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Internet ad revenues climb, study says

Net companies may be slashing their marketing budgets and folding altogether, but a report shows the Internet is still a viable place for ad dollars.

    Internet companies may be slashing their marketing budgets and folding altogether, but a report released today shows the Web is still a viable place for companies that rely on advertising dollars.

    Online ad revenues for the second quarter hit $2.1 billion, up about 9 percent from $1.95 billion in the first quarter of 2000, according to research by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers. Revenues grew 127 percent from last year's second-quarter figures.

    "I think the overwhelming conclusion is that the online advertising marketplace is still alive and well," said Rich LeFurgy, chairman of the IAB. "It is still continuing to show the marketing strength that it has exhibited" in the past.

    But a slide in technology stocks, combined with the demise of many e-businesses, has led many analysts to predict slowing ad revenues for key Internet companies, including Yahoo.

    The report makes no predictions about upcoming spending patterns, but it shows no signs of the expected dip in ad revenues since last year, when Internet ad spending in 1999 hit $4.62 billion, according to the IAB and PricewaterhouseCoopers.

    LeFurgy said that the dip has not occurred because traditional advertisers have so far taken up the slack.

    "What we have heard anecdotally was that traditional advertisers have stepped in to fill in the gap that the dot-com advertisers opened up in the second quarter," he said. "I think what got an awful lot of attention was the pullback...in the Nasdaq market and the dot-com reassessment" that put growth behind profits.

    "The untold story was the continued migration of traditional advertisers to the medium," LeFurgy added.

    Tom Hyland, chairman of PricewaterhouseCoopers New Media Group, agreed that traditional advertisers have come into the Net marketing game. He emphasized that the biggest beneficiaries have been the higher-profile sites and portals, signaling that the money is following the traffic.

    "While there have been difficulties experienced by dot-coms, those ad dollars are just being concentrated into more of the efficient providers...sites that are going to ring a better audience," Hyland said.