Music and book retailers were the most frequent online advertisers in May, accounting for 30 percent of all Internet ad impressions, according to a Nielsen/NetRatings report released Wednesday. While the volume of online marketing messages continues to grow, an Internet ad recovery is not yet in effect, industry analysts say.
The retail goods and services category, including online merchants such as Amazon, Barnes & Noble, Bertelsmann's CDNow and Columbia House's DoubleDirect, topped the list of Internet marketers with 33.8 million ad impressions in May, a 74 percent increase over the same time last year. In addition, retail giant Wal-Mart significantly increased its online presence, registering 89.5 million ad impressions in May, up from a mere 7.3 million last May.
Much of Wal-Mart's advertising appeared on Yahoo!, Excite, and Better Homes & Gardens, according to the online research firm.
An impression is registered when a person accesses a Web page featuring an ad banner or some other kind of message.
The financial services category came in second with 14.4 billion ad impressions reported, a 59 percent rise over last May. The number of Web media (Web publishers promoting themselves on other sites) messages grew 38 percent to 12.1 billion ad impressions.
The travel category showed the greatest strength, surging 304 percent to 5.4 billion ad impressions. The rise in Web travel advertising coincides with rapid growth in online travel bookings. Travel research firm PhoCusWright predicts that travel bookings on the Internet will reach $34 billion next year, making up just under 15 percent of annual travel spending.
Overall online ad impressions jumped 77 percent to 94 billion year-over-year.
However, a rise in the volume of ads isn't entirely positive for the Internet as long as actual spending by major consumer marketers remains soft.
As long as there is more ad inventory available than demand from marketers, Web publishers can't increase the prices they charge for advertising. Nielsen/NetRatings estimates that the rates Web sites charge for their ads has fallen about 22 percent in the last year, although analyst Charles Buchwalter says that ad prices seem to have stabilized recently.
Internet ad spending declined by 12.4 percent in the first quarter, according to ad research firm CMR, a Taylor Nelson Sofres company.
Earlier this week, Thomas Weisel Partners analyst Gordon Hodge said that online advertising remains weak and that total advertising revenue is expected to fall 17 percent in 2002 from $7.2 billion last year.
Yet there are positive signs for all advertising.
On Tuesday newspaper publishers reported cautiously optimistic forecasts for the rest of the year at an investor conference, saying that there signs of a rebound in the severe, long-running advertising slump. That comes on top of surprisingly strong demand from advertisers during the broadcast TV "upfront" negotiations for the upcoming fall prime-time lineups, with the six networks ringing up an estimated $8.2 billion in commitments, an increase of more than $1 billion over last year's upfront.
Last week, Wit Soundview analyst Jordan Rohan raised his ratings of Internet ad firm DoubleClick to "strong buy" from a "buy" and AOL Time Warner to "outperform" based on the stabilization of online ad prices for portals and gradual recovery in the Internet ad market, beginning in the summer.
"After two years of consolidation and attrition in the online media and commerce sectors, existing Internet survivors face a less competitive environment - which should lead to price power, superior margins, enhance market share, and share price outperformance," Rohan wrote.
CMR is expected to release a mid-year report on all ad spending revenues, including the Internet, and full-year projections on June 25.
Jane Weaver, MSNBC.com. June 19, 2002
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