Dotcom Advertising Plays Increasing Role In Advertising Growth, Says Report
Dotcoms are having an increasing effect on advertising growth, according to new research from ABN AMRO. Figures for advertising growth in 1999 and the first half of this year show that dotcoms are playing an ever-larger role in growth across all media, and the research also shows where the various different types of dotcoms are spending their advertising budgets.
During the whole of 1999, 1% of total advertising growth came from dotcom advertising, while the remaining 4% came from traditional advertisers. For the first half of this year, total growth has reached 12.5%, with 5% from dotcoms. The largest increase has been seen in Outdoor, which has seen growth of 20.5% for the first half of this year, compared to 5.5% last year. In 1999, 2.5% of growth came from dotcoms, while this year they contributed 11.5%.
Radio has also benefited from dotcom adspend, going from 10% growth during 1999 to 21% for the first half of this year. Dotcoms accounted for 2% of growth last year, but 7% this year. TV has seen one of the most dramatic increases in the influence of dotcom spending year on year – from 1% of 6.5% total growth in 1999 to 6% of 13% total growth so far this year.
The research points to strong market growth regardless of the benefits of dotcom adspend, but warns that a slowdown in that area could prove challenging for certain sectors, particularly TV and Outdoor.
ABN AMRO do not expect dotcom spending growth to be sustainable at current rates and would not expect to see a 5% contribution to total growth again. “We expect around one or two percentage points impact over the next five years as dotcom spending heads towards our forecast of 8% of total adspend,” says the report.
The research has also shown that the different classes of dotcoms favour different areas of the media for advertising. For the purposes of their research, ABN AMRO used the following categories:
- Rock.com companies are mature companies such as AOL, Yahoo! and Amazon
- Hot.com companies are pure internet start-ups such as QXL and the now defunct Boo.com
- Bricks and clicks are the internet operations of traditional companies, such as Prudential’s Egg.com
ABM AMRO believe that the companies most likely to slow up on adspend will be the Hot.coms, as a result of spending limitations. These companies currently contribute just over a third of the total adspend coming from all dotcoms, with particular influence in the Outdoor and Press sectors, where they make up 45% and 40% of total dotcom adspend, respectively.
The Rock.com companies contribute the smallest amounts of all dotcom advertisers, favouring TV most (contributing 27%) and Press least (20%). Overall, these companies, whose brands are already firmly established on the internet, contribute 25% of the dotcom advertising across all media.
Bricks & Clicks, then, are possibly the best prospect for long term dotcom ad revenue. Not only does this group contribute 39% of dotcom advertising across all media, favouring TV and Press in particular (they contribute 40% of dotcom ad revenue in each of these sectors), but with the backing of established ‘bricks’ companies, their marketing coffers are more likely to stay filled in the future.
ABN AMRO: 020 7678 2080