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Online Advertising Articles
(January 2001)



Yahoo! Confident in growth of Webvertising (CNET News.com, January 31st)
Tim Koogle, Yahoo's CEO, continues to note the reasons why web advertising is certain to grow, despite the slowing economy and low ad market. The fact that the Web is the only medium where advertising and transactions come side-by-side, plus the realisation that traditional companies still only dedicate 1-3% of their overall ad spending to the Web are signs that more ad dollars will flow in during the coming years.

Teen Portal Snowball Tightens Ad Contracts (CNET News.com, January 31st)
Following on from the cutbacks made by UGO, the GameCenter Alliance and Cybereps, entertainment-focused online ad property Snowball.com has announced major cutbacks made to their contractual agreements with publishers.

Hey, Look Over Here...Yes, HERE (ClickZ, January 31st)
One of the biggest downfalls of banner advertising is that most banners fail to interrupt the attention stream of the visitor. As a result, advertisers aren't seeing high ROIs on their buys, in many cases. This article suggests some changes that can be made to both the design of e-commerce websites, and the manner by which advertising is integrated into online content. In response to the latter, the author suggests that site sponsorships and advertorial content effectively capture the attention of web users, without restricting the user's sense of being in control of his/her web surfing experience.

European Online Ad Spending to Grow 70% in 2001 (internet.com, January 30th)
Yet another report has been released suggesting that, once publishers have survived through the flat period that is expected to last 6 months, ad spending (and corresponding ad rates) are set for a gradual increase. This report is specifically a reflection of the European market, but gives a good indication as to where the whole industry is heading.

Web Advertisers Work on Ways to Better Catch Your Wandering Eye (Boston Herald.com, January 29th)
When ad revenues dropped for the first time in their history during the third quarter of 2000, advertisers and researchers around the world began to question the effectiveness of the standard banner ad, and how online advertising may develop in the future. Some tests performed by university teams monitored heart rates and focus group opinions to gauge the level of response generated by particular banners, while others tracked the eyeball movements or click rates of their subjects in order to best analyze which ads (and positions) work best at soliciting attention and responses. Interesting reading...

More Layoffs at Beyond Interactive (internet.com, January 29th)
This Ann Arbor-based online advertising firm has announced the termination of 30% of its workforce, or about 100 jobs, in its second round of layoffs during recent months.

Wireless Advertising Shows Promise Despite Glitches (CNET News.com, January 26th)
This article details the challenges facing wireless advertising, in terms of technology, ethics and standards.

Commentary: "Free" Web Services Tap Sophisticated Advertising (CNET News.com, January 26th)
With many web-based companies basing their entire business model around advertising, and providing users with services that are effectively free as a result, several major online properties have been forced to adopt innovative advertising strategies in an effort to retain positive revenue growth during the ailing banner ad market.

Death of Banner Ads Exaggerated (Wired News, January 26th)
This article provides a great overview of the market as it stands, and where online advertising will go from here. It notes that while ad networks and ad-supported sites are reporting anaemic results at present, traditional advertisers (rather than cash-strapped dotcommers) are expected to 84% of the digital marketing scene by 2005. The article also notes that these additional funds will come at the expense of old media revenues, and that the superior targeting and tracking technologies offered by the Web make it an increasingly attractive outlet for media buyers.

Low CPM Rates Sow Discontent Among Publishers, Networks (InternetNews.com, January 25th)
In this time of despair, publishers and ad networks alike are reconsidering their relationships, and repositioning themselves to make the most of the few ad dollars that are on offer. This article touches on the failing of larger networks to serve branded publishers on a site-to-site basis, while highlighting the unique business models employed by Winstar Interactive and Phase2Media - two agencies that represent sites individually, rather than as part of a faceless network. It also touches on Engage's desperate policy changes, that have left many publishers with severely shrunken Net CPM revenues.

