• by July 30, 2001

Business Week, in a recent article on Online Advertising, presented a compelling case for making the medium a part of the media plan, supported by studies from several sources. They point out that, according to PricewaterhouseCoopers, U.S. advertisers spent $8.2 billion online in 2000. By comparison, outdoor advertising reported $1.8 billion in sales last year, and the cable-TV ad business generated $11.2 billion.

According to Nielsen/Net Ratings 174 million Americans are on the Net. And in June, the average Web user spent about 16.5 hours online, at work and at home, says Nielsen.

A February Morgan Stanley report showed that the banner ad is more effective at generating brand recall and brand interest than ads on TV or in magazines or newspapers.
- Consumers show a 27% greater ability to recall a brand after seeing an Internet ad.
- Magazines increase brand recall by 26%
- Newspapers 23%
- Television 17%.
- Streaming media ads are 5 times as effective at generating brand recall as traditional banner ads.

Morgan Stanley calculates that the Net's effective CPM is about $3.50 for sites with broad general audiences and possibly 10 or 20 times that for sites with more desirable audiences.

According to PricewaterhouseCoopers, average CPMs for daily newspapers are about $19. Prime-time TV commands the second highest CPM at about $16.

Marketers say they'll push for performance pricing, instead of price-per-CPM. Forrester predicts that 83% of ad spending will be based on at least some hybrid of cost-per-action and CPM by 2003. New measurement tools reveal that online can deliver impressive ad performance results vs. other media.

Forrester predicts that by 2005, early adopters will spend as much as 23% of their marketing budgets on Internet ads and online advertising will account for 9.5% of total ad spending, or $42 billion.

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