• by March 12, 2001

Jupiter Media Metrix today reports that the number of different (unique) vertical online ads increased by nearly 70% during the fourth quarter of 2000 but warns that their return on investment (ROI) is still unproven. AdRelevance data released today states that vertical online ads cost advertisers $54 for 1,000 impressions (CPM) - almost twice as much as full-size horizontal banner ads ($28 for 1,000 impressions), whose average standard rate card value dipped nearly $3 from the third quarter.

Jupiter analysts say that publishers are embracing the new ads in an attempt to stimulate advertiser interest and increase revenues even though the ultimate value of the new format is not yet known.

"Publishers are clearly experimenting with new and larger ad sizes in an attempt to increase online advertising revenues in what is undeniably a soft market," said Christopher Todd, a Jupiter analyst. "However, bigger ads don't necessarily mean better results for advertisers -- especially over the long term. A great deal of work still lies ahead to unilaterally identify and communicate the true value proposition of online advertising as a medium."

AdRelevance found that the number of different vertical banner ads increased from 2,809 to 4,725 during the fourth quarter. Additionally, vertical banners received 20% of all ad impressions during the quarter - a total of 1.9 billion impressions - while the full horizontal banner continued to be the most common online ad format with 36% of impressions. According to Jupiter analysts, vertical banners typically appear on highly trafficked pages of a site as advertising sellers attempt to make their sites more attractive to advertisers.

According to the AdRelevance data, the average cost of a full horizontal banner slipped from $31 for 1,000 impressions to $28 during the fourth quarter. Jupiter analysts attribute the decrease in rates, in part, to an increase in inventory availability combined with a decrease response rates for direct marketers and a renewed emphasis on ROI.

AdRelevance also says that incentive sites, general news sites and politics sites were among those that increased rate cards during the fourth quarter. Meanwhile, computing and technology sites had the highest rate card value for full horizontal banners - $50 for 1,000 thousand impressions, a $5 decrease from the previous quarter.

"Typically we see a surge in holiday-related advertising during the fourth quarter which results in greater demand and higher ad rates across the board," Todd added. "The fallback in average banner pricing exemplifies the serious concern which is affecting the marketplace."