Internet Advertising Analysis Part 16; Rich Media still has some drawbacks

 

Rich media does have some drawbacks, some (but not all) of which will be ameliorated by broadband availability

• Lengthy Downloads: Because most users still use dialup modems with maximum speeds of 56 KBPS (and are expected to continue to for some time), relatively few users can experience rich media without enduring lengthy download periods. Broadband is defined as greater than 128 KBPS. Greater bandwidth, allowing for faster download speeds, will eliminate this problem, but until then, few things are more annoying to users on the Web than having to wait for an advertisement to load before they can view the content of the site they came to see.

• The Novelty Will Wear Off: Just as click-through rates on banners fell as more and more banners were served, we expect the click-through rates on rich media will continue to decline as more rich-media ads are served.

• More Expensive to Produce: Although rich-media ads are still relatively inexpensive to produce compared with their offline brethren, those advertisers that turn to the Web for extremely inexpensive advertising may be turned off by rich media. Rich media is estimated to cost roughly three to five times more to produce than regular animated banners. Who Is Advertising on the Web? Logically, Web-savvy technology and telecommunications companies were the first adopters of the Internet as an advertising medium. Now, however, brick and mortar companies are advertising on the Internet and pure-play Internet companies are advertising on “traditional” media. We estimate that Internet companies have added 2% growth to overall advertising in 1999.

 

 

Table 74 Top Web Advertisers (March) Ranked by Millions of Impressions

 

Deciphering what categories of companies are advertising on the Web may be an exercise in futility, as the answer appears to be that everybody is! That having been said, we believe that several trends are developing.

 

 

 

Table 75 Industry Category of Internet Advertisers

 

Consumer brand companies (the Procter & Gamble’s of the world) are increasing their share of Web ad spending. The early dominators of Internet advertising such as Internet, technology, and telecom companies are spending greater and greater amounts on advertising, but their share of the pie is shrinking as others ramp up their Web advertising. Financial companies have also been increasing their share of Internet advertising. Looking forward, we believe that three broadly defined categories of advertisers will advertise heavily on the Internet. These three categories share several characteristics, the most important of which is that their products can be more easily purchased online. It is precisely for this reason that we believe they will also advertise heavily online. After all, when the sales cycle can be completed so quickly, over one medium, it makes sense for the companies that have the best ability to sell items online to also advertise online.

 

Figure 26 Top Internet Advertising Categories of 3Q99

 

 

 

 

 

 

Figure 27 Appealing Demographics: Internet Usage by Age Group

 

 

 

 

Figure 28 Appealing Demographics: Internet Usage by Income

 

 

Continue with:

Part 17 Inventory and Concentration , Part 18; Market Share and Concentration Data , Part 19; Global Impact, Part 20; Residential and Business Use ,

Part 21; Pageviews , Part 22; Advertising vs. Direct Marketing , Part 23; Investment Conclusion

 

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