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Web ads not selling out
Web sites filling pages with in-house ads, new report finds

Although the number of advertisers on the Web has grown considerably -- approximately 65 percent since January 2000 -- a sizable portion of online companies are filling ad space with banner ads promoting their own products and services, a new report from a Web research firm found.

House advertising, which is advertising by publishers on their own sites, accounts for almost 20 percent of all available online advertising inventory, the Web audience measurement firm Media Metrix said in a report issued Monday. House advertising accounted for more than 17 billion online ad impressions out of a total of 92 billion impressions on the 500 highest- trafficked ad-supported sites between January and April 2000, the study concluded.

"Although the online advertising industry has been growing at a phenomenal rate, almost $26 million of potential online ad space is going unsold every week," Charlie Buchwalter, vice president of media research for the AdRelevance division of Media Metrix, said in a news release.

However, the use of house advertising is not spread equally across all sites. Portals, community sites and search engines are able to sell a higher percentage of their inventory than a variety of smaller, more vertical sites, the research firm found. Employment sites are the heaviest users of house ads, with about 45 percent of all online ad inventory on those sites devoted to promoting their own products and services, versus an average of 12 percent for Web portals, such as Yahoo! (YHOO: Research, Estimates).

Total online advertising revenues are expected to grow to $28 billion worldwide by 2005, up from $4.3 billion in 1999, according to a study by Jupiter Communications released June 19. Jupiter analysts said this growth will be driven by the expansion of the online population worldwide, which will more than triple within the next five years, rocketing from 200 million users today to 600 million users in 2005.

"While the numbers paint a compelling picture for the Web as a global channel for advertisers, there are significant hurdles to making the Internet a superior global communication tool," said Evan Neufeld, vice president of international research for Jupiter.

Last year, Forrester Research issued a report saying page view growth on the Web will far outpace ad spending growth. With new return-on-investment tracking tools and plenty of ad inventory available, marketers increasingly will demand performance-based advertising deals, Forrester said. The research firm also forecast that over the next five years the Internet will siphon $27 billion -- or 10 percent of all US ad spending -- away from traditional media.

However, advertising agency executives say that "click-through rates" on Web banner ads are as low as 0.5 percent today, down from about 1 percent a year ago, as consumers increasingly ignore banners on pages.


unknown, CNNfn.com. June 27, 2000

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