eMarketer/Forbes.Com Issue Favorable Online Ad Report
eMarketer doesn't do its own research but compiles research done by others for its online reports. After collecting more than a dozen online spending figures for last year it released its own, saying $7.3 billion was spent. This was nearly one billion less than 2000, an 11% drop, which compares with a 5.9% drop in spending for other media. For this year, eMarketer projects an 11% jump in online spending, which dwarfs other media where spending will drop 1.4%. "It's poised for a significant bounce back," said eMarketer CEO Geoffrey Ramsey, who presented the white paper.
eMarketer projects online spending will jump to $8.1 billion this year. It will grow to $9.2 billion, $11.4 billion and $13.5 billion from 2003 to 2005.
The white paper then looks at the reasons for growth, finding them in the increased number of Internet users and increased broadband penetration. There are 152 million North American Internet users this year, up from 133 million last year. The number will rise to 184.5 million in 2004. There are 17.6 million broadband households in the U.S. this year, up from 11.4 million last year. There will be 34.7 million by 2004. This year, 27% of Internet households have broadband. By 2004, it will be 44.9%.
Data also shows that broadband penetration increases with income levels, making the broadband audience more attractive for advertisers. Broadband users also spend more time online.
Online shopping is also growing, with 55% of Internet users now buying online and 77% shopping. This represents a 2% jump from last year.
The white paper also looks at the different goals for online advertising, direct response and branding. Direct response advertisers still want click-throughs, which Ramsey says are increasing now after a steady decline. While click through rates were flat last year at 0.3%, they are up this year to 0.83%. The increase is due to less clutter on Web pages and the use of larger ads and rich media, which boost click through.
For advertisers seeking click through, the white paper says targeting is the key to generating a higher rate. Ads targeted to customers seeking a particular product generate 60% click-throughs, the white paper says.
In its discussion of branding, the white paper reports that a higher number of exposures improves brand awareness. While one exposure lifts awareness by 5.6%, four exposures lifts it 10.4%. Large rectangles and Skyscrapers increase brand awareness more than banners.
The increased number of exposures also boosts purchase intent.
The white paper also compares branding in various media. The CPM rate for banners is far lower than TV, magazine and newspaper ads, but brand awareness is also lower. The CPM rate for banners is $3.50 compared with $16 for TV, but TV ads generate a 36% jump in brand awareness compared with 14% for banners.