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The internet has
provided yet another medium through which products, services and brands can
be promoted through advertising. For most of the web's brief history,
advertising has been seen as a much more reliable source of income for
WEBSITE and CONTENT
owners than subscription revenue, because people can get so much information
ONLINE without having to pay for it. The web
has unique attractions for potential advertisers too. Web audiences can be
tracked and carefully targeted, and it is easy to monitor which sites
visitors come from, how long they spend at a site and where they go next.
Such information is difficult and expensive to acquire in the real world,
which is why many companies with products and services to sell have turned
to the web instead of magazines or television.
Such faith in the new medium appeared to be
justified until as recently as 2000, when the Internet Advertising Bureau
reported that internet advertising revenue reached $8.2 billion, nearly
twice that of the previous year. But in 2001 the market declined by nearly
12%, and the outlook seemed bleaker still in2002, when mid-year figures
suggested a further decline of more than 20%. Such figures are an inevitable
reflection of the collapse of the dotcom phenomenon (dotcoms
contributed as much as 70% of the advertising spend in 2000) and even the
biggest internet companies have suffered. Yahoo, historically one of
the web's more reliable performers, saw its advertising revenue drop from $1
billion in 2000 to a mere $538m in 2001.Part of the reason for the decline
may be that consumers have become less tolerant of online advertising. A
study by Burst of web surfers would leave a website if it was too cluttered
with adverts, and they were even more disparaging about the explosion of
pop-ups, the advertisers' latest weapon.
It is not surprising that in these
circumstances advertisers have become a lot more cautious in their online
activities. Not only do they now display much greater discrimination about
where they advertise, but they have also changed the way in which they do
so. One reason for this change is the decline in the usefulness of the
banner, still the principal form of advertising on websites but now
considered the least effective. Whereas pioneering sites such as hotwired
( the self-proclaimed inventor of the banner ad in 1994) once claimed
click-through rates of 10% or more, in the United States the figure
plunged to 0.3% in 2001. Faced with abysmal returns from this once rich
source of revenue, advertisers are turning to more sophisticated rich
media advertising techniques to boost their sales.
Despite this apparently bleak picture,
online advertising seems to be recovering slowly. Many businesses now report
more interest from advertisers as the web economy revives, and most analysts
remain optimistic. Forrester Research estimates that online advertisers will
spend 6.4 billion in 2007 in Europe alone, representing 6.3% of total
advertising spend for all media. Some industry sectors are performing
especially well; for example, spending on online travel advertising rose by
as much as 39% in 2002 compared with a year earlier. Meanwhile, content
owners continue to seek other forms of revenue, many returning to the idea of selling their
content to subscribers rather than giving it away for free and relying on
advertising to provide their revenue. Smaller advertisers are turning to
other, cheaper devices such as affiliate marketing programmes (in which a
supplier of goods or services exchanges a link to its website for a
share of any profits accruing from sales generated as a result) and
E-mail advertising to sell more goods online. Amazon's affiliate
marketing programme, for example, offers websites that display links to its
bookselling pages a share of the profits from any resulting book sales.
Smaller businesses have been well served by such network, which offers
schemes including free exchange of banners between sites as well as
various inexpensive ways of advertising on high -profile sites such as
Yahoo. |
