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Report: Advertisers Seeing Returns from Niche Buys

According to a new report, independent Web publishers could have reason to celebrate.

A study by Jupiter Media Metrix' AdRelevance unit suggests that consumer packaged goods firms are rethinking their media spending -- and that means spending money on niche Web sites.

CPG firms purchased 55 percent of their online ad impressions on niche Web sites during the first quarter of 2001, compared to 44 percent during the third quarter of 2000, according to the study. While CPG advertisers are focusing a higher percentage of their online ads on niche sites, they've also decreased their share of online ads on Web portals in the process.

Analysts said the rise in spending on niche content sites come as CPG companies are experimenting with their online media strategies, seeking out innovative ways to get their products in front of Web savvy customers. In many cases, this means finding a special-interest site that meshes with a product's positioning and brand.

For instance, alcoholic beverage producers are one of the advertising segments turning to niche sites -- in this case, sports and automotive sites -- to reach males online. As a result, the Jupiter study suggests that alcoholic beverage manufacturers produced ads that were viewed by males 77 percent of the time during first quarter.

Similarly, cosmetic advertisers achieved a 57 percent female demographic by increasing their ad impressions on fashion, personal expression, and children and family sites.

"Online advertisers have long been looking for better ways to target consumers," said Jupiter senior analyst Mike May.

Because most of the sites they find appeal to niche interests or segments, both advertisers and publishers are benefiting, according to the study.

"Data show that CPG companies have been more heavily targeting sites that appeal to specific demographic segments," May said. "The costs of doing business with these smaller affinity sites are typically lower than the portals, and because most CPGs are investing to learn, they're avoiding larger media buys. Small sites are more likely to sign the shorter term deals that CPGs are looking for while portals try to hold out for deals stretching six to twelve months."

While CPG manufacturers are fleeing expensive and expansive portal buys in favor of niche sites, retailers continue to purchase almost 50 percent of their impressions on portals. Jupiter analysts attributed retailers' fondness for portal buys because the sheer volume of orders they generate makes it easier for them to forgive low ROI rates.

However, May did warn CPG advertisers about becoming overly reliant on niche sites in their online media strategies. For one, portal sites could still make for attractive media buys, with an attractive mix of a large user base combined with audience segmentation among subsites (such as Yahoo! Autos), according to the report. Additionally, May said CPGs also should be wary of neglecting more expensive portals buys because they offer more of an opportunity to scale campaigns with little effort.

So, as CPG advertisers -- and traditional companies in general -- increase their spending, it appears certain that portals will again experience increased interest from retail goods manufacturers. But for the meantime at least, the Jupiter study concludes that niche content sites are the current beneficiaries of CPG firms' keen interest in reaching targeted traffic through more frugal buys.