The online advertising market continues to be difficult to predict, causing web companies to struggle with revenues, according to analysis by GartnerG2.
Net giants such like Yahoo!, DoubleClick and AOL Time Warner are feeling pessimistic about the outlook for online advertising as AOL’s results this week show (see
Box Office Success Offsets AOL Time Warner Losses). Both AOL and GartnerG2 are forecasting that the online ad market will pick up in Q3, in line with predictions for a broader advertising and media recovery (see
Insight Analysis: Media Healthcheck – April 2002).
Ad growth at cable TV Gartner also forecasts that cable TV revenues will grow faster than broadcast TV. This concurs with early upfront data from Jack Myers Report released recently (see US TV Revenue Forecasts Fall Flat).
This investment by advertisers in cable TV in the US is indicative of an increased commitment to targeted media generally, says Gartner. Internet advertising should also benefit from this trend, given its ‘targeted’ nature.
The more targeted the medium, the higher the price for advertisers, says Gartner. This can be as much as 5-10% per selection criteria, which might include such simple selections as age, sex, geographic or demographic.
Broadband growth to fuel recovery Gartner forecasts that 20% of US households will have broadband by 2003, compared to 10% currently. Broadband access speeds will enable faster downloads of rich-media ads.
AdRelevance says that the average growth rate of rich-media ads from Q2-Q3 2001 was 317%; this is likely to rise as bandwidth increases. The high price of rich-media ads should have a positive knock-on effect for the recovery of online advertising spend.
Advertisers should take cheap opportunities GartnerG2 recommends that advertisers begin to test online campaigns now, before Q3, whilst the cost is still relatively cheap. As demand increases and supply decreases, online media prices will naturally rise.
