Troubled Dot-Coms Not The Only Ones Cutting Online Advertising

  • by December 22, 2000
(Reuters) - In 1999, companies paid foolish sums to get their names in front of a growing Internet audience; this year that whole online advertising market imploded as most websites discovered there were just not enough ads to go around.

On to better times in 2001 for those ad-supported Web businesses that have survived the wreckage?

Not necessarily.

It would be easy to blame the brutally weak online advertising market on all the cutbacks coming from troubled dot-com companies, a trend that will eventually pass.

But an informal survey of several would-be advertisers suggests otherwise. The cutbacks are coming from all kinds of companies-online and off, well-funded and broke.

Even many companies that have the money in their budgets to spend as they wish say they are leaning against broad Internet advertising, in favor of selected spots on the most trafficked sites.

A number of others are changing their strategies even more drastically, often opting to reach customers through the vastly cheaper email marketing, or returning to tried-and-true media outlets like newspapers and magazines.

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"I think online brand-building is effective, but in our view advertising offline is more effective," said Jonathan Morris, an executive vice president of Bluefly Inc , an online store that sells discounted designer clothing.

Though it is an unprofitable dot-com with a deeply depressed stock price, Bluefly says it still regards advertising as an indispensable cost that is essential to reach new customers. But it finds it gets the most bang for the buck in offline fashion magazines like Vogue and In Style.

"Just the space allows you to do things you can't possibly do in a banner," said Morris. "We spend more money advertising offline than we do online."

And what about all that brand building anyway?

If the Internet was supposed to be the best way to reach consumers in the New Economy, brand building came to be regarded last year as the ultimate goal. Content sites looking to make money on their Web pages convinced companies that if they got their names and logos out onto every type of Web page imaginable --- news, stocks and even weather report pages-they would make an indelible, invaluable impression in the minds of their customers.

Now, it seems almost every company that advertises online is wondering why it put so much focus on branding when its real goal was to just to sell stuff. And with that new enlightenment, many are abandoning so-called "run-of-site" advertising, where ads run all over a site rather than on certain pages, in favor of a few select spots, usually online shopping sites.

"We are not big fans of run-of-site advertising," said Lariayn Payne, vice president of advertising for eStyle, an online retailer selling merchandise for pregnant women, mothers, and their children. "We'll probably be cutting back going into 2001 on the things that haven't worked."

Several other companies, in

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