Study: There's Hope Yet for Web Advertising

A new report from Nielsen//Netratings’ AdSpectrum service suggests that the online advertising sector is not all that bad — and actually could be getting better.

According to the report from analyst Allen Weiner, who tallied Web campaigns launched in mid-first quarter, the optimism stems from what could be the long-awaited shift from dot-com cash to traditional ad money.

Those traditional clients not only have deeper pockets, but they’re also are generally less interested in metrics like clickthroughs — a perennial thorn in the side of the industry after years of touting its potential for direct response.

The best news is that while dot-com advertisers still outnumber traditional companies, offline advertisers now lead in a number of ad impressions. In fact, new campaigns from offline advertisers constituted about 40 percent of February’s impressions, while dot-coms only made up 35 percent.

To Weiner, that suggests increased faith in the medium by traditional advertisers and agencies — an assertion supported by recently announced online campaigns by Pepsi, Diet Coke and Ford.

“As the year unfolds, it is likely this trend will continue with even greater emphasis as the percentage of Web advertising offliners grows,” he said.

In other optimistic findings, 4 percent of the week’s new campaigns uses larger-than-banner sizes, in keeping with recent efforts by groups like the Internet Advertising Bureau — which sees larger ad types as being a more effective branding tool.

For the week of Feb. 25 — roughly the mid-quarter mark, when many ad buys kick in — Microsoft bought the most impressions, at 334 million. Following the Redmond, Wash. giant were Classmates Online (258 million), Equifax (243 million) and Sony (210 million). Yahoo, AOL Time Warner, Amazon, Providian Bank, Excite@Home and Nextcard also all ran campaigns in excess of 67 million impressions.

Not everything is rosy however. Despite such efforts to promote the Web’s branding potential, the newest campaigns remain largely focused on direct marketing — rather than brand-building.

Less than 12 percent of new campaigns focused on branding objectives, according to the study — and of these, most were dot-com advertisers. But Weiner apparently is unmoved:

“Moving forward, it seems logical that online branding has a healthy future,” he wrote. “As more traditional advertisers move to the Web, branding likely will follow as a larger part of the online mix. Savvied traditional advertisers, accompanied by skilled agencies, understand the need to provide a mix of targeted direct-marketing campaigns along with image ads and will leverage their media mix to accomplish this dual strategy.”

There is other mixed findings in the report as well. For one, in-house advertising still plays a major role in new advertising campaigns, with nearly 14 percent of new campaigns — from companies like AOL Time Warner, Microsoft and Lycos — being run exclusively on the advertiser’s own sites.

Newspaper giants, such as Gannett and Knight Ridder, also ran wide-scale campaigns on their own Web properties.

But that’s not necessarily a bad thing. The oft-maligned house ad — frequently dismissed merely as a way to fill unsold inventory — is proving to be of some use. According to the report, house ads not only boost traffic to the featured sites, but could raise CPMs as a result of the increased number of visitors.

Despite the mixed bag of news, Weiner said he predicts increased interest in Web media by offline advertisers picking up in coming months.

“This trend toward offline advertisers migrating to the Web is showing traction in Q1,” he said. “As the year unfolds, the promise of online advertising as an effective direct marketing and branding mechanism seems likely to rebound and lift the mood and morale of those in and around the Web world.”

Whether this prediction is borne out, especially with big players like Yahoo and DoubleClick forecasting several more quarters of slow ad spending, remains to seen; at the very least, the news is a change from the doom-and-gloom reports running rampant in the industry.