• by Dale Chaney , June 13, 2002

As banner ads decline, sponsorships are reemerging as one of the best ways to make an impression online.
aSponsorships are picking up a little steam—even as online ad formats have proliferated and the Internet environment continues to toughen up. Numbers from the Internet Advertising Bureau for four consecutive quarters beginning with Q4 1999 show that sponsorships have not only increased their percentage share of total Internet ad revenues during that time but have also outstripped banners—long the dominant online ad form—in actual dollar growth for the period.

Sponsorships accounted for $425 million of ad revenue in Q4 1999, 25 percent of the total, and for $557 million in Q3 2000, 28 percent of the total. The difference in the quarterly performance tallies to $132 million or growth of 31 percent.

Banner revenues, meanwhile, grew from $901 million in Q4 1999, 53 percent of the total, to only $915 million in Q3 2000, while their percent share of the total actually declined to 46 percent. In dollars, the difference between the two quarters is a meager $14 million—or a percentage growth in ad revenues of only 1.5 percent.

During the same period, other categories of online advertising—email, interstitials, classifieds, and referrals—grew from 22 percent to 26 percent. With the coinciding increase in sponsorships, the numbers simply reflect a weaker rate of growth for banners. These differences in growth between banners and sponsorships are perhaps being fed by a current re-evaluation of their respective applications in Internet advertising.

In a study titled “The Great Portal Payoff,” Booz-Allen & Hamilton offers the opinion that it is time to “banish the banner” to maintain the financial viability of Internet portals and suggests that sponsorship is emerging as an effective advertising vehicle for reaching portal users without relying on the banner format. Companies should consider sponsorships, attaching their names and messages to appropriate parts of a portal site or creating altogether new sections, the consulting firm suggests.

Even the IAB’s “Advertising ABCs” suggests that, instead of building a big site, a brand like P&G’s Tide should be looking for a way to sponsor the online schedules of every Little League in the country—with just a logo and positioning line sufficient to make an impression.

IAB started releasing data on sponsorships as a category in 1997. In the first quarter of that year, when Internet advertising revenues hit $129.5 million, banner advertising accounted for 70 percent of online ad spending and sponsorships accounted for 24 percent. In the next quarter, sponsorships rose to 41 percent of total ad revenues, and banners accounted for 54 percent. All other ad forms were grouped in the “other” category. Currently, the “IAB Advertising Revenue Report” represents data from more than 200 companies representing more than 1,500 websites.

Freelance writer Dale Chaney can be reached at dale_chaney@msn.com.