By Michael Mahoney E-Commerce Times
08/15/01 4:16 PM PT
Brand-name companies need to develop online advertising programs
as a distinct practice to optimize the potential of the Internet,
the Jupiter report said.
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U.S. Internet businesses are not the only ones experiencing a slowdown in the online
advertising market, according to a survey released Tuesday
by Jupiter MMXI.
Jupiter found that 42 percent of European advertisers plan to spend only 1 to 5 percent of
their entire 2001 advertising budgets online. Jupiter said that those companies might be
overly pessimistic about the Internet's effectiveness as an ad channel.
"Of those who are advertising online, many are still in the evaluation
stage," Jupiter MMXI advertising analyst Staffan Engdegard said.
"However, if they use traditional media selection
and performance criteria to evaluate the success of their campaigns, they
risk undervaluing the opportunities the Internet presents."
According to Engdegard, the reason for staying away from the Internet lies in the belief
that the medium cannot reach a large enough audience to justify the expense.
Forty percent of European businesses plan to spend nothing on
online advertising this year, according to Jupiter, which
surveyed 113 European advertisers for its study.
Opportunity Knocks
However, Engdegard believes advertisers are making a big mistake if they
continue to ignore the Internet as a way to increase their brand identity
and awareness, because European consumers continue to spend more and
more time online each month.
For example, Engdegard pointed to Jupiter numbers showing that Internet users in the UK
increased the time they spent online by 90 minutes over the past year.
"Brands need to develop online marketing and advertising as a distinct
practice to optimize the potential of the Internet," Engdegard said. "Brands
should apply a targeted-marketing model better suited to the dynamics of the
Internet than the mass-marketing model most are used to."
Internet Necessities
Engdegard said that advertisers should understand the context of how
consumers are using each site, rather than trying to target consumers simply
by site content.
"Whether it be through adding value, education, identifying new target
groups, or even experimenting with new ideas and products, consumer brands
cannot ignore the Internet," said Engdegard.
On the Rebound
According to another Jupiter Media Metrix report released earlier this
month, Internet companies will have to wait at least
another year before the
advertising market rebounds. Online ad spending will fall 20
percent this year to US$5.7 billion, down
from an earlier forecast of $7.3 billion, Jupiter said in that report.
Jupiter also said it expects the Internet marketing sector to see about $15 billion in
spending by 2006, off substantially from earlier
projections. For 2005, Jupiter now predicts spending of
$12.9 billion, down from a previous estimate of $16.5 billion.
The real growth in ad spending, Jupiter said, will come from digital
marketing such as coupons, promotions and e-mail, rather than direct
advertising on Web sites. Jupiter forecast that digital marketing spending
will hit $19.3 billion by 2006, compared to an estimated $2 billion in 2001.