Types of Internet Advertising

A fundamental consideration in Internet advertising is finding ways to distribute information to consumers or inducing consumers to visit web sites. When firms solicit customers, however, such activities are regulated under various statues governing disclosure, liabilities, and truth in advertising. Therefore, what constitutes advertising on the Internet is an important issue to be settled in the near future. The Federal Trade Commission's (FTC) Bureau of Consumer Protection, for example, recently forced Apple Computers, Inc. to offer $599 bargain upgrades to its customers who purchased entry-level Performa models; Apple's advertisements had given a false impression that the upgrade would be inexpensive and timely. The upgrade was so expensive that it equaled prices of a new computer. To protect consumers from such instances, the FTC monitors and evaluates advertising activities. Does product endorsement on newsgroups constitute advertising? Should the FTC scrutinize all types of newsgroup postings, web links, e-mails, and so on? The Federal Drug Administration has strict rules on how drugs are marketed. Should product information pages on a pharmaceutical firm's web page be treated as advertising? Can one of its employees mention its products on a chat line or post information on a mailing list?

The dilemma shows how diverse advertising channels are in the electronic marketplace. The conventional definition of advertising does not include the more subtle ways of soliciting business on the Internet, such as:

• Endorsing and reviewing products on newsgroups by firms and customers
• Soliciting listings from search services
• Soliciting and exchanging web links
• Providing product-oriented mailing lists and e-mail updates
• Web storefronts, which can be no more than a standing advertisement for a firm

Currently, the main channels of online advertising consist of banners on the World Wide Web and e-mailings. A more significant development in online advertising is selling advertisements to consumers directly and indirectly.