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It is a common knowledge that companies like to make some advertisements for their products and the reputation of companies. With the development of technology, there is a new kind of advertisement which is the Internet advertisement. Whether the Internet advertisement is better or the traditional advertisement is more useful has been sparked a heated debate. Some people hold the belief that Internet advertisement is better, it is more power. While others think the opposite. Now let us discuss the affection of Internet advertisement and traditional print advertisement. We will see which makes more sense for a company to spend their money on. I prefer to the first view.
First, I am going to talk about what is traditional print ad. Direct Mall, Yellow Pages, Radio, TV (Broadcast Cable), Magazines, and Newspaper, these are traditional print ads. The breadth of U.S. advertisers across virtually all industries means that growths of advertising spend is highly correlated with the GDP, a measure of country’s productivity. The story becomes different when disaggregating advertising spends by channel. While TV, direct mail and newspapers account for nearly three-fourths of all advertising spending combined, the Internet channel has grown the fastest since 2001, taking share away from most traditional channels. Internet advertising grew at an annual clip of 18% from 2001-2006 and only cable TV (10%) was close to a double digit growth rate. Other channels basically kept pace with GDP growth (about 3%), with newspapers (1%) and radio (2%) most negatively affected. Total US internet advertising was $21.2B in 2007, a 26% increase over 2006. Consumer related advertising made up 55% of revenue. However, in the first quarter of 2008, for the first time in three years, quarterly internet ad revenues failed to set a new record.(the figures come from the article which is named Impact of Internet Advertising.)So, we can see the importance of traditional ads from the GDP, and the GDP is related to company profits closely.
Second, I want to say something about Internet ads. The internet powerfully influences industry structure and sustainable competitive advantage. The Internet weakens industries’ profitability, as rivals compete on price alone. And it no longer provides proprietary advantages, as virtually all companies now use the Web. The Internet is no more than a tool-albeit a powerful one-that can support or damage your firm’s strategic positioning. The key to using is most effectively? Integrate Internet initiatives into your company’s overall strategy and operations so that they 1) complement, rather than cannibalize, your established competitive approached and 2) cerate systemic advantages that your competitors can not copy. Integrating Internet
initiatives enhances your company’s ability to develop unique products, proprietary content, distinctive processes, and strong personal service-all the things that create true value, and that have always defined competitive advantage. Advertising on the Internet has the dual benefit of being generally more efficient and effective compared to other media channels. A standard advertising cost metric is CPM or Cost per Thousand Impressions. For example, a $1 CPM equates to a cost of $1 to reach 1,000 theoretical viewers or readers (theoretical because not everyone will read or look at an advertisement). Internet CPM rates in 2006 averaged $6, much less than most traditional media (see table below). Compounding this lower cost is the effectiveness of Internet advertising, which can be measured using a variety of tracking methods. An advertiser can tell, for example, who clicked on an Internet ad and even who bought a product or service during an internet session. Companies such as Google and Yahoo have leveraged the measure-ability of the Internet to charge advertisers for clicks rather than impressions, further attracting advertisers with its pay-for-performance model. On the other hand, it is extremely difficult to measure how effectively television, newspaper, radio or magazine ads drive sales.
(This graph comes
from Google imagines)
Finally, I would like to put Internet ads and traditional ads together to show something. It is well-known that ads can make profits for companies. So, no matter Internet ads or traditional ads all can bring money for companies. The difference is just which can bring more profit for a company so that a company likes to spend their money on.
And we can see it very clear traditional ads can make more sense for a company to spend their money on. The traditional ads have been existed for many years. I hold the idea that traditional ads look like the grass live in individuals’ mind. It is more acceptable. But with the new generation born, and touch the new staff, maybe they will change. {In the upcoming fifth stage, information technology will be used not only to connect the various activities and players in the value system but to optimize its working in real time, Choices will be made based on information from multiple activities and corporate entities.}(Strategy and the Internet, by Michael E. Porter P.14).
These years traditional ads is more acceptable, because it existed many years, and Internet ads just come out, but Internet ads have a huge progress. So, I think Internet ads will more sense for a company to spend their money on in the future.
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