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Brick and mortar sustains online ad spend

Krishnan Thiagarajan

THE stodgy "brick and mortar" companies are the real drivers of advertisement spending on the Internet, however much they may be berated for being slow to gravitate to this medium. According to a report by AdRelevance, a Jupiter-Media Metrix research com pany, new traditional non-Inetrnet advertisers have been growing at a faster rate than new dotcom advertisers.

An analysis by AdRelevance shows that 50 per cent of the Hot 100 advertisers in October, 2000 were new traditional companies, up from 41 per cent in January this year.

In a startling aberration from general expectations, the report also points out that in the third quarter of 2000 (July-September), far more advertisers came online for the first time in August than in any prior month this year. This is a startling aberr ation largely because the demise of the dotcoms early this year atleast created an impression of temporary deathknell for new dotcom ventures. But the strong ad spend in the online medium seems to suggest that the dotcom as a medium is probably alive and kicking. And the dotcoms which suffered were the ones which were built on unsustainable business models (without any USP), fuelled largely by the media hype surrounding this medium.

The key findings of the AdRelevance research of traditional and dotcom advertisers coming online for the first time between January 2000 and October 2000 were :

1. The number of new companies advertising online is growing at an average rate of 14 percent per month. The number of new companies advertising online has increased by 157 percent over the past 10 months.

2. While traditional advertisers accounted for approximately 41 percent of the top 100 new online advertisers in January 2000, they made up close to 50 percent in October 2000 - with dotcom companies rounding out the other half.

3. More than 1,000 companies a month have advertised online for the first time since March 2000. Third quarter of this year saw 5,489 new advertisers coming online - far surpassing first quarter (2,935 new advertisers) and second quarter (3,879 new adver tisers).

Full banner ads continued to rule: Among ad formats, even though 80 per cent of advertisers continued to use the full banner in an online advertisement campaign, other ad formats are also gaining in importance. The principal finding of another study done by AdRelevance shows that smaller ad elements such as micro or short buttons and short banners are getting far better exposure (or higher impressions per ad) compared to a standard full banner. This is an indication that the use of different ad formats may turn out to be a fertile ground for new experiments in the field of advertising.

Similarly, the field of advertising technology is also set for a massive transition. So far, simple animations GIFs and JPEG images have populated online advertisement technology. Once broadband connections makes available high speed Inetrnet access in t he US and Europe by early next year, the world of rich "streaming" media and other such innovations may literally reshape the world of advertising technology.

Rethinking on advertisment models: An interesting study by Engage AdKnowledge Online Advertising Report has questioned the viability of cost-per-click and cost-per-acquisition advertising. According to the study, AdKnowledge found that 32 per cent of all sales resulting from online advertisements were through "ad views without a click". In other words, they have concluded that viewing online ads-even without clicking - can also drive customers to purchase or register at advertisers sites.

Except that the time lag in the case of online ads accessed without clicking was higher than those who clicked on an advertisement as it appeared on a Web site.

If this report is anything to go by, the revenue model of dotcoms which are built on the cost-per-click model need serious reappraisal. So much for the dotcom frenzy earlier this year.