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
"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
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.