Telecoms’ Online Ad Spending Grows Rapidly

Telecommunications advertising, led by SBC Communications, was the fastest growing online ad sector in a Nielsen//NetRatings study that compared December 2004 impressions to December 2003.

The study finds telecom ads increased their share of total impressions year over year by 6 percent. Year-over-year growth in other sectors, including financial services, retail goods and services, and online media, meanwhile, remained flat.

“The significance of this report’s findings is that companies in the telecom sector are embracing the Internet as a viable means of mass marketing,” said Corey Jeffery, senior analyst at Nielsen//NetRatings. “One key driver was the [SBC/BellSouth] acquisition of AT&T Wireless, which merged with Cingular in October. They have been out there with an aggressive media push to rebrand themselves on the Internet to a larger extent than ever before.”

Cingular is a joint venture between SBC and BellSouth. Because SBC has a 60 percent shareholder stake, all Cingular ad impressions are attributed to SBC by Nielsen//NetRatings’ AdRelevance system, Jeffery explained.

SBC led all online advertisers tracked by Nielsen in December 2004, with 3.4 million impressions. It was followed by Dell Computer (1.9 million), Netflix (1.6 million), LowerMyBills.com (1.5 million), and InterActiveCorp (1.5 million).

SBC’s Cingular brand promotion campaign signals a trend that is likely to spill into other sectors that have been slower to invest in online branding, such as auto and consumer packaged goods, Jeffery said.

“From a strategy perspective, we began to see an uptick in branding as an advertising strategy online at the end of the year, which is something we expect to become increasingly prevalent across the board in 2005,” he said.

In the telecommunications sector, SBC took 32 percent of all ad impressions in December 2004, a 22 percent year-over-year increase over December 2003’s 10 percent. Verizon Communications ranked second in the category with 10 percent of impressions, rising 3 percent over December 2003. Vonage Holdings also took 10 percent, up 8 percent over 2003.

Among telecommunications subsectors, wireless services accounted for 52 percent of all ad impressions. Second largest was the ISP/broadband segment, which accounted for 18 percent of all telecom impressions. Local/long distance ranked third, accounting for 15 percent; and Internet telephony came in next, with 6 percent.

E-mail sites, such as MSN’s Hotmail, Yahoo Mail, and Juno Email, were the most popular environments for telecommunication ads. Internet telephony players deployed 80 percent of their ads on sites like these, while wireless services companies placed 62 percent of their impressions in such sites. Equipment firms dedicated 41 percent of their ads to email sites, and local/long distance players concentrated 19 percent of their online ads in the email environment.

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