RealTime IT News

Study: Traditional Advertisers Outnumber Dot-Coms

It's a long-awaited sign: according to a new study, traditional advertisers surpassed dot-com advertisers for the first time in March.

Of the top 100 advertisers in March, more than half were traditional advertisers, according to the study, conducted by New York-based Nielsen//NetRatings.

The study indicates that traditional offline companies made up 56 of the top 100 online advertisers last month -- a telling indicator for the whole spectrum of Internet advertisers.

Naturally, this is good news. Traditional advertisers typically have deeper pockets than dot-coms, and are more attracted to Web ads' branding properties -- which is reassuring, since average clickthrough rates for so-called "highly targeted" banner ads rarely top the 0.5 percent mark.

Dot-coms and other "digital economy" firms made up 34 of the top 100 advertisers, while high-tech companies accounted for the remainder.

"For the first time, we see a changing of the guards in the world of online advertising," said Allen Weiner, who is vice president of analytical services at NetRatings. "Traditional offline companies have caused a seismic shift in the sheer number of companies opting to do online campaigns and the amount of money they spend, signaling a healthy forecast for the industry as the year progresses."

Weiner also pointed to recent online campaign announcements from advertisers like Pepsi, Diet Coke and Ford, which "suggests renewed interest in the medium by traditional advertisers and agencies."

Among the top 100 advertisers, the single largest chunk of spending came from traditional-side clients.

In all, advertisers spent nearly $280 million on online advertising during March, according to the study. Of that, about $123.3 million -- or 44 percent -- came from traditional advertisers. Dot-coms shelled out $104.8 million, or 37 percent, while high-tech firms spent $51.4 million, or 18.4 percent.

Of the top 100 Web advertisers, offline brands also bought the most impressions. Some five billion impressions were served on behalf of traditional firms, while dot-coms and cross-media plays purchased a still-hefty 4.3 billion impressions. High-tech firms bought about two billion impressions.

Financial services firms proved the big spenders from the traditional side. Credit reporting service Equifax led with 636 million impressions, followed by Providian Bank, with nearly 504 million impressions. E*Trade came next, with 254 million impressions.

(Financial services firm typically spend relatively large amounts on brand advertising across all media. That's because there are often only minute differences in their services offerings -- so carving out a brand identity is key.)

In the digital economy category, Yahoo! had more than 554 million impressions, while AOL Time Warner served up nearly 512 million impressions. (Both figures don't include house ads.) Microsoft dominated the high-tech category, leading with more than 1.2 billion impressions served in March.

Weiner said that in large part, the shift from an industry largely reliant on dot-com ad spending, to traditional client dollars, is more due to offline brands' moving offline in increasing strength rather than the continued dot-com shakeout.

Indeed, many offline brands have adopted a "watch and wait" strategy, learning from dot-com advertising blunders (such as overspending, poor media placement, poor creatives, and so on). Now that advertising prices are reaching all-time lows, traditional companies are feeling more comfortable taking their considerable media and advertising expertise and pushing online.

"No other medium in history provides the immediacy, interaction and precise targeting that the Web offers," Weiner said. "The burden will be on the creative folks to learn how to use the Web effectively and make lasting impressions."

NetRatings' Weiner has been one of the few industry-watchers coming out with good news for the battered online advertising sector. In a similar AdSpectrum study for NetRatings last month, he assessed new advertising campaigns launched during first quarter, and concluded that traditional advertisers are beefing up their spending.

In a phone interview Wednesday, Weiner also said he predicts a second coming of dot-com advertisers later in 2001. But there's no real need to worry: unlike the firms that dominated Web advertising since its inception, these new dot-com advertisers will be better educated in prudent ad spending, creative design, and media placement than their fallen peers of 1999 and 2000, he said. As a result, they should fare better and contribute significantly to overall industry revenues.