Web Ads on the Rise
Web advertising trackers have created a new business themselves and predict big bucks for the industry's future
It's long looked like World Wide Web ventures -- most notably online newspapers -- won't make money from surfers or even serious users.
So a lot of hope has been directed toward Web advertising. But it's always been hard to determine who's looking at what, for how long and why.
However, a new cadre of technology companies and analysts have developed a cottage industry in tracking Web advertising. In the past month, a slew of studies and products have come out that predict a promising future in Web advertising revenues.
Jupiter Communications, New York, which will also hold a large conference next week on online advertising, has come out with the most startling numbers. Ad spending on the Internet will reach $5 billion by 2000, according to Jupiter. By comparison, Web advertising in 1996 will total about $312 million.
"Advertising is the only way a lot of these sites are making money," said Ann Burgraff, director of marketing at NetGravity, San Mateo, Calif. NetGravity, which sells software that helps companies track their own ads, is one of the companies on a committee of the Internet Advertising Bureau, New York, that is forming a standard way of measuring advertising on the Web.
Determining standards in Web tracking is vital, as some companies may count time spent on an ad (which could be misleading if someone goes into an advertiser's site and leaves the room) while others tabulate clicks on a site.
So who's making the money? Although 600 Web sites offered ad space in 1996, the top 10 percent raked in 66 percent of the revenue, the study said. Search engines and directories collected the most money, followed by entertainment and information sites. Netscape Communications Corp., Mountain View, Calif., brought in the most -- $7. 7 million in the second quarter alone. Netscape gets most of its ad money from five search engines that pay $5 million a year each to Netscape.
On the other side of the fence, Microsoft Corp., Redmond, Wash., spent the most money on Web advertising. Microsoft spent $2 million in the second quarter. Netscape poured some of its cash back in to Web ads -- it came in fifth on Jupiter's list of top 10 advertisers. Search engines InfoSeek and Excite were Nos. 2 and 3. Two telcos made the list of big spenders -- AT&T, Basking Ridge, N.J., came in at No. 8 and New York-based Nynex scraped through at No. 10.
Most advertisers still tend to be technology companies, although non-computer consumer products, such as Toyota and Procter & Gamble, made up 14 percent of ads bought in the second quarter, according to Jupiter.
Forrester Research, Cambridge, Mass., has found Web advertising to be such a hot topic that earlier this month it created a new research service, Media & Technology Strategies, to advise publishers, broadcasters and other information providers how to attract customers using the Internet.
Forrester's prediction of online revenues is more reserved -- it estimates online ad revenues will reach $4 billion by 2001. Forrester found that 75 percent of 52 advertisers it surveyed plan to spend more on Internet advertising in the next three years.
Mary Modahl, group director of New Media Research at the company, said there will be a shift toward networks of sites that sell advertising, much in the way that media buyers sometimes purchase ads in groups. Time Inc.'s Pathfinder site, for example, has 90 Internet publications. "It helps leverage the sales force," said Burgraff.
Web management software, such as NetGravity's, is used by companies to track ad traffic and to ensure that ads, such as banners, are changed when they should be. NetGravity's customers include Netscape, Time Inc.'s Pathfinder and CondeNet.
The company, which has been selling the software for about a year, reached the 1 billion mark this month in ads managed on customers' sites. NetGravity's customers previously would manually monitor ads, said Burgraff.
Tracking ads, beside determining which ones are attracting customers, also will help companies more specifically target businesses and consumers. Burgraff uses the futuristic analogy of a car driving down the road passing a billboard that can tell what the driver is like -- not just the car, but the person in it. It's a marketer's dream.