ComCorp, Inc. Articles

Web Ads Gains Up Despite Decline in Advertising Spending

Despite the fact that by the second quarter of 2007, total advertising expenses experienced a 0.3% loss, recent reports by TNS Media Intelligence show that online advertising continue to push further its market gains by a whopping 17.7% which means that despite the fact that many businesses spend less for advertising, most of them are shifting to Internet marketing strategies to sell their products and services. Internet spending which has a 17.7% share amounts to total profits of $5.52 billon as compared to the advertising expenditures through consumer magazines which has a 6.9% share, 3.6% for outdoor advertising and 2.8% for cable television.

“Still the Internet continues to take in a larger share of the pie, even as the total pie is shrinking,” said Jon Swallen, senior vice president for research at TNS Media Intelligence. “The Internet’s slice of that pie is getting larger primarily at the expense of newspapers, and to a lesser extent television.” The same report shows that other advertising categories which used to dominate the advertising industry are now experiencing its worst decline such as the newspaper which has been reduced to a mere 5.7% share, radio with its 2.7% and the 2.6% broadcast television. This clearly indicates a growing shift not only in today’s marketing strategies but also among the prevailing attitude of today’s buying public who are increasingly turning to the Internet for their shopping needs.

The newspaper industry which used to dominate the advertising industry has already been offset by online advertising but even the Internet ads posted on newspaper websites still fall short of the expected advertising growth rate as compared to the incremental revenue from Internet advertising in other websites and fail to cover the income lost with the decline of print advertising. For every dollar spent for a print ad, an online ad would only cost around 70 to 80 cents and the newspaper company would still have to cover the remaining 20 to 30 cents with every advertisement that decides to move online.

The recent decline in overall advertising expenditures could also have been brought about by the economic weakness being experienced today with the slow increase in retail sales, rising unemployment and waning consumer confidence. With the slow economic gains, most companies are tightening their advertising budgets. “The cutback in advertising is being led from the top of the market by big blue chip companies, manifesting itself in fewer brands being supported with ad money. It indicates a retrenchment,” Swallen said.

But there is no foreseeable end to the Internet’s lead in the advertising industry. Online advertising is indubitably the most effective way to advertise and sell your services and products. Unlike other advertising strategies, Internet technology is able to cope up with speeding changes in today’s business markets making it a truly dynamic way to reach out to customers and effectively increase business profits. What used to be advertised on paper and ink can now be more effectively done electronically but at a far lesser cost with today’s growing borderless World Wide Web.

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Surveys Show Online Ads Growing Faster This Year

Online ads may be the biggest threat for print ads this year. This was put into light by a survey conducted by the Interactive Advertising Bureau or IAB and the PricewaterhouseCoopers or PWC, two of today’s respected marketing research firms.

The survey reveals an impressive 26.4 percent growth of online ad revenue on the first half of this year at about 10 billion dollars over the same period last year. Ad spending trends, on the other hand, were traced by the research organizations, Nielsen and TNS Media Intelligence, both of which noted a slower growth rate than what the IAB and PWC reported, referring to ad revenues of last year’s first half to reach only a 37-percentage hold on revenues.

There are varying interpretations regarding this contradicting survey results from all four media research firms. On one side, there are some members of the investment community believing that such growth is alarming. On the other side, there are the experts, the IAB in particular, who reads the numbers as a sign of maturity.

Some investors think of the growth as something to worry about and experts gives the reason why: growth rates are getting harder to maintain. This, as online ad revenue continues to grow statistically according to the actual dollars spent. Both of the years 2006 and 2007 have seen the downward “pull” of the ad revenue “push”, taking marketers to a dive of 2.1 billion dollars into the medium on the first two quarters of the previous year.

This year’s survey shows no difference, say experts. The distribution of revenues across display, channels, and search has not changed so far. While search spending has reached 41 percent of revenues, 40 percent was the achievement of the first half of last year. In other words, the search leaped to 4.1 billion dollars.

Statistics show an increase of 2.4 billion dollars on display advertising, which is 31 percent of the entire ad expenditures in the first six months of 2006. The year 2007 saw a 1 point difference at 32 percent.

Further, classified ads surge to 100 million to 1.7 million dollars, thus, leaving the first and second quarters of the year with only 17 percent—a low result when placed alongside the same period of the previous year at 20 percent. It also seems that not even the regulatory changes and mortgage crisis could keep lead generation from growing from 7 to 8 percent of all internet ad revenue.

The IAB/PWC survey also revealed ad revenues were now, more than ever, centered on top ad sellers. As for the top ad revenue-earning sites, they got the 70 percent chunk of the total ad spend, a one percent difference from last year’s 71 percent over the same period. The top 50, on the other hands, manage to account for 91 percent of all reported online ad revenues.

Throughout the surveys, consumer advertisers dominated 54 percent of the overall ad revenues. Pegged at 5.4 billion dollars, that percentage is considered higher compared to its 3.9 billion worth of spending in 2006. Retail led the rankings among consumer ads at 47 percent of all ad revenues followed by the automotive, travel, and entertainment industries at 21, 13, and 9 percent respectively.

