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joins the club
Suffers with all other media as it joins mainstream
By Marty Beard
Internet ad sales are slumping, as we all know. But the slump, it turns out, is not rooted in a lack of faith in the effectiveness of web advertising, which long hobbled the medium.
Rather, it stems from the same forces that are causing the slump in virtually all traditional ad-supported media.
Put simply, web advertising has finally earned acceptance as a mainstream medium, and its dubious reward is to be punished in equal measure with its brethren.
"We’ve matured to the point that we’re acting like other media," says Robin Webster, president of the Interactive Advertising Bureau, commenting on an IAB report on internet ad revenues for first-half 2002.
"The numbers we are reporting must be viewed in the context of advertising overall."
Online ad revenues declined 7.8 percent in the first two quarters, to $3.76 billion, compared to the same period in 2000, according to the IAB report.
Spending in the first quarter totaled $1.89 billion, followed by $1.87 billion in the second.
Those declines, as the IAB notes, are consistent with declines in other media.
"While the declines are not insignificant, they are well within the parameters of the overall advertising industry’s experience," Webster says.
For example, national spot-radio ad revenue is off 22.4 percent this year, according to recent CMR figures, and Sunday newspapers' revenue is off 10.4 percent.
While declining revenues are never good news, Webster says, she suggests that there are reasons for optimism about the long-term viability of internet advertising.
"We’re continuing to see trends that usage of the internet is increasing," she says. "I think in the long term that’s going to be positive for us, because advertisers have got to reach the consumer. So once the economy turns around, we hopefully will be poised to take advantage of that by having more audience online."
There’s also another indicator that online advertising has matured, according to the IAB report.
More internet advertising than ever is priced based on the traditional cost-per-thousand model.
In the first half of this year, 50 percent of online advertising was priced on a CPM basis, with 40 percent on a hybrid basis and 10 percent on straight performance.
By way of comparison, in 2000, 43 percent of advertising was priced by CPM, 47 percent was hybrid, and 10 percent was straight performance.
"The dominant pricing model is now the CPM, which is the traditional media pricing model," Webster says.
"I think it’s important that we depend on variables that we have control over in the medium so we don’t depend on, say, the agency, the creative or the advertisers’ product."
The IAB reports that 90 percent of online revenue transactions were cash-based in the first half of this year, compared to 94 percent in the first two quarters of 2000. Barter/trade transactions accounted for 9 percent of all transactions, and package deals held steady at 1 percent.
The first half of this year also saw a notable change in the types of online ads being sold.
Thirty-six percent of all online ad formats sold were banners, compared to 51 percent in the first half of 2001. Twenty-eight percent of online ads sold in this year’s first two quarters were sponsorships, compared to 27 percent in 2000.
Perhaps the most dramatic change, though, was in online classified ads, which increased 176 percent over the first two quarters of 2001. In 2000, online classifieds made up 5 percent of online ad sales, compared to 15 percent this year.
"It’s encouraging to me to see the absolute increase in classified ads," Webster says. "What that’s indicative of is that the people who use classified ads understand the power of this medium in terms of its interactivity. You can get a response right away.
"Likewise, if whatever it is that you’ve been advertising has been sold, or the job filled, you can get rid of it faster. That’s a smart use of money."
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Consumer-oriented
online advertising |
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Category |
Percentage |
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Music |
9 |
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Toys/games |
1 |
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Amusement |
5 |
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Travel/hotel |
11 |
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Automotive |
12 |
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Retail/mail order |
50 |
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Other |
12 |
| Source:
Interactive Advertising Bureau
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Diversification of Ad Formats |
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Format |
Jan-June 2001 |
Jan-June 2000 |
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Banners |
36 |
51 |
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Sponsorships |
28 |
27 |
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Classifieds |
15 |
5 |
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Slotting fees |
8 |
N/A |
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Interstitials |
3 |
3 |
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Key word search |
3 |
1 |
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Referrals |
2 |
3 |
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Rich media |
2 |
2 |
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3 |
3 |
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Other |
0 |
5 |
| Source:
Interactive Advertising Bureau
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September 25, 2001 © 2001 Media Life
-Marty Beard is a staff writer for Media Life.
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