CAMPAIGN-I: Spotlight on: online advertising - Top ten publishers are losing stranglehold on net adspend. The UK internet market is seeing a sustained period of growth

By ALASDAIR REID, campaignlive.co.uk, Friday, 08 December 2000 12:00AM

If there's one tiresomely hackneyed fact that most people know about online advertising, it's the one about the ad industry spending all of its money with a measly ten sites. It's all the more tiresome for being true. With squillions of web publishers out there, last year just ten of them accounted for 90 per cent of advertising spend.

If there's one tiresomely hackneyed fact that most people know about online advertising, it's the one about the ad industry spending all of its money with a measly ten sites. It's all the more tiresome for being true. With squillions of web publishers out there, last year just ten of them accounted for 90 per cent of advertising spend.

For many of those on the outside looking in, this says almost all you need to know about the sector. For all the effort it spends on peering into the future, the online advertising industry sometimes seems a small and unsophisticated world.

So this is the section you tend to look at first when the Internet Advertising Bureau publishes its market analysis report. It's certainly what most people did last week when figures for the first half of the year 2000 were released. And the score? Actually, it's a bit of good news and a bit of bad news. Yes, the figure is down. But, no, not by much.

The top ten publishers still gobble up 85 per cent of the cash out there.

This, though, was the only ambiguous note within the report. The rest was damned good - and there's no doubt that the UK industry continues to laugh in the face of continued uncertainty in the e-commerce marketplace. UK-sourced advertising growth continues unabated - and, while you'd expect that for an industry building from such a low base, the rate of growth is encouraging.

The first quarter of 2000 was up 31 per cent on the last quarter of 1999.

Likewise, the second quarter of 2000 also recorded a 31 per cent gain on quarter one. We're not looking at an exponential trend here but the slope of the graph looks a lot steeper than the one that characterised 1998 and 1999. Year-on-year growth for the second quarter was 303 per cent.

And the shape of the graph is very different to the US one. It's true that in some ways we're at least six months behind the US, but in others - for instance, market conditions with regard to dotcom stocks - we're the same. So the conclusion is that the market here is proving more resilient.

Last year, Jupiter Communications predicted that the UK market for the whole of this year would be worth pounds 88.9 million. By the end of the first half, it had already hit pounds 63.4 million. So, full steam ahead. And within that overall success story, there was one particularly interesting angle - the type of internet advertising that grew fastest was banner.

Not so many months ago, when click-through rates fell below 1 per cent, there was no shortage of people queuing up to predict the demise of banner. Now they have to eat their mouse mats.

So, what do industry pundits think? Are they still embarrassed by the continued concentration of revenue with the top ten publishers? Some admit that they are. As one source puts it: 'The drop in concentration of money is not enough but it's always tricky. If we were being honest, we'd say that we don't know what the universe is. We don't really know how much money is out there. Also, there's a lot of barter and unconventional deals still going on. This is actually the biggest question-mark over the industry.

It needs standards and currencies and reliable research - all the paraphernalia, in fact, of a grown-up medium. This report is one of a number of signs that we're moving in the right direction. We're getting there.'

But others, of course, are more upbeat. Eric Stein, the managing director of the online ad network DoubleClick, says: 'The most important point is the fact that the concentration figure is coming down.

I think it's great to see positive growth numbers and it's great that reports of the death of banner were premature. Those are the important things. The conclusion here is that there are more websites that are becoming viable vehicles and that advertisers are finding them. The breadth of companies and industries spending online is pretty encouraging.'

That's a theme picked up by many. Paul Pilkington, a consultant at PricewaterhouseCoopers, which compiles the report for the IAB, states: 'Clearly the demise of banner just hasn't happened despite the drop in click-through. But the click-through situation has to be set against research showing that banner is good for brand building.

'Further evidence for that is seen in the fact that FMCG is now such an important advertising category, representing 11 per cent of total revenue. Those advertisers are there because they know you can build brands as well as driving traffic. It also tells you that the demographics of those online are more attractive to advertisers.'

Rick Sareen, the regional director for Europe at Beyond Interactive, backs that up: 'We are great believers in banner - probably because we have a number of large clients who use it and see it working. I don't think they'd keep spending millions on it if they didn't. I think that where FMCG is concerned, 2001 will be the year in which, for the want of a better word, the internet will be conventionalised. We'll really see the top 200 advertisers in there in force.'



This article was first published on campaignlive.co.uk

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