Internet Co-op Documentation:

9/98 Update from the Internet Task Force Committee

Question: Since the report made by your Committee was published in October 1996 (see below) what has happened on this subject?

Answer: Nothing significant has changed since that report. The key point that seem to come out is that most resellers in most businesses, even technology, are usually not very interested in diverting real dollars from established media and activities to ads on their Web site. Issues raised a year or two ago about documentation (tear sheets in effect) are less a concern than relatively low dealer interest. Documentation isn't all that hard with prior approval and a stated period when the Internet ad would be up. Requests for funding of Web sites are more of concern because "what is the standard?" A preemptive approach here might be to offer a template, which the dealer can localize, as with an ad slick, and get co-op funds for this purpose as long as the manufactuer's in-house resource does the work. That controls costs, and it can also be stated that this one-time reimbursement is all the Internet expense the manufacturer will bear under current plans. Hyperlinking to the manufacturer's site is also a good idea. (Offered by Miles David, TradeOne Marketing, and NAPAA Internet Task Force Coordinator)

Panel Moderator: Miles David, Vice Chairman TradeOne Marketing

INTERNET CO-OP ACTIVITY LEVEL NOW: 5 out of 30 manufacturers attending the 2 sessions had some Internet co-op involvement; 2 had paid claims, other 3 now reviewing proposals from retailers.

WHAT SHOULD MANUFACTURERS PAY FOR? The two who had reimbursed on a claim paid for a Web site or part of one. At this early stage in Internet co-op, content expenses (cost to develop ad material) was what those who volunteered comments expected to reimburse. Some thought they should also pay to refresh content. However, a later show of hands in the first and larger of two sessions seemed to indicate only about half thought they should pay for content development, which would be the equivalent in print co-op of paying an ad agency to create the ad.

In the second smaller session, the thought was again volunteered that manufacturers pay for content development. But there was some comment that manufacturers should not pay for the ongoing cost of a Web site, such as for the Internet Service Provider (ISP) inserting the retailer's home page on the Internet.

HOW MUCH TO PAY FOR CONTENT? Moderator presented a Web Price Index for Small Sites, defined as 40 pages or under:

• National High.......$200,000
• National Median......$26,100
• National Low...........$2800
• Small Entrepreneur......$600

Source: Advertising Age Net Marketing Magazine, October 1996

Point made was that cost range for Web site production was clearly very wide. There was discussion of a need for some form of standard manufacturers might work from to indicate how much they would pay for content creation.

TEMPLATES -- AD SLICKS: Someone suggested creating "templates," perhaps meaning a form of Web ad slick which could be furnished to the retailer. It was unclear whether the word template was meant as an ad slick or a rate card for creating a site.

PRIOR APPROVAL AS SAFETY NET: Since many manufacturers have a Prior Approval clause in co-op Guidelines, this was suggested as protection against excessive retailer Internet claims for content creation.

There were indications some attending were unfamiliar with the Prior Approval concept. One or more said it would be unwieldy to have to handle individual P.A. Internet co-op requests. Others accepted the observation without expressing concern.

AUDIENCE DELIVERED BASIS FOR WEB REIMBURSEMENT: Moderator asked whether software recording hits and/or page views might be a basis for paying Internet co-op. Ability to use the server software to count hits and click-throughs is a characteristic of the Web as an ad medium. In the past, many advertisers felt their ideal would be a count of the audience actually exposed to their ad or commercial. If it can be provided with Internet ads, does it become both the ultimate audience size measurement and proof of performance in one?

Yazan Omar, Co-op Marketing Manager of CompUSA who attended, said requiring an audience count was holding the retailer to a higher standard for Internet advertising than for other media like circulars or ROP. There was some chin-nodding over the value of a count of exposures to the site, but the concept did not draw immediate approval or disapproval from most in the first of two sessions. It seemed an unfamiliar concept to attendees.

In the second session, there was some discussion of this subject and the observation that the measurement would be better if it counted click-throughs rather than hits, with click-through meaning going beyond an initial site visit to a backup detail page. Roger Vickery, NAPAA's president, noted that the NAPAA home page employs an independent company to count page visits.

There was some discussion about whether counts could be rigged such as by programming hits artificially; or if registrations are requested by devising a program to enter names from a CD-ROM phone directory.

As part of input for the group discussions, the moderator provided some background on Internet measurement. Whether counts of hits might eventually be rigged for co-op or not, Web measurement already stirs some controversy. There are questions about what is being measured and the print media's non-profit auditing association, Audit Bureau of Circulations, has formed a subsidiary to audit Internet audience counts. A subsidiary of A.C. Nielsen, Internet Profiles Corporation (I-Pro) among others, audits counts of Web exposure and considers page visits as opposed to hits a standard for exposure.

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