Over 40% of Top 25 Online Ad Sellers Profitable in 2001
Reflecting steep declines across the board in all ad sectors in 2001, Internet advertising revenue in the U.S. declined 7.5 percent in the fourth quarter of 2001, totalling $1.7 billion.
Internet advertising for all of 2001 totalled $7.2 billion, down 12 percent versus 2000. The Interactive Advertising Bureau (IAB) sponsors the Internet Ad Revenue Report, which is conducted independently by the New Media Group of PricewaterhouseCoopers (PwC).
The IAB notes that overall weak revenue results were not unexpected, and continues to mirror the experience of the entire advertising environment. In fact, the Internet ad results compare favourably to many other, more established ad sectors, which experienced steeper declines during the reporting period.
For example, data compiled by eMarketer, a leading provider of eBusiness statistics, shows that CMR The Myers Report and McCann Erickson all rate the decline in ad revenue for broadcast television at 11.8%, 12% and 13.8% respectively for 2001.
Additionally, national spot radio decreased by 20.4% according to CMR and 19.4% according to McCann in 2001. The IAB and PwC have also announced they will now issue a "top-line" report covering the first and third quarters, followed by detailed findings provided in the semi-annual full reports. The 2002 first quarter results will be announced at the end of May 2002.
"We believe that in assessing the results of Internet advertising in 2001, it would be a mistake to limit the comparison to the results for 2000, the banner year for all advertising sectors," said Greg Stuart, President & CEO of the Interactive Advertising Bureau (IAB).
"It's no secret that the slowing economy, combined with the very responsible actions by advertisers and media outlets in all sectors, as out of respect they ceased virtually all activities for over a month, has had an impact on the results for 2001. The industry fundamentals - growing installed base of Internet users, more attractive demographics, and higher accountability - are firmly entrenched, enabling it to more than hold its own through its first acid test of a slow ad market. What is important now is how we improve the medium and the actions we take to help the industry rebound.
"No one should mistake the fact that the Internet, and in fact, all interactive platforms, hold a key to sustained economic growth, and the IAB's and its member companies' actions in simplifying the process making the medium easier for all participants to navigate, are having very positive effects. A very real indication of the vitality of the business for online ad sellers was recently reported by Thomas Weisel Partners in their weekly report which, based on extensive studies of SEC filings, company documents and other research, concludes that 95% of the top online ad sellers are expected to be EBITDA positive in 2003. The Weisel survey has 42% of these online ad sellers profitable in 2001, and estimates that the number will grow to 71% in 2002 and 90% in 2003," Stuart concludes.
Larger traditional advertisers have begun to recognize the value that Internet advertising brings to their overall marketing efforts, and that by integrating their offline efforts with online exposure, the combined effect offers them strong growth potential.
This was amply demonstrated by the results of the Unilever/MSN Media Mix research released in February of this year, in which the research suggested that increased online advertising may result in increased key metrics such as brand awareness, brand attributes and purchase intent and branding effectiveness.
"Unlike other ad-supported media platforms, the Internet advertising industry has the ability to learn quickly from its research and foster positive change for the benefit of advertiser growth and spending," said Tom Hyland, Chair, PricewaterhouseCoopers
New Media Group. "The revenue we have seen for this quarter and the full year, compare favourably with the results we have seen reported from other sectors, and we believe that this is attributable to online ad sellers' ability to address advertiser needs in a timely fashion
In 2001, the consumer-targeted category continued to be the largest overall segment for online advertising (30%) with the retail segment (50%) driving these ad revenues.
Not surprisingly, industry concentration continues, with revenues increasingly being consolidated within large media companies, similar to most other media sectors.
The CPM pricing model is the model of choice, comprising 45 percent of all deal revenues in the fourth quarter of 2001, while straight performance contracts were at 13 percent, and hybrid deals, a combination of CPM and performance totalled 42 percent.
Percentage use of various ad formats remained fairly consistent in 2001.
Delicious
Digg
Reddit
Magnoliacom
Newsvine
Furl
Google
Yahoo
Technorati
Comments
Post new comment