• by Masha Geller , December 30, 2001

Lately it seems like there's very little good news generated by the online advertising industry. "The industry is in a recession." "Layoffs abound." With statements such as these polluting headline after headline, I'm almost afraid to open my inbox every morning for fear of more bad news. Well, here is some good news for a change.

First off, start-ups are infamous for their way of spending money in the past, but now it looks like they've finally changed their ways. According to the latest findings of Launch Pad, a San Francisco-based high-tech marketing consulting firm, and Blanc & Otus, a high-tech communications company, dramatic reallocations have occurred in the marketing budgets of business-to-business high-tech start-up companies recently.

Despite the economic conditions they now face, these start-ups have--drum roll, please--INCREASED marketing spending in absolute dollars from $2.2 million in 2000 to $2.8 million in 2001. As part of this striking shift, companies have cut back on their mass marketing efforts generally in favor of smaller, more targeted programs. For example, researchers found that online advertising investments fell by 72 percent and print advertising programs by approximately 44 percent, whereas direct marketing programs increased an average of 300 percent for online and 150 percent for offline.

Successful marketing departments are using programs with quick, measurable returns in terms of sales prospects or revenue. Gone are the expensive long-term brand-building activities. Advertising and event programs have been pared back. Instead, companies have turned to targeted, measurable lead-generation programs.

All of the above spells good news for the online advertising industry. And if the positive trends of the recent past continue, there is a good chance that the future may hold even more good news.

Secondly, we all know that ads follow eyeballs and web audience growth shows no signs of slowing down. October Internet ratings report from Nielsen//NetRatings revealed that Internet usage in the U.S. reached an all-time high, rising 4 percent in October and spiking 15 percent year-over-year to more than 115.2 million users. The growth in web usage is the largest increase seen in 2001.

Also, overall growth of the active Internet population swelled 15 percent during the past year. Surfers accessing the Internet at home fueled the increase, jumping 14 percent to more than 103.7 million Internet users. The number of office workers logging online grew 11 percent in October to more than 40.1 million. Sean Kaldor, VP of analytical services at NetRatings, said the growth indicates that the overall health of the Internet is solid in spite of the current economic conditions and recent national events.

And thirdly (not that I put too much stock in forecasts and predictions), according to a recent Forrester Research report, overall digital marketing will grow to $21 billion by 2006, and web display advertising will account for 5.4 percent of all ad dollars spent, online and offline, growing to a size roughly equal to magazine advertising.

Add all of the above together and you've got something to look forward to.