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Surveys Point to Web 2.0 Potentials for Internet Businesses

Web 2.0 may be a step further for internet businesses when well conceptualized and used. This was suggested recently in a research conducted by Avenue A/ Razorfish, a web design firm specializing on interactive services.

In their latest study entitled, Digital Design Outlook, Web 2.0 is starting to dominate the mainstream of internet services today where it finds its way into majority of online web users. The study clearly delineates that there is more to banner ads and well-conceptualized websites than most advertisers and publishing companies think.

Interactivity seems to attract the bulk of intent users these days. RSS feeds and websites that enables comments on products and services are just two features that distinguish web 2.0 websites from other websites. This explains why in the survey, most online publishers are shown to have adopted the interactive features available through web 2.0.

According to the Razorfish survey, 41 percent of web consumers write their own blogs while 59 percent customize their own homepages. Blogging, even creating your own website, among others, are just two of the things that have led internet users to prefer the more interactive of websites than their “drier” counterparts.

The study continues to validate the benefits of web 2.0 to today’s web entrepreneurs across industries. The media and entertainment industry, for instance, has benefited from the interactive features of web 2.0. The study shows a sharp 67 percent of web consumers logging in to YouTube just to watch a video even as 70 percent of respondents read blogs regularly.

It was also disclosed in the study that 85 percent of internet users watch a movie preview online before watching the film at a movie house. Fifty-eight percent of Ipod owners and movie lovers are also revealed in the study to have downloaded from iTunes or ordered films from Netflix/Blockbuster. The boob tube has also found its match with the web 2.0 upsurge, as 71 percent of web consumers have watched at least one TV show online.

The catch for retail websites is that while customer preferences for web 2.0 features escalate to levels one cannot just dismiss, retail websites must do more than just posting non-interactive advertorial appeals. Moreover, 54 percent of web consumers begin product search at general search engines in contrast with the 30 percent of users starting at e-commerce sites.

As the presence of web 2.0 in cyberspace becomes even more felt than in the past decade, online companies are now feeling more pressured than ever to meet consumer demands. The urgency seems to rise everyday as another survey indicates.

Earlier this year, Booz Allen Hamilton in the United Kingdom concluded in a survey that the web 2.0 phenomenon has over 41 percent of internet users in the U.K hooked up with it. As an interactive and participatory electronic medium, it has held customers to web 2.0-rich websites like Flickr, YouTube, and MySpace, where web visitors are allowed to exchange information and ideas with other visitors as well.

If there is one thing that web 2.0 promises, it is that both businesses and consumers can benefit from it: for website owners, it means more customers; for consumers, it means freedom to innovate and exchange information in the interactivities of cyberspace.

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Social Networking Surge in Canada Shows Bright Future for Online Advertisers

Four out of ten Canadians have clicked on an online social networking website, with half of them visit the website almost daily and spend five-and-a-half hours on an average each week to socialize online. This startling figure reveals a promising future for the online advertising industry as this market of social networking users which spend time on websites such as Facebook and Windows Free Spaces are likely to go into online shopping and respond to advertising via the Internet according to a study entitled “Online Socialization, Social Networking and Online Communities” conducted by Ipsos Reid, a reach organization based in Vancouver, Canada.

The study showed that nearly 37% of adult Internet users in Canada have visited an online social community with 29% actually having a personal profile in at least one such website. “Online social networks and communities appear to have hit the Internet with the momentum of a runaway locomotive,” concluded the study.

“This is a staggering result given that these sites didn’t exist four years ago. Facebook launched in early 2004, as did MSN Spaces,” said Scott Patton, senior research manager for Ipsos in Winnipeg, Canada. “Visitors to these sites are more apt to respond to a marketing message and make a purchase or compare products online.”

In a survey done among 1,000 Canadian respondents on the phone and 1,103 more respondents online, Ipsos figured out that 65% of persons who frequent social networking websites click on an online advertisement. These numbers present a good opportunity for the online marketing industries to establish partnerships with these social networking websites. “The challenge for the managers and developers of online social networks and communities will be to generate enough positive interest to keep up the momentum they have experienced so far,” says Patton.

According to Payton, online businesses and website developers could more successfully develop new ways to expand their contact with current users which will eventually entice them to spend more time online on the Internet and convince them to use their own social networking website. “Given the differences in online behavior between users and non-users - plus the sheer number of hours spent online by people visiting social network sites - the opportunities cannot be ignored from a marketing perspective.” Patton explains, “It’s not hard to imagine the possibilities that online social networks represent for marketing. The challenge is to decide which online social network to partner with when targeting customers.”

The same study revealed that Facebook is currently the most popular social network in Canada with over two-thirds of Internet users who have an online social network have one profile on Facebook. Each Canadian Facebook user spends an average 5.9 hours weekly.

The number of social networking websites continues to increase despite having slowed down from its initial growth. But the fact does not seem to bother online businesses who believe that while that the services that social networking feature may change, it however should not be considered as a mere fad. “People said that about computers when they first came out,” Patton said. “The Internet is here to stay. The more we become this big global community, the more this kind of network will be important.”

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