Ad Stunt Derailed by NFL Threats (InternetNews.com, January 25th)
In an effort to circumvent the exorbitant charges placed on advertisers for airtime during the Superbowl, startup Subjex.com launched an attention-grabbing campaign whereby one lucky SuperBowl ticket holders would be paid $1000 for each second that he/she managed to display the company's URL on-air. To nobody's surprise, CBS and the NFL expressed their resistance to the innovative plan.

Online Advertising: Better Than You Might Think (CMP TechWeb, January 23rd)
This article looks at AdRelevance figures that show that online ad inventory is increasing at a strong rate, and that the industry is showing signs of strong growth as more traditional advertisers move a greater proportion of their advertising budget online.

Ad Pepper Closes Americas Unit, Staff to Form New Ad Co. (internet.com, January 23rd)
German-based Ad Pepper has shut down its Miami office and laid off at least 10 employees in a move that follows Engage Media's similar withdrawl from the Latin-American market. Interestingly, the laid-off members have formed an ad network of their own, called PubliWeb, that will take over where Ad Pepper have failed in serving the Latin American and U.S. Hispanic markets.

Two More Dot-Coms Slash Jobs (Seattle Times, January 23rd)
Avenue A cites a weak overall online ad market as the reason for their cutting 70 jobs (15% of their workforce) this January.

FTC Ends DoubleClick Privacy Investigation (internet.com, January 23rd)
When DoubleClick acquired Abacus Direct in February 2000, several privacy advocates aroused anger from the general web population by asserting that this data could be cross-referenced with DoubleClick's own tracking systems to match a user's surfing habits with personally-identifying information. This article notes the end (for the time being) of the FTC's investigation into DoubleClick's actions.

How Will the Dot-Com Meltdown Affect Online Advertising? (eMarketer, January 23rd)
During the high-flying times of the dotcom drive, online companies spent huge percentages of their revenue on advertising in an attempt to establish brand recognition and market cap as quickly as possible. This article, which features figures and projections from Forrester and Pegasus Research, looks at the effect that dying dotcoms and shrinking marketing budgets will have on the overall online ad industry.

Online Ad Sales Hit (Adweek Online, January 22nd)
A brief article that looks at the lukewarm reaction that traditional media companies have had towards the emergence of competitive online media marketplaces.

Sofcom gets Real Media for a Song (Australian IT, January 19th)
With online media companies facing extremely low valuations at present, some can make worthwhile acquisitions, as Sofcom has found. Their January purchase of Real Media Australia establishes the company as Australia's leading internet advertising representative.

About Faces Lawsuit Over Pay-For-Surf Program (internet.com, January 19th)
California-based TargetFirst has filed suit against About, Inc., claiming that About deliberately misrepresented their ability to meet its obligations related to the pay-for-surf sponsorship deal that the two struck in October.

Engage's Q2 Losses Mount (internet.com, January 18th)
Soon after culling half of their staff, Engage's CEO Tony Nuzzo announced that the company expects to file losses of $55 million for the quarter ending Jan 31st, on a mere $25 million in revenues. In an effort to reassure investors and affiliates alike that this is not a sign of Engage's demise, he followed up by stating that the company has enouhg cash on hand ($86 million) to see it through to profitability. The announcement also noted that Engage will shift its focus from ad representation to software sales.

DoubleClick CEO Sees Flat to Lower 2001 Ad Prices (Excite News, January 18th)
Kevin Ryan has estimated that the low rates plaguing the online ad industry may continue throughout most of 2001, before making a gradual climb skyward as more ad dollars come online. (Note that Mr Ryan conveyed an increasingly bullish outlook in another article February 13th).

Online Advertising Not Dead Yet (Newsbytes, January 16th)
A team of analysts have found that online ad spending could double within the next 3 years, driving more dollars online, while depriving offline media outlets.

Are Click-Through Rates Really Declining? (ClickZ, January 16th)
It's no secret that banner click-through ratios have declined over the years; from an average response rate of about 5% in 1997, to about 0.5% these days. This trend has received a great deal of negative publicity, and has been hailed as one of the indicators that online advertising is not effective. Here, Jim Meskauskas (quite rightfully) challenges this train of thought, indicating that the declining rates can be put down to adoption trends, and the fact that increasingly complex web layouts give users more options regarding where to surf next. He predicts that CTRs will plateau at about their current level.

