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
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
Nigel Sheldon, the managing partner of mdigital, says: 'In an evolving
market, the useful way to look at projections is to constantly refine
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
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
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
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
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
It is a question with which the online research and evaluation
specialists are indeed grappling.