Move Over, Prime-Time!

American Demographics, July 1, 2004 by Noan Rubin Brier

Already, industries such as automotive (Daimler-Chrysler) and grocery stores (Safeway), have been part of the big growth in spending on Internet marketing between 2003 and 2004. "The market has stabilized itself enough that the traditional marketers are putting their toe back in the water," says David Coffey, vice president of new media technologies at PHD Detroit. Last year, that toe represented $7.3 billion in ad revenues, according to the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), Internet Ad Revenue Report.

Online revenues reached $2.3 billion for the first quarter of 2004, nearly a 40 percent increase in spending compared with the first quarter of 2003. It is safe to assume that some of the money driving this Internet advertising boom is being redirected from television marketing budgets. According to an Association of National Advertisers survey released at the Television Advertising Forum, 45 percent of the companies the association polled anticipated reallocating money away from television. What's more, 69 percent expected the Internet to be the medium that "would gain dollars in such a reallocation."

This kind of increase is especially telling when compared with some of the initial numbers from the 2004 television upfront markets, in which most of the major networks saw decreases in upfront sales. According to Theresa Lamontagne, a research director at OMD, "the ratings have been going down and cost has been going up. Advertisers are looking at this and saying, 'there's always going to be a place for television, but where else can we invest our clients' money?'" Fact is, running a major TV campaign without an important Internet tie-in is becoming less and less common.

Coffey explains that with a "traditional media format like broadcast, the consumer sits in front of the television and sound and motion is blasted at them. Whereas with the Internet, the programming is driven by the user experience; consumers have a better opportunity to respond at different levels to a marketer's message." For online marketers, the objective is this responsiveness, and the Internet is designed to facilitate interaction with the consumer. Since many Web pages are aimed at specific topics, it is fairly easy to be contextually relevant with marketing messages, i.e., car ads on car sites, bank ads on financial sites and golf ads on golf sites. It also means using the data that has been gathered by individual sites and targeting specific messages to specific demographics.

"If they're watching Friends, they're really a mass blob of people," says Tom Lynch, head of online marketing at ING, a Dutch financial services group that spent US$8.9 million on Internet marketing in 2003, according to TNS Media Intelligence/CMR. "But online it's very different. They may be going to the Jennifer Aniston site and they may be registered for it and we know exactly who they are." This allows companies to provide these consumers with information relevant to their lives and interests.