NEW MEDIA: Counting the Costs - Will new methods to measure online advertising create a counteraction to the drop in internet confidence? Robert Gray investigates

Funny how the phrase 'dotcom boom' already sounds as though it

comes from the pages of an economic history tome recording the latest in

a series of financial fads such as the South Sea Bubble, or the penchant

for tulip bulb speculation among investors in 17th century Amsterdam.

Yesterday's hot stocks have been transformed into today's penny shares -

a rapid about-turn in fortunes perfectly in keeping with the

lightning-quick speed of the digital age.



Of course, not all the dotcoms are going to die out. Yet many,

particularly in the US, have caught cold, and their ill-health has

implications for the online advertising market.



In the US, where online advertising had been growing at 150 per cent

year on year, the Internet Advertising Bureau released figures for the

third quarter of 2000 that showed a 6.5 per cent drop in internet

advertising on the previous quarter. This was the first time since the

IAB began reporting figures in 1996 that there had been a decline.



Europe was by no means immune. Online advertising spend in the UK fell

to 17.3 million euros in December 2000, from 17.7 million euros in

November, according to Forrester Research's, Internet AdWatch Spending

Monitor.



There was a similar fall in Germany. Although more ads were being sold,

rates were down.



Meanwhile, several online media owners in the UK and Sweden have

reported a decrease in revenues for the first few months of this year

over the corresponding period for 2000, according to Jupiter MMXI.

Clearly, global economic jitters mixed with a fall in spend from dotcom

advertisers is having an adverse impact on online revenue streams.



'It's a tough situation for ad sellers now,' Jupiter MMXI's online

advertising analyst, Staffan Engdegard, concedes. 'But it's important to

keep things in perspective. Last year represented a 250 per cent

increase over the previous year, so one should think of the first part

of last year as being exceptional.'



Despite the tougher times, Forrester Research remains confident about

the prospects for 2001. It is predicting a 70 per cent rise in online

adspend across Europe to 1.2 billion euros (pounds 750 million), with

activity picking up in the second half of the year following a quieter

opening period. Long term, it projects net-based advertising to grow to

six billion euros, or 5 per cent of all advertising spend in 2005.



But how useful are these figures? And more to the point, how accurate

are they?



Nigel Sheldon, the managing partner of mdigital, says: 'In an evolving

market, the useful way to look at projections is to constantly refine

them.'



Changes in the global economy, together with the difficulties facing

dotcoms, mean projections made more than a few months ago may need to be

revised downward, Sheldon maintains. Although he adds: 'Plenty of

traditional advertisers are still looking hard at upping their online

spend.'



The managing director of Universal Interactive, Damian Blackden, says:

'It's always handy to have figures, but the best way to get a steer on

the market is to be in it.'



Blackden points out that from the media planner/buyer's perspective,

harder trading conditions for media owners have made them 'more

collaborative' and keener to meet the brief. 'You are more likely to get

the shape and size you want on the day that you want it.'



Carat Interactive's managing partner, Richard Wheaton, thinks that

better research is needed if more clients are to be persuaded to

advertise online.



Just two years ago the UK online advertising market was worth a mere

pounds 50 million - a level at which a huge amount of research was not

viable. Now it is larger, better research is vital.



In the US, the IAB's quarterly Advertising Revenue Report is conducted

by the New Media Group of PricewaterhouseCoopers and represents data

from more than 200 companies, aggregated from thousands of websites. The

data is considered fairly accurate, in that it is compiled directly from

information supplied by companies selling advertising on the

internet.



Engdegard says Jupiter MMXI also collects its data confidentially from

media owners. This approach is necessary, he says, because a lot of

revenue comes from barter deals and areas such as sponsorships, which go

beyond the more straightforward banner advertising approach.



ACNielsen MMS, meanwhile, is to launch a new product this summer under

the working title webpix, which will measure internet spend across

Europe in a similar way to which it measures spend on other media to

allow clients and buyers to make comparisons.



'Nobody else can offer the cross-media analysis that we'll be able to

offer,' ACNielsen MMS' strategic planning manager, Ewan Darby, says. 'We

want to set a benchmark for measuring advertising expenditure on the

internet and we'll even be able to do it by individual creative

execution.'



New methods are certainly required due to the fast pace of change. The

managing director of Media.com, Jason Dooris, feels the revenue model

for the internet is moving away from the commoditised advertising

approach to more of a 'contra-deal model'. For clients such as the

airline Emirates, Dooris is looking to deliver content to sites such as

Conde Nast Traveller in return for a presence on the website.



'It's about delivering value with content to enhance the online

experience,' Dooris says. 'That's much more powerful and useful to the

user and also for the host site. But the big question is how do you

evaluate that?'



It is a question with which the online research and evaluation

specialists are indeed grappling.



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).