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Sliver of hope for Net ad recovery

Companies are increasingly churning out new online ads, according to a new report that has researchers saying the comatose ad market may be stirring.

The number of unique online ads has risen in early 2002--a sign that the comatose online advertising market may be stirring, according to a Nielsen/NetRatings report released Monday.

From January to April, the number of unique online display ads jumped 33 percent from 52,530 to 69,838, according to AdRelevance, the online advertising measurement service Nielsen/NetRatings purchased last month from rival Jupiter Media Metrix.

AdRelevance said that traditional advertisers largely propelled the growth, with established advertisers filling the top spots. Columbia House took the lead by increasing Net advertising 89 percent from January to 330 unique ads in April. Following were Nestle, which grew 67 percent to 214 unique ads; the federal government, which increased 60 percent to 370 ads; USA Networks, which increased 60 percent to 538 ads; and Microsoft, which grew 55 percent to 348 ads.

The increase is a rare positive sign for online advertising, which has seen a string of quarter-over-quarter declines after several years of double- and triple-digit growth. In 2000, U.S. Internet advertising grew by 78 percent from 1999, reaching $8.2 billion. For the most recently available period, online advertising revenue totaled $1.79 billion in the third quarter of 2001, down about 4 percent from the previous quarter, according to industry trade group the Interactive Advertising Bureau (IAB). The decline was the industry's third straight dip in quarterly sales.

In the same period, classified ads showed the strongest growth, accounting for 17 percent of revenue in the United States, according to the IAB's report. Banners remained the dominant format, accounting for one third of online sales. But advertisers have increasingly turned to new formats with bigger, flashier designs that may incorporate video, animation and interactive features.

Charles Buchwalter, vice president of media research at NetRatings, said the increase in unique ads from traditional advertisers offers some hope for the battered Web publishing business.

"If there is an increase in the number of unique ads, (that) translates to an increase in actual ad expenditures," Buchwalter said. "That is going to be the point at which people are really going to start feeling that the malaise of online adverting is behind us--but we don't see that yet."

Other companies that increased their unique ads this year include Oracle, which bumped up Net advertising 55 percent from January to 268 unique ads in April; Verizon Communications, which grew 54 percent to 270 ads; Hewlett-Packard, which increased 47 percent to 303 ads; Citigroup, which rose 42 percent to 349 ads; and General Motors, which increased 40 percent to 638 ads.