StatsAd Industry MetricsGrowing Uncertainty Over Web Ads

Growing Uncertainty Over Web Ads

The online ad industry grew last year, though average CPMs are down -- as are traditional advertisers' expectations of again increasing their funding for Internet projects.

Major companies upped their Web marketing spending last year, although they’re increasingly unlikely to do so this year, according to a survey from the Association of National Advertisers.

The New York-based industry association, which represents some of the largest traditional advertisers, said its fifth annual Internet advertising study found that online ad spending grew in 2000, with marketers increasing their average number of Web sites to 9.7, up from 6.1 last year.

The survey’s 136 respondents, representing 93 different companies, also said they spent an average of $665,000 to develop a site and $691,000 to maintain it — up 24 percent and 17 percent, respectively, from 2000 levels.

Besides more extensive Web development work, the study also found that the majority of national advertisers — 79 percent — advertised online in 2000, up from about 66 percent in 1999. Average spending also increased 24 percent, to a $2.4 million each.

More advertisers also turned to the Web for branding goals, with more than half of the respondents saying they used online advertising for developing or improving brand loyalty — 10 percent more than last year. That’s good news for online media advocates, who believe that the industry can capture greater advertising dollars if clients view it as an effective branding medium.

“As the use of Web sites, extranets and intranets matures, we see increased emphasis on them as brand building and communications tools,” said ANA senior vice president Barbara Bacci Mirque.

Yet, despite those reassuring findings, the ANA study also produced several discouraging conclusions, she said.

For one thing, online advertising still accounted for only about 2.8 percent of national advertisers’ total spending — about what it did in 1999. As a result, increases in Internet ad spending closely reflect increases in overall ad spending, and that means that Web advertising did not capture a larger piece of the pie.

Furthermore, only 41 percent of respondents said they expect to see an increase in Internet ad spending during 2001, whereas almost all had forecast an increase for last year. Additionally, the study took place in April and June, and thus doesn’t take into account the Sept. 11 terrorist attacks and related events — events that many believe have and will continue to negatively impact the industry.

“The biggest concerns among advertisers are how to measure Web site performance, audiences for Internet advertising, and, of course, budget constraints,” Mirque said.

As a result of lingering questions confronting the industry and the shakeout of dot-com ad dollars, respondents said that they’re paying average CPMs of $11 — about half of last year.

Among advertising types, 92 percent of ANA respondents said they favored the standard banner and button, with 75 percent also using search engine marketing, down 9 percent from last year. Seventy percent tried sponsorships, down 11 percent from last year. E-mail, however, saw some growth, with 7 percent more — 66 percent of respondents — saying they use the medium for marketing.

Reprinted from InternetNews.com’s Internet Advertising Report.

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