Ray Van Eng (08/25/97)                     

According to Internet Advertising Bureau, the first quarter 1997 online ad spending was $129.5 million, an 18% increase over the previous quarter and the otal revenue for online advertising in 1996 was $301 million. Jupiter Communications projected that the market could continue to grow to $7.7 billion in 2002.

Jupiter points out that one of the most unique advantages of web ads over other forms of advertising is accountability which means that it is easy to determine whether the online ad is attracting attention or not by measuring the "click rate" from web surfers.

What type of companies will benefit the most from online advertising? Besides those selling computer hardware and software, Jupiter suggested that automakers, financial services, and travel related firms stand to gain by investing in this medium. In contrast, web advertising may not be as critical for makers of packaged goods.

It seems that Procter and Gamble may be in agreement with this theory becasue although the giant producer of branded consumer goods has earmarked about $300 million for web ads, that amount is less than one percent of its $40 billion total ad budget.

Jupiter expects that local ads will prevail over national ads as more local businesses take advantage of spreading their words in local content sites. This could pose a serious threat to the revenue streams for newspapers who are heavily dependent (almost 90% in some cases) on local ads for their profits.

Jupiter also thinks that in the future, the focus will be placed less on banner advertising and more on integrating advertising messages into editorial content and as a result would become more intrusive to web surfers. Yet, moving web surfers closer to the point-of-sale (POS) where the actual transaction take place is a major goal for every online advertiser.

Nevertheless, for now, banner ads rule. And ROI (return on investment) can be measured in some cases.

Recently, Lexus paid $2,000 for a Pointcast ad banner and generated 240 responses which when tracked translated into 40 showroom visits and resulted in 16 vehicles being sold. Sounds like good business for the luxury Japanese car maker.

There are also signs that some companies are taking an integrated approach in keeping their ads on the Internet more in line with those presented in other traditional media for a more unified branding effort.

As one of the best examples illustrating the symbiotic relationship between TV and web, Budweiser is using streaming video technology to showcase a five second clip of the beer company's 'lizard and frog' TV commercial as a banner ad on Lycos' search engine. Web surfers clicking on the link will be able to view the entire TV commercial repurposed for the web online.

According to Dave Zinman of Focalink, an online media management firm, generally speaking, advertisers spend about one quarter of their budget on TV, one quarter on newspaper, one quarter on direct mail and the remaining one quarter on all other media such as the web, skywrtiting and billboards.