Flash Ads: Users Unite (Adweek Online, January 16th)
Macromedia has attracted several major media companies to form an alliance designed to develop standards for rich-media ad delivery and measurement.

The State of the Internet (Something Awful, January 15th)
After being bitten sharply by two online ad networks, SomethingAwful's Rich Kyanka composed this article, outlining the general state of online advertising, its failures, and some steps that could be taken in order to improve its effectiveness (for both publishers and advertisers) in the future.

MP3.com CEO Remains Bullish on Internet Ad Model (Forbes.com, January 12th)
Countering the warnings issued by Yahoo! and Disney, MP3's CEO Michael Robertson has dismissed the gloomy view of online advertising as a "crazy notion", stating that while rates may be low right now, and may not grow in spurts as dramatic as what we saw during the tech boom, the advertising-supported business model remains viable.

Ad Revenue is Nothing to Yahoo About (RedHerring.com, January 12th)
While many smaller ad-dependent online media firms had warned that their revenues would be low this year due to a soft ad market, it was thought that the major players would survive the cutbacks until Yahoo! this week issued the first earnings warning in the company's history.

Want a Good Job That Doesn't Pay? (Australian IT, January 9th)
This brilliant article by Daniel Rutter highlights the validity of the online ad downfall, while outlining how some indie players will be able to survive the shakeout, while others are best off sticking to their day jobs and relegating their web ventures to hobby status.

Give Commercials a Break (Fortune.com, January 9th)
Here, Stewart Alsop attempts to dismiss claims regarding the death of advertising, instead suggesting that technology has and will bring us different ways of delivering, measuring and tracking advertising across a variety of media.

CMGI's Yesmail Sends Home 24 Workers (internet.com, January 8th)
Embattled CMGI, who recently made a dramatic reduction in Engage's workforce, have this week announced 24 layoffs from within their email marketing company, Yesmail. This, claims president David Menzel, is in response to a temporary softening in the online advertising market.

Publishers Enraged at Engage (internet.com, January 8th)
As if a 40% sales and technology commission cut wasn't enough, Engage's announcement this week that several of its publishers would be charged an additional 20%, bringing Engage's own slice of the revenues to 60%. This comes at a time in which ad rates are falling, and those publishers affected have apparently been informed that they must agree to the revised pricing scheme, or leave the network.

Engage To Cut 550 Jobs (internet.com, January 4th)
Following from the staff cuts that Engage took last September, CEO Tony Nuzzo announced the loss of another 550 jobs from the unprofitable firm. Read more on CNNfn.

Why Pay Per Click? (Internet Day, January 4th)
Although many hard-core web publishers have criticized the commercialization of search engines, it's hard to ignore this article's suggestion that those with money to burn were able to acquire the best listings in the free engines anyway, by hiring a team of search engine optimization experts. The author of this article asserts that the popularity growth of engines such as GoTo.com and FindWhat helps create equilibrium once again, and presents savvy publishers with a great way to purchase targeted traffic inexpensively.

Online Advertising Isn't Dead (Redherring.com, January 3rd)
Speaking from an investment POV, this article ponders whether or not the market-leading internet companies who derive a majority of their income from online advertising have been beaten down too low. It suggests that since there still remains a great deal of value in online advertising, and since traditional advertisers have yet to allocate a proportion of their marketing budget to the medium congruent to the amount of time that consumers spend interacting with the net, the market will turn positive in the second half of 2001. When this happens, RedHerring suggests, bellweathers such as AOL, CNET and DoubleClick will be in the best position to see growth from brand-centric traditional advertisers.

CNET Gamecenter Alliance Breakup (Stomped, January 3rd)
February 1st will mark the end of the popular CNET Gamecenter Alliance that provided ad revenues to a variety of credible gaming sites. This article does a good job of highlighting the reasons for the decline in gaming (and other) networks, while suggesting a few avenues for publishers to explore in order to maximize their aggregate potential.


 
 
 

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