Report: Online-Dependent Industries Buy Ads Online

While online advertising remains barely a blip in most companies’ ad plans, it has succeeded in gaining budget share in companies that have grown dependent on the Internet, according to a new study.

The report, issued by online ad technology company DoubleClick and performed by Web measurement firm Nielsen//NetRatings, found that Internet advertising has succeeded in gaining a significant portion of ad spending from key industries, such as classifieds, technology equipment and retail.

According to the “Cross Media Ad Spending Report,” much of the pessimism over online advertising’s performance is misplaced, since companies in industries truly transformed by the Internet have made online a key part of their ad spends.

“The conventional wisdom has been that online is only receiving 1-2 percent,” said Doug Knopper, DoubleClick’s vice president and general manager of online advertising solutions. “But the reality is if you look at very specific categories you’re seeing 10 or 15 percent.”

In a category such as employment services, which has been radically altered by sites such as TMP Worldwide’s Monster.com and Yahoo’s HotJobs.com, online advertising accounted for 41 percent of the sector’s $41 million of ad spending. Media companies, searching the Net for readers, devoted 15.5 percent of their $479 million of ad spending. Retailing, which continues to move online, spent just under 15 percent of its $3 billion worth of ad budgets. Companies in the travel industry, which has been radically altered through online booking services, devoted 12 percent of their $788 million of marketing spending.

The report found overall ad spending on the Internet declined in the second quarter, falling 16.6 percent to $1.5 billion. Still, the Internet has established itself as a solid part of the media mix, surpassing radio and outdoor advertising in 2001 with an 8 percent share of total advertising, according to the report.

Nielsen//NetRatings compiled the data through its Nielsen Monitor Plus offline media tracking service and its AdRelevance online ad spending tracking system. Nielsen Monitor Plus does not cover some advertising areas, such as direct mail and yellow pages.

Overall, of course, the study found the ad industry still dominated by traditional media — especially television, which garnered 55 percent of ad spending. In fact, DoubleClick and Nielsen//NetRatings said TV ad spending had recovered more quickly than other media, as advertisers search for a mass audience during tight budget times. While ad spending on network TV grew a healthy 5.6 percent in the first quarter, compared to the same period last year, the boom areas were Hispanic TV (6.7 percent) and local news (9.1 percent).

Despite the healthy numbers in recruitment, media, technology, and retail, DoubleClick and Nielsen//NetRatings said companies in those sectors actually spent a larger percentage of their budgets online in 2001. In recruitment, which has been hit hard by the sluggish economy, online share in the first quarter dropped 17 percent compared to the same period last year; retail fell nearly 8 percent; media by 4.4 percent; and technology equipment by 4.3 percent.

Categories often identified as ripe for an increase in online advertising, such as electronics, pharmaceuticals and automobiles, showed mixed results. Electronics’ online share was the biggest gainer, rising 11.2 percent, but pharmaceuticals rose just .2 percent and auto declined by .2 percent.

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