StatsAd Industry MetricsOnline Ads End Year on a High Note

Online Ads End Year on a High Note

December of 2000 was the best month to date for Internet advertising in terms of the number of impressions, according to AdRelevance. Meanwhile, marketing budgets got a vote of confidence from a Getzler & Co. study that said profitability is more easily found by cutting operating expenses, not marketing costs.

Online ad impressions in December 2000 increased 21 percent over the previous month, reaching an all-time high of 65 billion, according to AdRelevance.

Despite the increasing negativity toward the online advertising market, AdRelevance found that MSN and Yahoo dominated the Web in terms of ad revenue and impressions. According to the data, MSN brought in the most ad revenue during December ($180 million) while Yahoo led all sites with more than 7.5 billion ads served — more than three times their nearest rivals. Amazon.com led all advertisers with nearly 3 billion ad impressions in December.

Other findings from AdRelevance include:

Top Sites by Ad Impressions
December 2000
Site Impressions
(millions)
Yahoo 7,620
MSN 6,343
iWon 2,556
AOL.com 2,204
eBay 1,582
Source: AdRelevance
  • Amazon.com led all advertisers in ad spending ($61.8 million). 42 percent of Amazon’s spending was on MSN.
  • MSN received an average of $486,000 in revenue per advertiser (370), compared to $105,000 for Yahoo and Netscape.
  • GeoCities was first among sites ranked by number of advertisers with 1,507. Yahoo ranked second with 1,123.

“Online advertisers approached the holiday season with significant concerns due to the increasingly negative perceptions of the industry. However, the latest AdRelevance data indicate a robust, across-the-board increase in online ad impressions during December,” said Charlie Buchwalter, VP of media research for AdRelevance. “MSN outpaced the competition by concentrating on the biggest spenders in the online advertising market and appears to be the winner of the holiday season among the ad-supported Web sites.”

The slashing of sales and marketing budgets has been a popular method of cost control among dot-coms in trouble, but a study by Getzler & Company, Inc. found that dot-coms searching for profitability would be better served by cutting operating costs instead.

Getzler & Co.’s study, which included 190 tech companies, compared the second and third quarter performance of 46 firms that cut marketing costs with 25 firms that cut operations costs.

“While sales growth among the two groups remained approximately the same, there was a dramatic difference in profitability,” said Brian Mittman, VP at Getzler & Co. From the second quarter to the third quarter, losses remained constant at firms that cut operations costs, but losses more than doubled at firms that cut marketing costs. “The results indicate that marketing costs remain a far greater driver of profitability for dot-coms than operations costs,” Mittman said.

For the study, operations costs included general and administrative expenses, overhead, and the costs of technology, product, and content development for Web sites.

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