Internet advertising grew by 60 per cent during 2004, but while the likes of Yahoo! and MSN enjoy the benefit of increased online budgets, the growing swell of niche websites are missing out. (We feature five of the best niche sites in the panel below.)
For, despite the billions of websites in cyberspace, digital media planners are placing the bulk of online ad bud-gets across a handful of large websites.
The most recent figures available, from the Internet Advertising Bureau and PricewaterhouseCoopers in 2002, revealed that 89 per cent of online advertising budgets were spent across the top ten websites or portals.
The breakdown of adspend across the internet is no longer available from the IAB, but many online agencies admit to spending the majority of their clients' online budgets across up to 30 "tried-and-tested" websites.
Digital divisions within large agency networks rely on a limited number of buying points to deliver their clients' objectives efficiently. "A consolidated approach makes sense," Richard Dunmall, the managing director of mOne UK, says.
But the chief executive of the IAB, Guy Phillipson, blames laziness on the part of media agencies for the fact that some campaigns gravitate toward the top ten sites. "They may provide great reach but not necessarily return on investment," he says. "Many agencies are not being imaginative enough or testing and learning properly."
Specialist digital agencies claim that by focusing on the larger sites, networks are cost-cutting at the expense of their clients.
"It's much worse than laziness," Andrew Walmsley, the co-founder of the digital media planning and buying agency i-level, says. "It's a business decision. It's cheaper for an agency to maintain relationships with ten media owners than 100."
I-level deals, on average, with around 150 different websites every month, and says it has sacrificed profit to invest in a dedicated online planning service.
"Many agencies are not experts in this field. They're working on the basis of a TV negotiating strategy, which is inappropriate for the sector," Walmsley, who left Bartle Bogle Hegarty, where he was the head of digital media, to launch i-level in 1998, says.
The larger networks argue that portals and bigger websites give agencies better treatment, and that the time-consuming nature of many online advertising transactions works against seeking a broad spread of sites for small - and often squeezed - online media budgets.
"Clients are constantly trying to reduce their commission rates," Kirsty Wilson, the managing director at Media.Com, says. "Agencies have to cut their cloth accordingly, and if you do deals with big sites, it is easier."
And, with a "cowboy mentality" still in evidence across much of the internet, agencies play it safe with clients' cash. "Media agencies have an issue buying from smaller sites," Paul Frampton, the head of digital at Media Contacts, the direct and digital arm of the Media Planning Group, says.
"Many of them are not audited and won't have the technical support needed. For a branding campaign, a media schedule will be quite narrow as many sites can't run the formats you want."
The emergence of a limited number of buying points is evidence of the maturity of the sector, Nick Suckley, the departing managing director of Media.Com, says. "The top ten sites are accelerating away in terms of reach," he says. "It's a reflection of the free market in operation.
it's not a network-agency conspiracy." (Suckley and Pete Robins, the co- managing director of Media.Com, are leaving the agency to set up their own business with a fresh approach to online media planning.)
As the internet moves into the branding arena, agencies increasingly seek reach and volume comparable with other forms of media. "The portals deliver the numbers," Charmaine Oakley, the digital planning director at Zed, ZenithOptimedia's digital and direct arm, says. "Yahoo! competes with the national press."
Zed uses around 275 sites across its online plans and, like many agencies, will vary the number of sites it uses, depending on the campaign. For direct campaigns, it will plan across a wide spread of sites, while branding campaigns tend to be more limited.
"It depends on the brief," Wilson says. "If the answer is Yahoo!, that is what we will use."
There are now a number of online planning tools available and Phillipson says that, as the medium develops, agencies will become more imaginative and progressive in their strategy.
In the meantime, restricting online media plans to a few well-trodden sites is pushing up media inflation across the industry. "If you don't have any alternatives, the people you are trading with will exploit that," Walmsley says.
FIVE OF THE UK'S BEST NICHE WEBSITES
MyKindaPlace.com was the UK's first website designed for teenage girls, launched at the height of the dotcom boom in June 2000. This busy, content-rich site covers the whole spectrum of interests of your average giggly teenybopper - from celebrity, music and film to fashion, beauty and sex, including a section with agony aunts armed with the facts on how to "lose your V plates". The site has a loyal following of 600,000 unique users and a teen database of more than 300,000 e-mails.
Monkeyslum.com is the male version of MyKindaPlace, launched in September 2004 to bring lads' lifestyle to the web. Its content, "covering everything from football to fit birds, sex to skank and gadgets to gaming", targets the pre-FHM generation of boys between the ages of 11 and 19. One particularly fun section of the site allows you to build your own woman from celebrity body parts. With forums and message boards allowing teenage boys to interact, "it is almost controlled by its audience", Media Contacts' head of digital, Paul Frampton, says. The site has an underground feel that can offer more impact than the larger publishing houses.
Many consumers may not take kindly to a portal that defines them by age. But 50connect.co.uk is tapping into the UK's fastest-growing market and one that is responsible for more than three-quarters of all online purchases. Reaching almost one million over-45-year-olds, it runs a wide range of channels, from motoring to genealogy, under the "live life to the full" banner. The site's target audience accounts for 80 per cent of the personal wealth in the UK and 40 per cent of consumer spending, amounting to £145 billion a year.
Another survivor from the early days of the internet, Press Holdings' handbag.com launched back in 1999 and claims to be the first website dedicated to women online. With the aim of providing "the inside track for busy women", it serves up a range of information from health, relationships, careers and beauty to extra frills such as horoscopes, dating and the usual "educational" tips on issues such as how to reach orgasm. The median age of its users is around 33 years old, unique users are slightly less than one million every month and unique page-users reach more than 28 million a month.
One of the top internet service providers in the UK (it claims to be consistently in the top three in terms of speed and reliability) and owned by ntl, virgin.net launched in November 1996. The site, bordered with the trademark Virgin red trim, is often left off media plans, with planners usually opting for the likes of Wanadoo and BT. It has a reasonably clean and uncluttered homepage - a refreshing change for a portal. It has an online shopping channel and is, in typical Virgin fashion, hot on business partnerships to broaden its range of services; they include Virgin Megastore, the travel services eBookers and The First Resort and the lingerie retailer Figleaves. Its search engine is powered by Google and it boasts a range of entertainment and lifestyle channels from gambling, technology and sport, to movies, music and eating out.