All The News That Clicks
Newspapers, radio, TV, and magazines are scrambling to boost their Web presence.
Most auto manufacturers spend lots of time and money figuring out who their customers are and how to reach them. Nissan knows that online is where to find them. Go to Oprah.com, and there's an ad for the Quest minivan. At Forbes.com, look for an ad for the Infiniti, Nissan's high-end sedan. Nissan America's online advertising spending is up 40 percent over last year, and it isn't about to slow down. "In the future, online advertising is going to grow rapidly, and it's likely that TV is going to be affected most," says John Rinek, director of media and agency management for Nissan. "We need to redirect our resources into areas that are paying off for us, such as online."
The online world is rapidly changing for advertisers--and for the media industry that depends on them for its livelihood. Long gone are the days when ad buyers handed over wads of cash for banner ads with the hopes of getting a few clicks. Now, the technology for delivering and measuring Internet ads is sophisticated and more powerful, allowing advertisers to be smarter and more demanding. This fact is not going unnoticed by print publishers and television executives, who are keenly aware that as their audiences are moving online, so are their advertisers. "Advertisers' expectations are greater now, and so is their involvement and knowledge of what they want their online advertising to be," says Peter Green, senior vice president of ad sales for Weather.com, the online arm of the Weather Channel.
To catch up, the media are in a feverish scramble to buy Internet properties and launch online initiatives that provide more Web pages that they hope will attract more viewers and, hence, more ads.
Last week Rupert Murdoch's News Corp. agreed to pay $580 million for Intermix Media, owner of the popular community website Myspace.com, which had 17.7 million visitors in June. The announcement came just days after News Corp. formed its Fox Interactive Media unit. The Washington Post recently launched dual home pages for its local and global audiences, which it hopes will increase advertising. And Yahoo! and Google, which are driven by advertising revenues, last week reported record quarterly earnings that indicated their growth shows no sign of slowing. Yahoo!'s revenues rose 51 percent from last year to $1.3 billion, and Google's revenues soared 98 percent to $1.4 billion.
Yet even as online advertising surges, it remains a tiny portion of total ad spending--3.6 percent, or $9.6 billion, in 2004, according to research firm eMarketer. It's expected to grow to 4.6 percent, or $12.9 billion, in 2005. Although Web commerce has been around for over a decade now, it is still a new environment for the advertising industry. Pricing is uncertain, and advertisers are still trying to determine how to best target their audience. The biggest spenders online are not yet the biggest old-media advertisers like Procter & Gamble and Pfizer. In May, according to TNS Media Intelligence, Internet phone pioneer Vonage spent the most online, serving up ads with an estimated value of $30.1 million. LowerMyBills.com came in second at $21.3 million, followed by Verizon at $19.5 million.
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