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Q1: The Start of Something Good?

  |  March 29, 2002   |  Comments

Q1 2002: The State of Internet Advertising. Not only is it integral to the mix, for an increasing number of traditional advertisers online is a standalone buy (unless you're a Fortune 100).

Congratulations. Q1 is over. You're 25 percent done with the year no one was prepared to face three months ago, when things had gone from bad to worse to what-could-possibly-happen-next? The country was at war, the economy in recession, and advertising screeched to a virtual standstill.

Let's take a moment to dust off, blink into the light, and get our bearings before plunging onward. The Web's still here. Companies are still marketing on it. How's 2002 trending?

A pre-September 11 forecast predicted 10 percent growth for online ad spending this year. OK, we knew that wasn't going to happen, but a more recent CMR study forecast 8.8 percent growth in online ad spending this year -- a margin that leads growth across the entire ad industry. Last week, eMarketer upped the ante to 11 percent. Methodologies are all over the board, as usual, but both researchers forecast online ad spending to reach a more-than-respectable $8 billion this year.

Assuming you just landed from Mars and can only access online marketing information from this calendar year, here are some conclusions you'd draw:

  • Online is an increasingly integral part of the mix -- especially for youth-oriented and fast-food products.

  • The travel industry is counting on online for survival.

  • Some categories might dispense with offline marketing (or components thereof) completely: software, hardware, and... automotive?

  • Fortune 100 companies are inexplicitly moribund. In the real world, they're business behemoths, but online they act more like mom-and-pops.

Advertising's first annual benchmark, the Super Bowl, was notable this year for cross-media strategies -- more about that in a minute. What was more notable was Doritos's 180-degree flip on the bet-the-farm-on-one-spot folly that marked the beginning of the end for more than one dot-com. Instead, Frito-Lay boldly announced it would "rather have continuity with an all-channel media presence 52 weeks of the year" than 30 seconds at halftime. The company tripled its online budget and blew off the game in favor of developing new sites and striking deals with teen destinations, such as mtv.com.

Those advertisers that did pony up for Super Bowl airtime integrated online tie-ins. AT&T's mLife launch drove viewers to a Web site (OK, the site didn't work); Pepsi invited people to Yahoo to vote on Britney Spears ads. The Yahoo site had no discernable traffic Saturday and then attracted 135,000 unique visitors on Super Bowl Sunday (mLife's traffic increased 20-fold in the period). Levi Strauss got into the act earlier, asking users to vote online for which ad would air during game time. Lipton's spot was an opening TV salvo in an episodic ad series that will play out online.

Cross-media buys and co-branding agreements are becoming routine. In this quarter:

  • Food giants Pepsi-Cola and Mars are developing campaigns centered on online voting.

  • Lipton's spokespuppets, fired during a Super Bowl spot, take their labor grievance to the Web, then back to TV for an April climax.

Between them, media behemoths Viacom and AOL Time Warner made alliances with Pepsi, Snapple, Kraft Foods, Wendy's, and Burger King.

Co-branding and incentives are big in the beleaguered travel industry, which is focusing on online marketing with new intensity. Travelocity.com and Expedia are duking it out for distribution; bookings; package vacations; air, hotel, and car reservations -- even theme park tickets -- with the major players. The two companies inked agreements with Disney. Among the airlines, Continental, Delta, Northwest, and British Airways signed similar deals this calendar year. AOL is gambling on travel incentives. Subscribers are getting pop-ups and sign-up forms for offers from partners AAdvantage and American Express Membership Rewards.

Driving instead of flying? Automotive companies think the Web is a natural vehicle for selecting... a vehicle (especially one targeted to a young demo). Volvo is leading the pack. In the past three months, it's launched a new model exclusively online, unveiled a branding site for "high-concept cars," and promised ads on iTV and wireless, as well as in rich media. Meanwhile, Toyota launched a lifestyle site for its youth-oriented Scion brand, and Mazda's teamed with Disney online to promote a minivan.

U.S. software companies will dramatically cut offline ad and marketing spending and dramatically up online commitments this year, according to a recent survey. Reasons cited were targeting and measurement -- what you'd expect. But isn't the no-brainer factor here the fact that consumers who buy software have computers and surf the Web? (Sometimes it makes sense to think outside the research report box.) Could hardware follow suit? Well, Palm just launched a new handheld exclusively online.

What's inexplicable amidst all the positives of the past three months is the reluctance of the Fortune 100 to get with the program. Forbes found C-level executives spend an average 16 hours per week on the Web (email not included) -- double the time they spend with any other medium. Fortune 100 marketing execs appear to have scant understanding of the media consumption habits of their own bosses -- online advertising is flat. Is interactive still too immature for the big boys, or are they the ones who refuse to grow up?

Time will tell. Three quarters to go.

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Rebecca Lieb

Rebecca was previously VP, U.S. operations of Econsultancy, an independent source of advice and insight on digital marketing and e-commerce. Earlier, she held executive marketing and communications positions at strategic e-services companies, including Siegel & Gale, and has worked in the same capacity for global entertainment and media companies, including Universal Television & Networks Group (formerly USA Networks International) and Bertelsmann's RTL Television. As a journalist, she's written on media for numerous publications, including "The New York Times" and "The Wall Street Journal." Rebecca spent five years as Variety's Berlin-based German/Eastern European bureau chief. Rebecca also taught at New York University's Center for Publishing, where she also served on the Electronic Publishing Advisory Group. Rebecca, author of "The Truth About Search Engine Optimization," was ClickZ's editor-in-chief for over seven years.

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