisers must aim to engage in a dialogue with consumers.

It's 1994. In Arizona, the husband-and-wife legal team Lawrence Cantor and Martha Siegel bombard internet bulletin boards with what will soon become known as spam. Meanwhile, the launch of the online magazine Hotwired.com gives the world its first "banner ad". "Have you ever clicked your mouse right here?" it reads, before ending with a pregnant threat: "You will." The ad is for AT&T.

That was ten years ago. Since then, the world has changed. Cantor and Siegel are divorced and, since 2000, AT&T has generated more revenue from data than voice. Technology has evolved, bringing the internet to a new maturity. Browse the web today, though, and you could be forgiven for thinking that both spam and ever-more-intrusive ads are something new.

Back in 1994, there was no doubt that the web was the runt - albeit strangely attractive - of the media litter. Now, overcoming the hype of the boom-and-bust years, it has developed as a real threat to print and broadcast media. Recent media- consumption studies in the US appear to show that the predictions of many "e-vangelists" have begun to be realised - that the highly attractive 18-to-34, affluent male demographic is deserting print and television for online news, information and entertainment. These people are moving away from passive consumption; the internet is becoming a primary channel in which they actively participate.

Participation is the key difference - and the key opportunity - for advertising online. Consider advertising in two media in which people do not "participate": magazines and TV. Ads in magazines do not disrupt the experience of reading a magazine; in many cases, they may contribute as much as the editorial content to holding a reader's attention. Advertising on TV is also frequently not disruptive to the viewer's wish simply to be entertained. On the other hand, users of personal video recorders such as Sky + choose to watch specific programmes. This requires participation, and sets up a different value contract in the minds of users. In most respects, it's a big improvement - for PVR users, all the TV they watch is "good" - but the idea of disrupting their chosen viewing with advertising runs counter to that value contract.

Right now, the web is an entirely participatory medium. Unlike magazines, you can't leave a few web pages open on the coffee table. Unlike television, you can't leave it on in the background all day. And, although wi-fi and small, cheap laptops are starting to have an effect, you're very likely to sit down at a desk or table to use it. As a result, even when your goal is simply to be entertained, you enter into a dialogue. Advertising that interrupts a dialogue is rude. It might be memorable - so an advertiser might be pleased with perceived recall rates - but the memory is unlikely to be a good one.

So, has advertising ruined the online experience? No. Even if some advertising has made it briefly irritating. The reason it has not - participation - is also the opportunity.

If I really don't like the advertising in a magazine, I could - theoretically - carefully cut out all the content, paste it all together in a new bound volume and throw away all the advertising. If I don't like the advertising on television, I could - and a few zealots actually do - make recordings with the ad breaks edited out. This behaviour is unlikely for the obvious reason that the effort involved far outweighs the benefit. It also results in a lower-quality product than the original.

Magazines and television are delivered by inflexible carriers, but the carrier for the web is the ultimate in flexibility - the Swiss-army-knife PC. Online, people don't just participate in the dialogue with a website provider, they participate in the moulding of the delivery medium to suit their needs.

Today's in-your-face dynamic banners that paint over the page you're trying to read are an evolutionary step on from pop-ups - a Darwinian change driven by widespread adoption of pop-up blockers. But the diversity of the delivery medium will only increase: specialised browsers, feed readers and other software increasingly let people extract what they want from online sources in the form that they want it. Over the next few years, and particularly with the next major release of Windows, the edges of "online" will blur into a seamless, configurable experience - a trend as visible in the mobile space as on the desktop.

This is the opportunity. The more people invest in making the medium their own, the greater their attention and loyalty to it. Advertisers that create value contracts through that medium will get ever more focused, positive attention, and they are beginning to realise the possibilities.

No wonder the IPA Bellwether Report for 2003 showed that a higher proportion than ever of UK advertisers are now allocating more than 10 per cent of their marketing budget to online.

The highest returns on investment in online ad-vertising at the moment are coming from well-planned, intelligent search-engine marketing focused on pay-per-click keywords, the most famous example being Google's AdWords programme. These are well designed to fit in with, and add value to, the user's activity. As "hooks" they are very effective, but the real value comes as part of an integrated journey, where each click delivers value to the user, and can be tracked and measured.

"Online" advertising is increasingly not just about the web. Over the next ten years, mobile phones will become richer and more sophisticated delivery channels for services. PVRs and video-on-demand will put television viewers, collectively, into a newly participatory mindset. And new classes of devices will become widespread, creating a world where you can, in fact, leave a few web pages lying open on your coffee table.

Practical user research - prototyping, observation, iteration - is already a necessity for high-quality interactive service design. Advertising needs the same techniques to build a deeper understanding of how people apprehend and interact with the whole mix of channels - more than "media-neutral planning", this extends to how people's objectives and attitudes change during their journeys. The response must be properly integrated campaigns, where advertising delivers perceived value when people first encounter it, and continues to add value at each subsequent step.

Advertising that does not do this will become increasingly marginalised.

Advertising that gets it right, on the other hand, will be actively solicited and welcomed by people for whom it provides value. A rich prize indeed.

Lorenzo Wood is an innovation partner at Oyster Partners.

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1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).