Despite a slew of divergent numbers on the online advertising outlook, members of the Online Publishing Association (OPA) say signs of a rebound are showing up in an industry poised for a comeback.
Expect better growth this year and next because of five factors, a member of the industry trade organization said. Taken together, they suggest that online advertising will be even harder for major advertisers to ignore as budgets start to pick up following a two-year decline.
“First of all, the online audience is growing,” said Geoff Ramsey of market research firm eMarketer. Ramsey, speaking at a luncheon sponsored by the OPA, said the online audience is expected to jump by 10 million this year to 152.8 million.
“The key point here is if you’re trying to reach an at-work audience, daytime is prime time on the Internet. For at work users, the Internet beats television and all other media, Monday through Friday,” Ramsey said.
In addition to numbers from Nielsen//NetRatings that peg the online audience at 152.8 million (which is based on usage at least once a month), Ramsey said people are spending more time online, especially as broadband penetration spreads.
Broadband access in households by some estimates is expected to double to 34.7 million by 2004, and more than a few research outfits agree that time spent online increases as broadband access grows.
“And to complete the circle, Internet usage is taking a bite out of other media, particularly television and magazines,” Ramsey said.
At the same time, “advertisers are realizing that the number of online shoppers continues to expand,” to an estimated 223.4 million in the 14-and-up age group, or 77 percent of the online population, according to eMarketer’s numbers.
The fifth factor is the major consumer packaged goods manufacturers’ attitudes toward online advertising. “The sleeping giants are awakening,” Ramsey said, referring to major advertisers such as Procter & Gamble who are growing more interested in “a growing body of evidence” suggesting online ads impact branding recall. As a result, he expects consumer goods companies to better integrate online ad buys with their overall media mix.
Ramsey said eMarketer’s prediction is that online ad spending will be up by 11 percent this year, which puts it someplace in the middle of research that pegs the growth at anywhere from a 13 percent drop (Lehman Brothers), to a 44.3 percent increase (GartnerG2) in 2002.
“Even if you look at the traditional media landscape (outlook), there is a divergence, from negative 2.7 percent growth (investment bank ABN Amro) to 2.4 percent growth (ad giant McCann-Erickson WorldGroup).
“Add them all up and divide them, and you get a washout of media spending” for the year, Ramsey said.
Even the size of the online advertising market conjures up a range of numbers, from about $2.5 billion in 2001 (CMRi) to $7.9 billion (GartnerG2). Ramsey said he went with the Interactive Advertising Bureau’s estimation, which puts the size of the annual market at $7.2 billion.
Putting aside the differences, he said fundamental consensus among researchers about the size of the online audience and how much time they spend there put the online advertising industry in a solid position for a rebound.
He may have been preaching to the choir, but other OPA members at the luncheon said they have seen enough evidence to suggest a trickling upward in more integrated advertising packages.
Sarah Chubb, the president of magazine publisher Conde Nast’s online CondeNet division, said although she couldn’t release any numbers, the company has seen a slight boost in ad purchases for the quarter.
Chubb said a slight bump in numbers from the Magazine Publishers of America bear out the trend, which showed that advertising revenues for magazines were up by 2.4 percent in May to $1.5 billion. The increase marked the first upward tick in over a year, and is giving the advertising industry hope that it may continue in 2002.
She pointed to a promotion for the Turning Leaf wine label that CondeNet’s http://www.epicurious.com division is running in conjunction with offline publications Gourmet and Bon Appetit. The promotion, which encouraged online readers to send in their own summer grilling recipes, has generated over 10,000 responses within a week of the promotion’s launch, she said.
Chris Schroeder, the chief executive of Washingtonpost.com, reminded the audience of the importance of leveraging the medium rather than taking, say, a television approach and applying it online.
“I can send a message at the same time to all of you, or to just one of you” if need be, he said, using the targeting example to illustrate to advertisers the uniqueness of the medium to “drive real results that outperform other media.”
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