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A Slow Start for Online Holiday Advertising

Although online advertising action for this holiday season is nearly four times what it was last year, online advertisers are off to a slower start, says a new industry report.

The study by AdRelevance, a Jupiter Media Metrix company, shows that while the number of retailers advertising online this season (2,313) almost quadrupled from 1999 (657), ad impressions are growing slower.

In fact, the study found that total median impressions per retailer are down and the number of holiday-themed ads in October 2000 was less than half of what it was last year.

Meanwhile, Jupiter Research reported that a separate executive survey found that 64 percent of e-tailers are making online media their top priority for advertising campaigns this season.

Only 21 percent of online retailers said they plan to advertise in print media and a mere 12 percent will advertise on radio, television and cable TV this holiday season, Jupiter said.

According to Jupiter, online retailers who over-spent on holiday advertising last year are taking a far more conservative approach this year, with only 11 percent planning to spend more than half of their ad budget on this year's holiday season -- compared to nearly one-third (29%) last year.

Jupiter said it is advising online retailers not to focus on price promotion and discounts, but to base their marketing on service, convenience and selection.

"Marketers have learned from last year's experience and this year have redistributed their online holiday budget and developed much more targeted and efficient marketing campaigns using more measurable media channels," said Marissa Gluck, senior analyst, Jupiter Research. "Although Internet shoppers have been spoiled by discounts in the past, during the holiday season they are more concerned with receiving their orders before the holiday, saving time and avoiding crowds than they are with saving on price."

The AdRelevance Holiday 2000 Intelligence Report, which tracked holiday-related online advertising from October through mid-November, found that online holiday ad impressions and spending by retailers did not post gains above last year until the second week of November 2000.

Total median online ad impressions per retailer were down 82 percent in October 2000 -- falling from 130,000 impressions in 1999 to 23,000 this season.

Interestingly, only five of last year's top 10 holiday advertisers show up in this season's rankings: Ubid, Yahoo!, eBay, barnesandnoble.com and Amazon.com.

Barnesandnoble.com, which ranked sixth last year among top holiday online retail advertisers, this year increased its share of the online ad pie by nine percent -- becoming the second largest online holiday advertiser behind Amazon.com, the study said.