Internet

The reality is that for all its growth, advertising on the Internet is still a new medium that is a long way from reaching everyone. Obviously, the reach of Internet advertising is limited to those who have both computers and Internet connections, which limits its effectiveness somewhat.

The Internet, while still playing catch-up with older, established media such as newspapers and television, is one of the most explosively growing advertising options there is. According to an Internet Advertising Bureau (IAB) report prepared by Coopers & Lybrand, from essentially zero as recently as five years ago, online advertising climbed to $1.92 billion in 1998.’ That’s more than double the total for 1997 – and an incredible 619 percent jump from 1996, when the reported revenue for the entire year was $267 million.

And the most recent available numbers for 1999 show that Internet advertising is continuing its steep climb. The IAB reports that in the second quarter of 1999, revenues grew to $934.4 million, which is more than double the same period in 1998; if totals for the rest of 1999 keep up the pace, the fledgling industry may be looking at a $3 billion-plus calendar year.²

Moreover, it’s said that a high tide raises all boats. The phenomenal success of the Internet has precipitated increases in traditional media channels, particularly Radio, as so-called “dot-corn advertisers” flock to stations, dollars in hand, to build brand recognition. In October 1999, Interep Research predicted that national Radio spending by dot-corn advertisers would reach between $ 165 million and $212 million for the year, a figure that does not include the additional money spent locally.³

Still, such stunning potential shouldn’t cause advertisers to flock to the Internet without a clear strategy and a reason to be there. Advertising on the Internet is still a constantly evolving medium that has yet to reach equilibrium. Obviously, the reach of Internet advertising is limited to those who have both computers and Internet connections, which limits its effectiveness. Online privacy fears also will have to be addressed; while the likelihood of credit card numbers being stolen during an online transaction is now no higher than during a conventional purchase, consumers will need to be reassured. The medium is most effective with products suited for primarily male audiences age 18-34 (the predominant demographic).

Advantages

Disadvantages

Direct Response: With the Internet you can reach highly educated and affluent consumers who are able to purchase your products or services with a click of the mouse. Interactivity: The Internet allows your customers to communicate directly with you; they can tell you what they do and don’t like, what they want, and what they will buy. Tracking: Internet technology allows you to measure exactly how many people saw your message…and how they responded. Immediacy: Thanks to online commerce, your message can reach the consumer just prior to purchasing…and actually inform them in great detail about how and why to buy. Flexible: The Internet allows you to change your message frequently; in fact, Internet experts suggest that you must continually change your offerings to keep them fresh. New and Exciting: As more and more consumers buy their first computer or finally get around to acquiring an Internet connection, there is a steady influx of consumers experiencing the Web for the first time. This sense of novelty and wonder will persist for some time before Web surfing becomes an experience to be taken for granted.

Infrastructure Problems: As consumers flood the Internet looking to shop and buy, sites that don’t sufficiently prepare for the onslaught will be plagued by painfully slow loading times or outright crashes. Moreover, e-tailers are very dependent on timely shipping, a possible weak link that could break down just when it’s needed most. Loss of online visitors means your advertising will be less effective. Limited Reach: Technology consulting firm Parks Associates estimates that as of 1999,56 percent of U.S. households have at least one personal computer; just 39 percent have Internet access at home. There are hundreds of thousands of Web sites on the Net, but the average user “visits” only a few – and “re-visits” only a fraction of those.4 Perception: Advertising is becoming more accepted on the Internet. However, the flip side of increased acceptance is decreased awareness. Many Internet users simply tune out ads or even block them with software designed for the purpose. Consumer Concerns: In theory, e-commerce is safe, simple, and easy. However, despite evidence of the security of online transactions, publicized reports of credit-card theft on the Net have made many consumers hesitant to use their credit card numbers online. Time: Although technical innovations continually boost access speed and response time on the Net, a significant base of users is still accessing the Web using modem speeds of 56 kbps or slower. Hardware bottlenecks make navigating the Net a slow, tedious process. Many users, turned off by the time it takes to view graphic-heavy pages, may move on quickly if they don’t think the site is worth the wait.