ROI Driven Online Advertising Presentation by Yaron Ilan (yaron@evrit.co.il)

1. ROI Driven Online AdvertisingPresentation by Yaron Ilan (yaron@evrit.co.il) Top Internet Advertiserswho are they and what can be learnt from them? ISOC IL - 6th Annual Conference

2. Topics • Introduction • Top advertisers • Who are they? • Common characteristics? • ROI Driven Online Advertising • Definition • How to do it? • Who can do it? • Notes on Israel • Q&A ISOC IL - 6th Annual Conference

3. Introduction (1) • The Internet is a platform for communication, commerce and media delivery. • Advertising is the main revenue source for traditional mass media companies. • Subscription fees are the main revenue source for non-mass media companies. • The Internet can be used both as a mass media platform and as a direct delivery platform. ISOC IL - 6th Annual Conference

4. Introduction (2) • Internet companies struggle to sustain themselves with advertising revenue. • They may turn to subscription based models. • Turning away from advertising means turning away from being a mass media platform. • The future of the Internet as a mass media platform depends on online advertising. ISOC IL - 6th Annual Conference

5. Introduction (3) • Market Data: • CTR: 0.5% and dropping • CPM: • Rate card $28 • Street Price: $5 • Equilibrium $0.4 • Common wisdom: Online advertising is ineffective. • People don’t notice banners. • People don’t click banners. • People don’t buy online. • Total yearly spending around $8B. ISOC IL - 6th Annual Conference

6. Top Advertisers • Nielsen NetRatings. • Monthly. • Home users. • U.S • December 2001. ISOC IL - 6th Annual Conference

7. Top Advertisers • Nielsen NetRatings. • Monthly. • Home users. • U.S • October 2001. • The list needs to be “Cleaned” ISOC IL - 6th Annual Conference

8. House Ads • Unsold inventory is filled with House Ads. • Two types: • Blank fill. • Promotion of additional. Services and partners. • Media Companies are not Advertisers. ISOC IL - 6th Annual Conference

9. House Ads • Unsold inventory is filled with House Ads. • Two types: • Blank fill. • Promotion of additional. Services and partners. • Media Companies are not Advertisers. ISOC IL - 6th Annual Conference

10. Top Advertisers • Three Leading Segments: • Financial Services. • Online Services. • Retail. ISOC IL - 6th Annual Conference

11. Online Services • Products • Information Goods. • Low fulfillment costs. • High Profit Margins. • Network effects. • Economics of Scale. • Sample: ISOC IL - 6th Annual Conference

12. Financial Services • Products • Information Goods. • Low fulfillment costs. • High Profit Margins. • Sample: ISOC IL - 6th Annual Conference

13. Retail • Products • Traditional. • “Nothing special”. • Sample: ISOC IL - 6th Annual Conference

14. Top Advertisers • “Not your everyday advertiser”. • No big brand names. • No traffic buys by “Dot.Coms”. • Small private companies. • All sell online. • All promote specific product or service. • All spend heavily. ISOC IL - 6th Annual Conference

15. Top Advertisers • All employ an ROI Driven Online Advertising Strategy ISOC IL - 6th Annual Conference

16. ROI Driven Online Advertising • Definition: A method of Online Advertising in which the Advertiser: • Can directly measure ROI of advertising activity. • Uses ROI as the sole decision factor for advertising activity. ISOC IL - 6th Annual Conference

17. How to do it? • Every ad is tracked. • Conversion ratios are calculated. • Media value is calculated. • Media buys are based on ROI. • Deal structure is modified: • CPM to CPC. • CPC to CPA. ISOC IL - 6th Annual Conference

18. ROI Driven Online Advertising Characteristics: • Breakeven point is clear. • Gross profit on each dollar spent. • “Unlimited” Advertising Budget. • Growth constrained by market prices. • Creativity by itself is irrelevant. • Brand Recognition is a side effect. ISOC IL - 6th Annual Conference

19. Who can do it? • Everyone can try. • System Requirements: • Tracking. • Online Sale/Order/Lead capabilities. • Management Requirements: • Commitment to strategy. • Basic knowledge of Statistics. • Product Requirements: • Short Sale cycle. • High Revenue/Conversion ratio. ISOC IL - 6th Annual Conference

20. Notes on Israel • A small niche market with almost no international advertising. • Underdeveloped local e-commerce. • Few “Big players” many “too small players”. • Wrong perception of the Internet as an advertising platform: • By advertisers • By media companies • Village mentality. ISOC IL - 6th Annual Conference

21. Summary • ROI Driven Online Advertising is the dominate strategy. • The Internet can be a very effective media platform for advertisers. • Online advertising future is directly linked to e-commerce development. • Those who choose not to play miss an opportunity. ISOC IL - 6th Annual Conference

22. Questions ? ISOC IL - 6th Annual Conference