• by Jack Loechner , Staff Writer @mp_research, October 3, 2001

A recent report from Jupiter Media Metrix predicted that online ad spending in the United States will increase only 5 percent in 2001, but it will rebound and grow at a compound rate of 22 percent over the next five years, reaching a total of more than $15 billion by 2006. During the same time period, though, Jupiter says that spending on digital marketing initiatives will surpass that of advertising and reach more than $19 billion. According to Jupiter analysts, web publishers must diversify advertising and marketing opportunities beyond measured media to achieve marketing goals.

Jupiter points out that consumer packaged goods companies are utilizing more cost-effective and measurable vehicles including coupons, promotions, sweepstakes, email, direct mail, and alternative media. While early efforts of these companies to create brand-centered destination sites have produced mixed results, major marketers are finding efficiencies in shifting coupon and promotion activity online. And, during the next five years, email marketing spending will almost equal all other online consumer promotions. Online promotions in 2001 are expected to be $.99 billion, while email spending is $1.0 billion. These components grow on an almost parallel track, and almost equally, from $1.99 billion in ‘01 to $19.3 in 2006. And in 2006, online ad spending will be only $15.4 billion.

Among the “digital initiatives” there are a number of sweepstakes sites in the Media Metrix top ten newcomer rankings. “Incentive sites were long regarded as sort of a niche category, but in fact, about 38 percent of people on the web are visiting one or more incentive sites in an average user month,” says Anne Rickert, Media Metrix measurement analyst. Twenty-two percent of all players at one site play more than five times a week, providing not only reach, but frequency.

Another piece of the new digital marketing component, couponing, started with paper coupons delivered in newspaper inserts, then went digital in a fairly crude manner, with electronic codes that could be used at online storefronts. It wasn’t long before the technology was improved, and consumer packaged goods companies began to see the merits of taking their traditional coupon efforts online. Today, online couponing seems to hold the promise of truly linking online marketing with offline buying. In addition, it is less expensive to get the coupon to the customer, the turn-around time is much shorter, the ability to target and follow up with a particular type of customer is greater, and there are no special system requirements to post a coupon on a coupon-offering website.

“Currently, the online advertising industry is more mature than digital marketing initiatives such as sweepstakes, coupons, and promotions,” Marissa Gluck, senior analyst for Jupiter Media Metrix says. “However, as marketers demand a greater impact from their online investment, publishers risk losing dollars to marketing initiatives that don’t require their involvement, such as online contests, movies, and games.”