Report: Online Travel Advertising Recovering from September 11th

While much of the online advertising industry remains in the doldrums, travel advertising on the Internet has picked up, according to a report released Wednesday by market research firm Jupiter Media Metrix (Nasdaq: JMXI).

Following the September 11th terrorist attacks, online travel ads plunged in the second week of September and bottomed out during the first week of October. But a report from Jupiter's AdRelevance division showed that online travel advertising has since returned to 94 percent of pre-September 11th levels.

Lately, booking services and airlines have been returning to the Web, Jupiter said. Of the top 10 online travel advertisers for the week ending December 2nd, four are online agencies and three are airlines.

Orbitz led the way with 44 percent of the travel market, followed by Travelocity with 13 percent and Hotwire with 5 percent.

Overall Industry Worrisome

It is a needed bit of good news for the overall online advertising industry, beacause online retail advertising has gotten off to a worrisome start this holiday season.

According to Jupiter, weekly online ad impressions for the retail sector reached 3.7 billion in the fourth week of November -- an increase of only 8 percent from October -- compared to a growth rate of 18 percent in the same time period last year. An impression is the number of times an ad is rendered for viewing, with one impression being equivalent to one opportunity to see an ad.

However, those 3.7 billion impressions do match the peak total from 2000, reached in the fourth week of December. That total represented an increase of 53 percent from the first week of October 2000.

Top online advertisers for the week ending December 2nd, rated by share of industry impressions, were Amazon.com (Nasdaq: AMZN) with 16 percent, Barnes & Noble (NYSE: BKS) with 11 percent and Columbia House with 10 percent, Jupiter said.

Amazon Online Ad Leader

As advertisers have slashed their online spending budgets, the industry has been ravaged by layoffs, bankruptcies and cutbacks. NextCard (Nasdaq: NXCD), for example, was the top online advertiser among financial services companies in January, but was not in the top 10 in November, according to Jupiter.

"This year's holiday ramp-up has yet to reach the growth trajectory of last year's," Buchwalter said. "Declines in consumer confidence resulting from the economic downturn, as well as the September 11th attacks, may be responsible for the delayed increase in retail advertising.

In the third quarter of 2001, Internet ad sales totaled US$1.79 billion, down 4.1 percent from the previous quarter, according to Jupiter. However, some analysts are saying the industry might have hit bottom and report seeing positive signs.

Priceline.com, the name-your-own-price firm that sells airfare and hotel reservations over the Internet, struck a deal Tuesday with America Online, and MSN has recently signed deals with Volvo and Universal.

Orbitz a Driving Factor

Prior to the terrorist attacks, the online travel industry had been rebounding, and Jupiter analysts credited Orbitz with the rise.

Online travel advertising began its dramatic rise in the second week of May, with 291.9 million impressions, and peaked in the fourth week of August with 1.1 billion impressions -- a 263 percent increase.

"The early 2001 launch of Orbitz put a surge into advertising, with the industry more than doubling between the spring and the end of summer," said Jupiter's Charles Buchwalter.

Since the September 11th, the travel industry has had to cope with a public that is both fearful of further terrorist strikes and frustrated with added security measures at the nation's airports. The industry has been so hard hit that President George W. Bush agreed to act as a pitchman for the Travel Industry Association of America's television ad campaign.