Magazine article Marketing

Direct Watch

Magazine article Marketing

Direct Watch

Article excerpt

Whether or not the dotcom bubble has or is about to burst, one thing is certain - offline advertising by online companies has grown rapidly over the past year, and is set to rocket throughout the rest of 2000 and beyond.

Internet-based companies spend [pounds]3.2m on mainstream advertising between March and May 1999, [pounds]7.8m the next quarter [pounds]28.9m the quarter after that, and a massive [pounds]43.5m for the quarter to February 2000.

TV and press advertising are the most popular media used by dotcom advertisers accounting for one third and one-quarter of all spend, respectively followed by DM (mainly used by financial services companies like Egg), outdoor and radio.

This advertising growth is far higher than or any other sector, but how long will it continue? And will we see internet companies increasingly taking adspend a way from traditional media, such as TV press and DM, in favour of purely online advertising and sponsorship?

Some pundits firmly believe that there will be a major shift of ad expenditure toward online advertising, at the expense of traditional media. Fletcher Research has predicted that UK online advertising reveues will soar from [pounds]50m at the end of 1999 to [pounds]625m by 2004, mostly at the expense of direct marketing which it expects to drop by a third-but also affecting outdoor and radio advertising, before moving on to dent press advertising as well.

The research concedes that dot-com companies will rely heavily on TV and press ads in the short term, but adds that once their brand are sufficiently established, as much as 50% of their ad budgets will move purely online, as will key sponsorship partnerships.

Others are more optimistic about the prospects for mainstream ad expenditure for several reasons.

First, the evidence to date is that dotcoms are bringing new advertising money to mainstream media and will continue to do so as the marketplace gets increasingly crowded by dotcom brands seeking to differentiate themselves.

Second, there have been relatively few instances of traditional advertisers switching money away from TV, press and so on, into online advertising, and even if this does occur, it is likely to constitute a small proportion of a large, and still growing advertising market.

Third, online advertisers are not going to find it easy to win and retain customer loyalty on a medium which hosts millions of sites surfed by disloyal, impatient consumers, and are likely to have to use existing media to build brand awareness. …

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