Commentary

Frequently Asked Questions

Since we're a Web research company, reporters call our office from time to time to ask what's happening in Web advertising. The questions fall into a continuum, from reasonably well-informed to really, really dumb. A few examples of some of the more commonly asked questions:

Q: Have you found any ads for liquor or cigarettes on the Web?

A: There are a few, but not many. Cigarettes are almost nonexistent; Camel has done a promotion, a few other brands have made rare advertising appearances. Liquor advertisers are far bolder; beer as well as hard liquor ads do appear on many sites.

Q: Did either presidential candidate use the Web during the election?

A: Surprisingly little. For someone who claimed to have invented the Internet, Al Gore shunned his creation almost completely. George W. Bush didn't show much more confidence in the medium, having used only a few ads on a small number of sites.

Q: Which ad formats appear most frequently on the Web?

A: Of the format we track, the basic and much-maligned banner is still the overwhelming favorite. The largest proportion of ads on the Web is the banner, with other shapes and sizes (skyscrapers, buttons, etc.) accounting for the next largest slice. Rich media actually accounts for a very small part of Web advertising, perhaps because marketers and their agencies have yet to get comfortable with a technology that works best.

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Q: How fast is Web advertising growing?

A: Estimating dollars spent on the Web is really tough to do, which is why few people have confidence in the numbers they read. For example, recently the highly respected Myers Report wrote that Web advertising would grow at 30-40% per year, whereas a Wall Street firm's research report showed a decrease of 5%. The latter is very difficult to believe, the former sounds a touch high. But who really knows?

Q: What proportion of ads is bought on a CPA (cost per action) basis?

A: As the Web advertising industry's growth has slowed, advertising salespeople have taken the 'risk' out of buying ads on the Web by making CPA deals with advertisers and their agencies. (CPA deals can be cost per click, cost per sale, cost per any metric. That's in contrast with CPM (cost per thousand) deals, which are based only on the number of people who actually see the ad.) Depending on who you ask, the percentage of dollars being spent on CPA deals is as high as 75%.

Q: What has happened to CPMs lately?

A: The bursting dot-com bubble is nowhere more visible than in the rates advertisers charge. It wasn't too long ago that certain sites were charging $150 per thousand to reach select audiences. The 'average' CPM (if there was such a thing) hovered around $30. Today it is not uncommon to hear of sites selling good inventory for under $5 per thousand, and numbers as low as 50 cents for run-of-site are not unheard of.

- Michael Kubin is co-CEO of Evaliant, formerly Leading Web Advertisers - http://www.evaliant.net - one of the web's most powerful sources for online ad data. He may be reached at mkubin@evaliant.net

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